“One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute.” – William Feather
Making investment can be a tricky play. Especially if the investment is in the stock market. You not only have to look at the company you are investing in but also several other volatile factors. Stock market is not an easy game to play. Having the right amount of money is not enough. It needs a lot more than that.
Here are some basic tricks which can help you understand the stock market a little better:
- Do not go with the peer pressure: This rule applies to all the investments you make and this is one of the most important ones for the stock market. You should not invest in a stock just because your friend or a colleague did so. You may want to invest in the same stock, however, the base for that should be your research and information and not peer pressure. As rightly said by Warren Buffet “ Be fearful when others are greedy and be greedy when other are fearful.”
- Invest time in your research: Not always a big brand will fetch huge profits. There are many market factors which determine the value of a stock besides the brand. You should conduct proper research and take a decision only when you are sure.
- Know your stock: When you play poker, you the game well. If you do not know, then there are absolute chances of you loosing your money. Same way is a stock. You should know what business you are investing in to be able to understand the twist and turns of your stock. Peter Lynch once said ““Know what you own, and know why you own it.”
- Patience is the key: Like any investment even stock needs patience. Do not go crazy buying and selling in greed of little profits. Try and sit on your stock for a longer period unless you are very sure that the stock is definitely going down. Like they say, slow and steady wins the race.
- Do not play emotionally: Just because one stock has been lucky for you in the past or because for some reasons it is close to your heart, this should not be the reason for your investment in a stock. It often leads to disappointment. Hence play this game without leaving any room for emotions.
- Create a diversified portfolio: Putting your money into a variety of stocks will minimize risk for you. This mostly helps you stay away from huge downturns.
- Do not get your hopes high: This does not mean that you should not have hopes but keeping high expectations is not only distracting but could also lead to disappointments. Keeping a realistic approach is always helpful in stock market.
- Do not invest all your savings: Stock market should not be your only way to make investments. You should also look at other options and invest only your surplus income in stock market.
- Keep a check: Sitting on your investments for a longer term does not mean that you forget your stock totally. You should keep a regular check on it and also keep yourself updated about the business and the industry overall.