Stock Valuation – Key To Intelligent Investing

Intelligent investment needs a lot of effort. Stock valuation can be considered as a tool for picking out stocks that will bring you good returns.

Imagine buying a car without knowing its actual value, or investing thousands of Rupees in property with zero potential to give you return.

Sounds scary?

Yet, this is exactly what it amounts to if you put money into deals without assessing their value.

You must read a guide on Stock Market Tips.

Stock Valuation : The First Step

As I mentioned above that, Intelligent investing needs a lot of effort.

If you want to invest in stocks, the first thing to look out for is its valuation. Valuation of a stock means the price or actual value a share holds.

If you are doing stock valuation then you need not study the stock chart every time or worry about the trend in the market or the interest rates of the stocks.

Never invest in stocks without knowing the value. Because that is like going up a blind alley where you have no idea what you will end up with.

Investment in stocks without valuation is like risking your money deliberately.

Fluctuations in the stock market are unavoidable. And with the accurate valuation of a stock, you can minimize the risk factor due to those fluctuations.

It will ensure that you not shoot in the dark, and make sensible investments. Use the valuation of stocks to serve as a guide for buying and selling stocks.

Instead of pouring your hard earned money into stocks without valuation, it is better to be patient and carry out a thorough research to determine the worth of stocks before buying.

You do not have to be a mathematics genius, or a stock market guru either to choose a stock. All you need is basic mathematical skill, and the perseverance to look for all the valuation information available for the particular stock.

You cannot make the most of valuation if you do not understand or appreciate its importance in the stock market.

Spending a large amount in buying shares based on what others say may well result in losses.

Must Read: How Share Market Works?

Neither should you buy based on media hype, as this may mislead you, and you may end up losing every penny you invested.

Owning stocks of a company in the form of shares can be a very good wealth-building tool for you as it grants you claim on everything that the company owns.

Must Read: Stock Trading Guide

Hence, assessing the value of the company, the profit it is generating and how beneficial it can prove to you, is a worthwhile enterprise.

Valuation can prove to be especially beneficial for middle class investors, as they have limited resources to overcome losses incurred in the Share market.


Therefore, valuation can be considered the key factor in buying stocks.

Just as one assesses the value of anything one buys on the basis of a specified standard. Stocks too need to be valued to determine whether the investment will bring you returns or not.

Be aware, there are companies in the stock market that are making huge profits, but their stocks are of no value. Hence, spending time on carrying out your own research will help you pick up the right stock for your portfolio.