Do’s and Don’ts in the Stock Market

Mostof us have our own perception of investment based on our experiences, but alsotend to be confused with the opinions given by others. Knowing the do’s anddon’ts of the stock market would help us turn really as a smart investor. 

Let’sintroduce do’s and don’ts of investing:

 

Mostof us have our own perception of investment based on our experiences, but alsotend to be confused with the opinions given by others. Knowing the do’s anddon’ts of the stock market would help us turn really as a smart investor.

 

Thedo’s and don’ts in the stock market are:

 

slow, steady, and boring wins the race:

 

Itis best not to panic over information about stocks on the media. Being slow andsteady with looking at the activities that your money is to be used for wouldensure that you invest in ventures that are good, useful and profitable.

 

Readinggood books on personal finance will help you in taking right financial andinvestment decision. In addition, finding good financial advisors would helpyou get advice regarding stocks and mutual funds, along with entrusting thecustody and management of your funds to them.

 

Allthis may seem too boring and time consuming, but it is better to be cautiousthan bitten too hard. 

 

Don’tgive any weight to market forecasts. All opinion pro and con is already builtinto the price of equities today:

 

Market forecasts on themedia has got good entertainment value but doesn’t have any investment value.It is just enough for long-term investors to invest in good stocks, and mutualfunds that would appreciate in the long run.

 

It is best to understandthat market forecasts only show you the expected direction in which the marketis heading based on the available information. This forecast is only a forecastand need not become reality.

 

In addition, marketfluctuations are the very nature of share markets and should mean nothing tolong tem investors. Making accurate market forecasts is tough, as they areinfluenced by various factors like the outcome of political elections, thedirection of the economy, interest rates and world events. It is also wise toknow that these fluctuations are incorporated in the price of the share, stockor mutual fund.

 

Domake your own analysis of the stocks, shares and mutual funds:

Itis unadvisable to place your full faith on analysis of others regarding stock,shares and mutual funds. No wise man would always tell you all about his marketbeating strategy. Making ones own analysis keeping your financial goals in viewand framing a strategy would help.

 

Thisinvolves studying the performance of top performing stocks and mutual fundsover 5 years and existing mutual funds over a period of 3 months to decide onwhich stock to maintain and which to dispose off. All this would ensure thatyou are investment smart.

 

Don’tthink you can successfully engage in short-term market timing:

Asa long- term investor you should never contemplate taking advantage ofshort-term market dealings and speculations. Playing with shares and mutualfunds in the short-term market may give you a profit in a few transactions butwill not give you profits forever. So you can’t have an investment strategywhich gives profit inconsistently. We need a strategy which can bring profitsconsistently so as to be a successful investor in the long run.

 

Itis true that playing in the share market is neither entertainment nor fun. Itis also futile to borrow or work on short-term margins to make money.

 

Don’tassume that if anyone were genius enough to devise a market-beating strategy hewould be stupid enough to share it with anyone:

 

Stock tips are good tolearn, but not to act on for speculations. It could prove dangerous to act onspeculation tips given by one and all, as they may not be correct.  In addition, everyone has his or her ownperception of investment, with other not having full knowledge or skills. 

 

You need to take time to think over each tip and analyze ifit contributes to your long-term objective of capital appreciation. Similarlyit is not advisable to subject your money to risk with investing in investmentfads that may or may not earn you huge profits.

 

The final advice:

You need to make a calculated decision considering the prosand cons whenever you make an investment. In addition abstain from tradingoften in the stock and mutual funds market. Always think in terms of long terminvesting.

 

 

 

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