Greetings of the day to all the members of CCI Family.
Thanks for appreciating my previous 3 parts. I hope that I am able to satisfy the expectations of CCI members.
The link to the previous 3 parts are given as under -
“Journey into stock market - Basics”
“Journey into stock market - Part 2”
“Journey into stock market - Part 3
In this article I will be focusing on the following points:
- Some additional tips for investment
- Queries raised in earlier parts
- Other factors
Before reading this article please complete the first three parts for better understanding.
So let’s start with it –
Don’t chase a Hot tip:
Whether the tip comes from your brother, your cousin, your neighbor or even your broker, you shouldn't accept it as law. When you make an investment, it's important you know the reasons for doing so; do your own research and analysis of any company before you even consider investing your hard-earned money.
Relying on a tidbit of information from someone else is not only an attempt at taking the easy way out; it's also a type of gambling. Sure, with some luck, tips sometimes pan out. But they will never make you an informed investor, which is what you need to be to be successful in the long run.
Pick a strategy and stick with it:
Different people use different methods to pick stocks and fulfill investing goals. There are many ways to be successful and no one strategy is inherently better than any other.
However, once you find your style, stick with it. An investor who flounders between different stock-picking strategies will probably experience the worst, rather than the best, of each.
Constantly switching strategies effectively makes you a market timer, and this is definitely territory most investors should avoid.
Buy best breed of companies –
In cars, we buy best of breed. Not even an issue. We pay up for the brand because we know that a brand, a good brand, signifies reliability. It signifies a higher level of service, a quality of ownership that can pay dividends for years.
Why don’t we feel the same in the stock market?
- As per my point of view always go for the Multinational companies for better returns.
- Eg. Nestle, Pepsi, Coca-Cola, etc.
Do’s –
a. Do your own homework. Gather as much information as you can on a stock. Do not be afraid to call the company and ask their Investor Relation Department about the company's product, earning and other such information. After all, you are getting ready to own part of the company. You need to know what you are buying. I am amazed that most people spend more time researching a $400 lap top purchase than a $2,000 stock purchase.
b. Do be patient when you buy a stock.
c. Do set an exit price for yourself. If you make a bad trade, take your losses and go on. Do not hope that the stock will go up tomorrow. Many times, that tomorrow never comes.
d. Do not buy a stock because a friend of your friend has made a lot of money on that stock. Many times, you will end up losing your money.
e. Do NOT buy at the market open. I repeat NEVER buy at the market open. You always get a pop at the market open which fades away in an hour or two. The best time to buy a stock is about 45 minutes to an hour into the market and late in the afternoon, about 30 minutes before the market closes. Conversely, the best time to sell is at the market open or about 1:00 p.m.
This would bring an end to my article. I hope thorough it many of you will benefit.
In my next article I would start discussing about the terms in finance and how to recover from loss in a deal.
I would like to thank each one of you for sparing your precious time in reading my articles.
About the Writer –
CA Final Student (Gave Nov 14)
CIMA Management Level
B.Com (P)
# Any sought of queries or suggestions for the remaining parts are most welcome. Feel free to contact me at sanyam.arora27@gmail.com
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