New age investing theme is now-a-days quite popular in stock market. But the big question is that 'How to select best stocks for this objective.'

Live TV

Loading...

New age investing seems something new for our generation. But it is quite common in developed nations and from time to time it is gaining popularity. I remember 2000 dot com time investors are rushing towards new age businesses and started investing in them despite of high valuations. At that time, the greatest investor of all time Warren Buffet gave us the philosophy, how to pick winning new age businesses.

He is among the only few investors who survived the Dot com crash of 2001. But the question is ‘How’?

2021 was quite similar to 2001. In 2021, all new startups businesses boomed, digital stocks boomed and IPOs flooded, tech stocks created buzz in industry which is very familiar to what we saw in 2001.

How to pick winning stocks?

From Buffet case study, as a Wealth Manager, I learned that he firstly pick stocks that have less debt or zero debt, have strong fundamentals and high cash flow even at that time. The picking shows one needs to avoid loss making businesses or businesses that currently showing loss. Most of the investors in low economic rate scenario pick loss making stocks for the sake of future potential growth. This is one of the biggest mistakes & this is the only thing that Warren avoided at that time.

How to pick new age stocks

My first criteria to pick stocks which is in profit from at least last 3 years and it’ earning is rising. Second criteria is see industry or sector future growth at least of 15 percent-20 percent CAGR. Thirdly the business must create Moats or have competitive advantage & lastly, I pick only those stocks which are sustainable for next 5-10 year at least said Ankit Yadav Wealth Manager (USA).

How to invest in such stocks

Investors can do SIP in them. This the best way to invest and to dilute risk of over exposure in stock at a time. So, systematic buying such stocks for long term can provide great outcome

Conclusion

Investors consider all the above-mentioned point and pick stocks on basis of debt, fundamentals and cash flow instead of future potential. One can achieve the desired goal and objective with limited risk. Investor’s must have to remain in discipline and approach systematically to pull off compounding which is considered 8th wonder in world.

The author, Ankit Yadav, is Wealth Manager (USA) at Market Maestroo. The views expressed are personal

First Published:Dec 3, 2021 6:43 PM IST