Investment in Shares

Posted on 22 July 2007 at IndiaStockMarket Group in reply to a query on "Investment in Shares"

Hi Friends,
I would like to tell all of you that Stock Market is one of the best way to create wealth even if you are not so rich (2 other ways are to invest in real estate and other is to become successful entrepreneur itself).
Hence those people who says we should not invest our hard earned money in stock market are not investors rather gamblers. and I agree if you will gamble in the market you will not even loose your money but even your shirt and sometimes pants too if something like 1994,2000 happen just after you enter.

Hence the best way to create wealth is :-
1. Do thorough research on the stock you are buying right from the start of the company.
2. Always remember that when you are investing... you are investing in a business and not in a stock or a company. Check whether you will buy the business at present rate.
3. Also do thorough research in Sectors. That which sector will outperform and do well based on the macro or micro economic factors of the country and the world.
4. After finding the right sector ....find out the best companies in that and invest in that.
5. Always remember.... ........Investin g Early and Exiting Early is the best strategy.
6. Time and not Timing is important in market for long term success..
7. Whenever entering first time in the stock market make a strategy and then invest or trade according to that. That strategy should be based on your age, risk profile, income, savings, your own psychology, time you can give to market, knowledge of finance you have and also the 6 the sense if you have to see the future.
8. One simple step to start with this is make not one but 2 portfolio of stocks. One of long term and one for short term. If you are very much convinced about your long term research don't sell your stock whatever way market go....up or down. You will be rewarded.
The short term stock which you have bought based on some sectoral uptrend or economic cycle...sell it once you earn a handsome profit whatever target you have set say 10 %, 25 % or 100%.

9. There is always 2nd bus and chance in stock market. So never invest in a stock at very high valuation. Soon You will be able to buy it cheaper or you can find some other better stock at lower valuation.

10. Use 100-you age. That much % of your saving you can invest in stock market. Say if you are 20 years then you can invest upto 80% (Though When I was 20 i was more than 90%).
If you are 40 years old then your investment in stock market should not increase 100-40 i.e. 60% of your savings (Though when I will be 40 still my 90% will be in stock market).

11. If you find a very good idea that you are very much convinced of .........take a big position in that to make a significant change in your balance sheet. As I always have those ideas with so much good entrepreneurs in India I will always overweight on Equities.

I will write more later........ .......

Regards,