What Not to Buy

     Before buying any stock ask the following question to yourself

• If the company is not profit making in the operation level,then I just through away the company from my list of thinking.I just don't want to even think to take their names.The Indian unicorns Zomato,Paytm,BYJU etc...etc...all are loss making companies as on date.
• People argue that these are cutting their losses day by day and will be profitable by 2-3 years.I don't buy stocks of the company which is supposed to post less loss.I am not interested in companies which can make profit in future.I am interested in those companies which are making profits and will make profits in future.
• I judge the  companies in its ability to remain profitable and not just only profitability.Check if the  company is profitable today ,and whether it will able to remain profitable for next 20 years.If you have doubt then simply discard the name.
• A loss making company means simply a no from my side.
• Do you really understand the business of the company or you are just buying because everyone else is buying that stock.
• If you understand the business,then is it wise to put money in that business  ?  Yes ,you must ask this question to yourself.I am telling you my choice I don't put my money in capital intensive businesses like Steel,Telecom,Automobile,Airlines,Energy companies etc.These companies need Rs.100 for running their business and earn Rs.10/- profit.Now even if they earn Rs.10 profit,they can't give you back this Rs.10 entirely.Because ,they will need money for running their business.Lets say they can give you back Rs.2/- as dividend.Check the dividend paid by these type of companies,you will understand what am I saying.Don't consider PSUs are exceptional ,just because they are paying good dividends.Look at their balance sheets.They are carrying huge debts.It just doesn't make any sense.Its like someone who takes blood from the blood bank every month in order to be alive, but donating blood to others.Its simple economics if you have debt ...pay the debt first...don't pay dividends.They just pay dividends because their boss needs money.
• Always judge the company by its ability to throw cash from its profits,to the shareholders as dividends.IT companies like TCS,Infosys etc. FMCG companies like ITC,HUL,Britannia,Marico etc can pay you almost all the profits as dividends.Because these companies are debt free and they do not need more capital for running their business. 
• Dividends are the only hard cash which an investor gets in his bank account.Ask yourself whether the company is paying dividends regularly.If yes,then the company must have very negligible debt.Because if debt is there,then there is no point in giving dividends to the shareholders. 
• If the company is not paying dividend,then ask yourself why is it not paying dividends? Remember that ,the very purpose of a company is to make money for its shareholders and the company creates it in terms of profit with hard cash.The only way it can reward its shareholders is by sharing profit with its shareholders by paying dividends and the capital appreciation in terms of rising stock price is a by product only and it is not in the control of the company.So,if a company is not paying dividend to its shareholders ,then it is like an unwritten promise to the shareholders that, dear shareholders I am not giving you the profits today,because I can use this money to make more profits for you in future.So,you have to check whether ,the company is actually retaining your profits for making more profits or it is just retaining it for its survival only.

• My No List

1. A loss making company.
2. Capital Intensive company (Infra,Energy,Telecom,Steel,Cement,Automobile etc.).
3. Public Sector Undertakings.
4. The Business I don't understand.

This is my learning ...and it will be refined over time ...because investing is an art......