Investment in Stock Market – My Views
b) For info on "fundamental analysis of a company"
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)
The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market
Japanese Candlestick Charting Techniques, Second Edition
Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications (New York Institute of Finance)
Technical Analysis Plain and Simple: Charting the Markets in Your Language (3rd Edition)
Stock market has been a fancy for most of the people worldwide. With fast disbursal of information through revolutionary means of communications such as internet, television and mobile, this field has become more interesting and transparent. Now days, even a layman investor can make money if he/she invests some time on knowing a company before putting his / her money into it. If someone does not have time to know the company then the best way to enter this market is through mutual funds where expert fund managers manage your funds. The history is evident that most layman investors burn their fingers when the market crashes because of inability to time the market. People tend to invest without knowing a company on tips / advice from brokers or friends to make easy money overnight which leads them to invest into companies with poor records of management, growth and investor friendliness.
My observation of this market and interaction with some legendary investors can be summarized in the following points:-
1) While investing, one should always stick to blue-chip companies with good history of management, dividend distribution, brand value and solid product portfolio along-with consistent growth record.
2) I like legendary Warren Buffett’s golden rules for investment in stock market. I follow his golden theory which says, “Rule no. 1 is Try to protect your capital and Rule no. 2 is never forget Rule No.1” I have experienced nine out of ten speculators or daily traders end up loosing their money at the end of financial year. This market gives maximum returns to the patient and long term investors. If someone has habit of intra day trading, then one should do swing trading with strict stop-losses in mind. Trading in a stock should be avoided in very volatile stock which results into triggering buying as well as selling stoploss. Should take short positions in a bear trend and long positions in a bull market.
3) One should never put his / her 100% saving in equity market because equity-investment is very risk oriented because any positive or negative development anywhere in the world can change the sentiment of this market. I think 50% of your money is more than enough for equity exposure. One can allocate balance funds into other asset classes such as gold / silver (in form of pure coins, notes with purity certificate, now days gold ETF and silver notes are also gaining popularity for investment options.), fixed deposits, PPF
4) One should try to enter this market when there is lot of panic and pessimism and exit when there is state of euphoria and lot of optimism. During panic, even the positive news is ignored by the maket and during euphoria, even negative news is ignored by the market. One has to be foresighter and should consider all the negative and positive developments taking place in the economy, industry or company while making investment or divestment decision.
5) I really like Warren Buffett's graph showing impact of developments in economic cycle on stock market. It explains beautifully when to enter and exit the market. Here it is for your information
5) I really like Warren Buffett's graph showing impact of developments in economic cycle on stock market. It explains beautifully when to enter and exit the market. Here it is for your information
More to follow…………
Good Books to enhance knowledge on Stock Market
I have come across few good books which have helped me in taking good investment decisions. I am giving below their titles with author name. If someone needs any help regarding below mentioned books, he / she can write to me at tradernthinker@gmail.com
a) For basic info on "Financial Market"
a) For basic info on "Financial Market"
b) For info on "fundamental analysis of a company"
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)
The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market
c) For info on "technical analysis" of the market
Japanese Candlestick Charting Techniques, Second Edition
Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications (New York Institute of Finance)
Technical Analysis Plain and Simple: Charting the Markets in Your Language (3rd Edition)
Important Links for Best Stock Market News
