This question is often asked by members:

"Which are the best stocks to buy"?

I never reply to such queries.

There are a few reasons for it.

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1. It spoils the forum's structure.

If someone answers such questions and gives 5-10 picks, other members will cross-question him and will also suggest their picks.

The thread will go something like this..

In the end, the thread will discuss every second stock listed on the NSE and there will be 10000 buy/sell recommendations.

The end-result will be a thread that no one will really benefit from.

That is why I prefer to segregate discussions of individual stocks in separate threads.

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2. There is nothing like "best stock" in the market.

I may sound like a boring financial planner, but the fact is, each individual investor has a different goal.

time frames are different...

Some are looking for short-term gains, some have an investment horizon of 3 years and some may want to hold a stock for 20 years.

risk appetite is different...

A young investor may be willing to take a much greater risk than someone who has just taken VRS.

The "best stock" for each individual investor is different.

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Most important reason:

3. Not everyone is qualified enough to recommend "The Best Stocks"

At least not me.

Only those who track majority of the stocks are qualified to recommend "best stocks".

I hardly track 100 stocks on active basis.

If I choose 10 from these 100 and ignore 1000's of other stocks, my picks are unlikely to outperform the markets by a big margin.

Same is the case with most other members here.

I don't think there is anyone here, who tracks more than 500 stocks... at least not on fundamental basis.

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To make money, one has to work hard.

It is true even in stock markets.

You can't expect to make a lot of money by just buying others' recommendations.

If it were so easy, then every stock market investor would have been a millionaire by now....

An investor himself has to learn to recognise opportunities and trends in the markets.

If an investor feels that he lacks time (or knowledge) for directly investing in stocks, mutual funds are the best choice for him.

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Warren Buffet once said:

"Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing".

No arguments with that, but he's one special guy. Some of us have to spread our risks (out of ignorance ). I have 42 stocks in my portfolio. If you see the portfolio of some well-performing equity mutual funds, they have more than 75. Even K-30, a Kotak mutual fund, claims that 30 is the "optimal" balance between risk-minimization by diversification and loss of performance by dilution. No comments on the performance of K-30...

Warren Buffet is definitely a good stock picker, but I think he is overrated.

He made his fortune when the American economy was booming.

Anyone investing in equities in this period would have got decent returns.

Over the last few years, his Berkshire Hathaway has given single digit annualized returns.

Berkshire Hathaway made a peak of around 78300 in June 1998 and is quoting at 120000 (September 2008).

This means an appreciation of 53.2% in 10 years.

This doesn't even come to 5% CAGR.

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Awesome, but not always wise.

I think penny stocks is the best. Penny Stocks screeners can research a given type of a stock within a few minutes and return comprehensive information. It is up to the trader to assess the information. If the stock seems gainful then he or she could buy it.

Who are the other stock pickers who made more returns for the same period?

I look for stocks of companies that are growing well, that are expanding rapidly and have more orders than they can easily handle. A huge order book position is good. At the same time, companies that take on a lot of debt for this purpose are a no-no. I like conservatively financed companies. They must have healthy profit margins, with a bare minimum of 20%.