Follow These Investment Secrets For Stock Market Success
HDFC, Tester
Many stock market investors have someone in their circle whom they trust a lot or look up to as a successful investor from whom they can learn. This ‘someone’ can be a friend, a relative, a professional stock advisor, or so on. However, you won’t be able to unravel a lot of equity investment secrets from a single source. In fact, many successful investors will avoid sharing some of these secrets that they learned over a period of time.
With experience and after interacting with different stock investors, you would come to know about several secrets that may be useful for your stock investment strategy. In this article, we have attempted to share a few top stock market investment secrets and give you the advantage. Let us check them out below.
Do Your Own Study/Research
Many stock advisors would suggest you to do your own study/research before taking any positions. Now, that is the fearful part for most investors. Every stock market investor wishes to make the right choice and earn consistent profits. But the reality is that hardly a few of these investors possess the technical and fundamental know-how to pick the right companies to invest in.
This doesn’t mean you keep your day job/business aside and spend extended periods in learning the nuances of the stock market. You can simply start by reading articles and following stock related news online. For example, HSL accumulates relevant and personalized information that helps you keep regular track of companies in which you plan to invest. These won’t make you an expert, but, you will at least become more aware of the happenings in the world of equity investment.
There are several experts out there who share quality information for those interested. Start keeping track of the stocks that they talk about. This is where you get the stock names. You can then try to dig some information about their past results, historical share price, competition, previous company announcements, etc. from our website and also from the official company site.
Build Your Own Strategy
It is not as easy as simply copying the strategy that works for someone else. There are few key learnings that happen only with experience. And these all contribute towards enabling you to become a highly successful stock investor in the long run. Once you have been in the stock market for a considerable amount of time you will come up with a strategy that works for you.
Diversify your Investments
Never put all your eggs in one basket. Variety is the spice of life. These idioms apply to most aspects of our life, even the stock market. In terms of the stock market, you should never invest all your money in companies from just 1-2 sectors. . All sectors won’t perform at once. There will be some sectors that would do well at different points in time because of reasons beyond our control. Instead, the ideal way is to pick top quality stocks from diverse sectors.
This diversification should also apply to the amount you invest in your stocks. Do not put a lot of money in just 1-2 stocks. For example, it is better to buy 4-5 good quality stocks using a total of INR 2,00,000 instead of putting the entire amount in 1 good quality stock.
Do Not Give Away Your Profits to Market
Investors often wait for their target price. They expect their stocks to achieve a desired price level. For many long-term investors, these price levels would be 2-3 times the purchase price of the stock. However, markets are subject to domestic and international events. Fluctuations are inevitable.
If the market trend is uncertain, it is better to book some profits in your winning positions. This gives you enough cash to re-invest in profitable stocks again at low levels - if and when the market falls. Avoid getting emotional with certain stocks and not selling a single share till the target price is achieved. Sometimes you may have to book profits below the target price. The key is not to miss out on assured 50% profits in quest for uncertain 100% profit.
Avoid Following the Crowd
There would be several instances when some company stock suddenly becomes the ‘talk of the town’ and everybody seems to be positive on it. That is the time to take a back seat and avoid the temptation of buying the stock. The stock is probably at a high value. For example, no one seemed to talk about Eicher Motors before 2010 – it turned out to be a multi bagger. The thing about multi-bagger stocks whose price rise several times over a period of time is that they won’t be under public scrutiny when the rise is happening. They will most likely become known only after their prices have soared.
Take a Break Periodically
Once you start investing in stocks, you would have the tendency to follow their prices regularly. You would want to do something every other week – buy more shares of the stock you already hold, sell some or simply find new stock to buy. It is advisable to take a break from the markets when they seem uncertain/volatile and do nothing. This period could be a week, a month, or even a quarter. If you wish to be a long-term investor, you need to have the patience to sit quietly on the side lines for a while without doing anything to your portfolio.
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