Find the secret of investing in BSE or NSE with minimum loss
The common stocks are prone to irrational or excessive price fluctuations in both directions. This arises of the impending tendency of people to gamble, or for the matter speculate. A sense of despair, hope along with greed takes over things
1. Overlook the fundamentals
In the process of earning some quick money from the market, the retail investors overlook the fundamentals that are planning to invest. Some of them go on to buy shares of the company without having time to gather about the basic information about the company. Most importantly it relates to the product or service that the company sells, and what are the future prospects of the business at the same time.
2. Cheap, yet on the expensive side
If you are a successful investor, you would look at bargain stocks that are available in the market at lower the rate which does have a strong growth potential as well. Newbies often mistake this golden strategy as buying cheap stocks, something in terms of high percentage gains. The retail investors do consider the share price of the stocks as they will buy stocks that are not that much valuable.
The returns on investment from your shares do not depend on the number of shares you have, but the performance of the company. There are chances of making a profit from a blue chip company, than looking at the option of buying plenty of small stocks
3. Myopic vision
The focus of retail investors is short term gains. If you are looking at a higher profit from stocks, then you have the ability to time the stock market. When you have invested in stock for a longer period of time, the tax persons would not come looking at his share of profit. The income from stocks that is held for more than one year works out to be a long term capital gain. In the case of investments less than an hour, you will need to pay for short term capital gains.
4. Do not paying too much of attention to portfolio.
A trend that would have come to your notice is investors who might have brought the dead shares of a company. Though this may example on how long term investment is profitable, this does not work out to be the best.
If you are of the opinion, that long term investment, it does mean buying shares at low prices and then ignoring them you are taking a huge risk. The investor should review the portfolio at regular intervals of time. If the outlook of the company improves or remains stable then it would be better to hold or buy the stock. When the assumptions that he has brought the shares do not hold true, then they can think of offloading them.
5. Entry at High, exit at Low
The stock market is vibrant and for any news it will over react. The value of a share will be proportional to the capital and earning potential of the company. In bullish market, the investors tend to invest in overprized shares as each and every one is buying them. This is going to become optimistic, and stock market prices are expected to rise. Wild decisions are taken in stock market in the short run.