What is the best way to earn an income in the share market?
Have you heard that more than 90% of the traders/investors lose money? It is true. 90% of the 90% do not know the basics. They even do not know the functioning of a stock market. They suppose each stock is given a value, If you buy it at 100 it will move between 50 and 150. They sell if it touches 110 and try to keep average on every 10 rupee fall. They will exit at 40. This is technical to them.
Fundamental is to buy some know company when it falls 10–15%. Buying all pharma and IT stocks over last 6 months and while the market has rallied 20% their portfolio will read -20%. They will now sell all the stocks and buy stocks in the highs, now they will pick stocks from the TV experts. When the market dips, high beta stocks that TV experts suggest dips 10–15% even 30–40%.
Half the money is gone.
- The time appetite, invest money only that will not be necessary for you in the next 10 years. The money that is needed in short term, should be invested only in debt fund.
- The heart to hold stocks that make profits for a longer period and to sell that stocks that you are losing money sooner.
- Analyze the broader market and sector outlook before you invest. If the market is at it high, it does not mean you should not invest or If IT and Pharma are down, it does not mean they are cheap.
When you are in the market
- do not be greedy
- do not panic
- do not lose cool
- stay updated
- know a bit technical
- know to read financial statements
- know to trust, know to learn from mistakes
- Be keen to learn something new everyday!
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