{"id":1330,"date":"2021-09-20T22:33:22","date_gmt":"2021-09-20T17:03:22","guid":{"rendered":"http:\/\/jamawealth.com\/blog\/?p=1330"},"modified":"2026-03-02T23:39:42","modified_gmt":"2026-03-02T18:09:42","slug":"quick-equity-investor-checklist-for-volatile-times-to-help-pick-high-quality-stocks","status":"publish","type":"post","link":"https:\/\/maxiomwealth.com\/blog\/quick-equity-investor-checklist-for-volatile-times-to-help-pick-high-quality-stocks\/","title":{"rendered":"Equity Investor Checklist During Volatile Times"},"content":{"rendered":"\n

As the indices have grown over the years, the psychological impact of the dips and highs has become larger.\u00a0India vix is one indicator of how volatility swings happen in a short time frame. \u00a0A 1000 point change today is the same as a 300 point change a few years ago, as it works out to roughly the same in percentage terms. Though we live in volatile times, a 1000 point fall makes one feel that something is drastically wrong. Headlines such as \u201c10 lakh crores of investor wealth lost in 2 days\u201d can have a deep impact on investors.<\/p>\n\n\n\n

Equity Investor Checklist For Volatile Times<\/h3>\n\n\n\n

To keep their peace of mind and the portfolio in one piece, an equity investor can check the following when investing in stocks (Equity investor checklist) in mind:<\/p>\n\n\n\n

  1. Ensure stocks they invest in have strong ROOTS, ie robust balance sheets with low debt. Volatile times might cause fragile companies to collapse. Having low debt helps tide over bad times.<\/li>
  2. Ensure promoters are aligned to the company with significant shareholding and low pledging.<\/li>
  3. Ensure companies have consistently high return on equity, which proves that the company\u2019s cash engine is ploughing money back to grow the company and not into promoters’ pockets.<\/li>
  4. Ensure adequate \u2018margin of safety\u2019 so that they do not end up buying an expensive company in a bull cycle just because the price is seen as going up. Weak ROOTS can cause such stocks to implode.<\/li>
  5. Check if companies are leaders in implementing technology for process automation. In an era where software is seen as eating the world, companies can quickly become irrelevant if they ignore technology.<\/li>
  6. Check for pricing power because companies that are able to hold or increase prices in recessionary periods have been proven to compound well over time. We call companies that are able to grow relentlessly as having WINGS. Combination of ROOTS & WINGS leads to a stable portfolio over time.<\/li><\/ol>\n\n\n\n

    Investing Framework<\/h3>\n\n\n\n

    The ROOTS & WINGS investment philosophy<\/a> is a handy framework for picking stocks. Companies with strong ROOTS, i.e. robust balance sheets, aligned promoters and consistently high Return on Equity and with growing sales, cashflows, operating income and profits on the wings side will do well<\/p>\n\n\n\n

    In addition to this, we look for companies which excel in ABCDE, which is an acronym for A<\/u><\/strong>dvocacy by customers, Brand power, Cost leadership & Pricing power, Distribution, and Engineering & Technology. <\/p>\n\n\n\n