Stock Market Advice: 5 things you should remember in current market!

Source: Google Finance

In last few days, our stock market has been quite volatile due to rapid changing sentiment.

If you are an experienced investor and trader, you will agree with the point that Stock market is made to make you fool in short term! And that’s why, hardly 10 percent of total investors are able to earn money from stock market and remaining 90 percent investors lose money.

Even, famous investors like Bernard Baruch have admitted this.

So, if you don’t follow some basic principles, you may lose a considerable part of your capital in stock market.

Considering this thing, I decided to make a list of common mistakes that small investors generally make and things to remember in this market.

If you followed the list and the points mentioned in it wisely, then you can avoid most of your unnecessary losses in current state of stock market and may also help you in taking Good Investment decisions in short term.

5 things to remember in this Market:

1) Before Economy, money flow matters more in stock market!

Why it matters more?

Because, if the market participants are ready to pump in more money in stock market (no matter what is happening in the economy), then stock market is bound to rise because of better inflows and vice-versa!

(Note: It’s a different thing that with the passage of time, falling or rising economy will have a direct impact on money supply)

2) Most of the time, if you do a proper research, you will be able to find a good opportunity!

Why I am saying this?

Actually what happens, when we have taken an exit from a stock, sometimes we get caught in the same stock due to buying it at the higher levels.

After selling the stock, it is possible that we may not find any better stock where we could place our next bet.

In such condition, if our previous stock (where we have already taken exit) is continuously going up, then many may thought that it will be a good decision if i take re-entry in my previous stock and enjoy the rally going on in it! And therefore, they take re-entry into that stock.

Doing this is good if you are really unable to find any better stock and in your view, your previous stock is still available at attractive price than others.

But if you take re-entry just because you don’t want to do some research and find a better stock for yourself, then you are likely to incur losses!

3) Take a look at these basic things before taking entry!

Before buying a stock, take a look at these things:

• Does the stock providing a good Dividend Yield?
• Whether share price is around its lows or highs? Consider 52week high and low for this purpose.
• Is stock trading at lower price or higher price than its peers? Picking that stock which is trading at lower price may give you better returns, if the company is financial strong, facing no major problem and matches industry averages.
• Does the stock has a Good Promoter backing or not? If not, then Institutional investors and smart money may maintain a strict distance from the stock during most of the time.
• Company is profitable or not?
• Did the price of stock fell mainly after January or not? If yes, then this could mean that share price is primarily down because of the Lock down. In such condition, it will be easier for the stock to move in upward direction with recovery in the whole stock market, unless there is any major problem for the company which got arised in the lockdown.

4) Don’t get stuck with overvalued stocks!

Try to avoid getting stuck in those stocks which are still trading at highest levels (52 week highs) and their fundamentals are either the same or have deteriorated more.

Before these stocks, undervalued stocks are likely to see a better buying until our market doesn’t recover most of its lost points which have gone due to just lockdown.

5) Invest only when you see a good value in stock!

It is not compulsory that you have to remain fully invested in stock market! Search for those stocks which are offering you good value.

If you can’t find a good stock, then you can also sit on Cash and maintain it until you didn’t find a good stock for yourself!

That is the end of this list. . . . . . .

So, these were the 5 Things or Tips for you to remember in current market.

Simply, what you have to do is that keep the discussed things in your mind before picking any stock in short term.

Here, i have discussed about these points in brief. So, if you find them little tricky or find difficult to understand any point, you can ask about that through comment box. I will be there to help you.

Good luck : )

#HappyInvesting