Every investor wants to make money in stocks, irrespective but one needs to have a good strategy in place to be able to protect one’s money and make handsome returns. Investing in the stock market in simple but not easy.It required passion, patience and discipline.one needs to have a sound understanding of the market and the forces at work and also some bit of research capability….although there is no sure -short formula or one -size-fits-all solution for success in the stock market,there are some broad guidelines, which if followed prudentlys can increase your chances of marking a decent profit.
If you do not study any company,you have the same success buying stocks as you do in a poker game if you bet without looking at your cards said peter lynch a globally remowed fund manager.he says there are no shortcut to make money in the stock market. It is imperative to do thorough research with a considerable amount of patients.It will be sensible to invest in a considerable amount of patients.It will be sensible to invest in a company which is easy to understand with a sustainable business moat”he said.
An individual should always invest in a business instead of simply looking at the stock price.understanding a business will help one analyse the future prospects of a company and help make better investment decisions. For Ex- warren Buffet’s primary investment philosophy is to invest in business that he understands .he invested around $1 billion in coca -cola in 1998 earning around 10 percent return in next 30 years.
Avoid herd Mentality…The decision to buy or sell a stock should not depend on what your friends or relative say. An individual should not invest in a particular stock simply because people around him are investing in it. This may not yield good returns and one may end up with heavy losses in the long run.consider the case of the Reliance power Ipo, which had received an over whelming response from retail investors.
It ia always prudent to invest systematically and with patience in the right shares of funds .as the stock market is always volatile , an investor should be ready to absorb calculated risk and decide a necessary course of action like hedging against underlying stocks.
Have a broad portfolio..By diversifying a portfolio across asset classes,you can help earn optimum returns with minimum risk.the kind and level of diversification can vary from investor to investor and it can help cope up with volatility,something that is part and parcel of stock market. It is always advisible to diversify a portfolio across asset classes,as it can help minimise risks .the extent of diversification would depend on the invester’s preference “said sofat..
One should always have realistic assumptions.the equity market tends to deliver returns in spurts.it is known to test investor’s patience all the time.”No asset class can give abnormally high returns for a very long time.unrealistic expectation always lead to wrong decisions.stock market offers opportunity to enter and exit at regular intervals.therefore,it is appropriate to keep some cash, instead of investing all of it.
Invest only surplus fundAn invester should only invest surplus funds,or money she /he doesn’t need in the short to medium term in stocks.since the equity market is valatile,there is always a risk of temporary loss/drawdown. The stock market moves in cycles, and it requires domains expertise and right temperament to understand how a trend changes.
Rigorous Manitoring is must….Investing in the stock market requires regular tracking of news and company -related events,which may impact the stock price. For Ex-The recent news of increasing the axle load limit of commercial vehicles had a negative impact on the share price of Ashok layland.similarly,good earnings can have a positive impact on stock price.
The ways mentioned above can motivate you to start investing in stocks.but the momentum of the market can be very confusing at times,without giving any scope for actionable strategy. Like in the current scenario,the equity benchmark sensex is havering around its lifetime high,but most stocks are in the negative trajectory on a year -to -date basis.. Investing in quality stocks for the long run always works.the BSE sensex has advanced 16 percent annually in last 15 years,whereas shares of companies like symphony, sbi bank and Bajaj finance have delivered annualised returns of over 50 percent during this period. Timely exit is important. Remember a penny saved is a penny earned.if you believe the environment is getting tough for a certain business,you should not shy away from existing your positions. If you do not have the the skills to select the right stock ,then take help of professional investment managers,who are experienced and have a solid track record…
Himanshu singh Rajput 