is it possible to find any listed company which can be bought in this high volatility ?
if your answer is no or difficult to find then stock market is not the place you need to be.
there is always some where companies stock price are traded less than their actual performance ?
how do you decide the stock price is trading less than its performance ?
example companies growing revenue / sales / PAT / EPS 15 to 20 % and stock price not even moving more than 20% in that year.
this are the companies where you need to dig more and research the reason why ?
elimination factors:
are this companies are cyclical business ? is this down cycle ?
does the management has history for miss-management or bad decision / dilution of equity very often / bad capital allocation ?
is company growing with high debt on books ?
not paying dividends ?
will the product generated by companies make sense which can grow well in upcoming days ?
is the company enhancing's the product / innovating new / upgrading technology ? how well it can add value to companies growth ?
read management commentary / con call / interviews to understand the temperament of management.
decision making : the main stuff which depends on person to person
all above should give better way of visualization - now this depends on individual how well they can visualize things with the current data and judgements from above inputs.
then comes the main part - to decide on buying it in the desired price range which you think its best price range to cover margin of safety from sharp downside incase of uncertain event which could affect the current market sentiments. This also depends on individual how good are they to decide and you need to believe in yourself to make this decision rather others opinion.
once you decide the buying price range now decide how much concentration of money you can allocate in it.
Note: its very important to also allocate concentration when you are investing as actual wealth for compounding is dependent on this.
risk control: this also depends on individual
Never allocate all your income portion in it always keep certain portion to cover margin of safety in case of uncertainty for the company / your family.
below is what I try to follow to cover risk and I do skip sometimes the exact allocation percentage bcoz my believe in the management is so optimistic that I am ready to allocate a high concentration
example: if I have say 10K of free cash.
I will allocate 5K in the company
2K reserve to add more incase their is any downside
3K for family
this becomes as
50% invested
20% reserved as insurance to cover downside
30% reserved to cover family
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