Stock Market …. A Slippery Slope Or Rising Ladder??

In the era of cutting edge technology , where people live in a cut throat competition and luxurious gadget are so much immense in daily life that all these amenities forced to you that if you want to maintain a lavish lifestyle , in that case you should be the part of the game and not only that , you have to win it at any cost.

As technology is growing , things are very dynamic in nature, earlier people used to save their money in the bank in traditional savings like fixed deposit or they bought any bank/financial institution backed mutual fund. People majority of the savings were in these two annuities. If someone has the risk taking capacity and an extra knowledge that person used to invest in the stock market. It was/is a popular abbreviation in normal life that investing in the stock market a blind gamble.

If you look around , how you will make an extra money , either you buy the property or get some inheritance from your family. But, both the options are not viable for everyone. If you are a service class person , you cannot buy property just like that , you need a huge amount of cash and good luck. However , if you are making just enough for living then what choices do you have to get an additional income?

I am sure , you can keep your money very safe in the bank and will incur some interest on it. But, at the time your fixed deposit will matured , inflation will eat all your profit or money has lost its value. In this circumstance , you have only one choice to invest your money wisely. It could be, either a conservative or a belligerent way.

I am not going to talk about conservative approach. In the aggressive approach , you would like to invest in the stock market.

Before , I go further , let me clear my stand here , what I believe about the stock market. Here is my personal definition.

“Investing in the stock market is as good as riding on a lion , till you are riding on it with full confidence, you are safe and thrilled , however , as soon as lion stop , he will eat you.”

What does it mean , you will understand as you will follow the blog. Personally, I  in believe in thrill and risk in the life. I will share my experience and expertise of the stock selection and buying & selling strategies of the stocks and last, how to play safe in the stock market. If you follow the rules your return may be high and loss would be minimized.

Here is my personal take on it.

Before investing in the stock market  look around and ask yourself that how much comfortable you are with the current economic growth of the nation?   If your response is that I am not sure or I don’t feel confident about the current economic environment then I will say “DONOT invest in the stock market at all” , keep your money safe where you feel full confidence.

If your answer is that , I believe in the country economic growth and feel that country future will be brighter, Not only that, if you think in the future inflation will be higher , only then you think about investing in stock otherwise be conservative.

As I said before, the stock market is not for everyone , it is a ride on a lion , if you have a weak heart , anxiety , and stress problem , stay out of this , not only that , even you have some financial obligations and looking for fixed income , it will not be good for you. If you are a free bird and having some extra cash to spare them only enter into it otherwise don’t even look into this. The reason , entering into the stock market is very easy but getting out is very very hard.

Here are my rules to play this game.

1….. For Buying a Stock…..

Never ever forget that your money is very hard earned , only it belongs to you  not someone else. Don’t buy any stock from the advice of someone blindly. Consider it like that , in normal life , how do you buy your household items for daily usage, by using your experience and common sense. Same applied for the stocks. You can consult with your friends , relatives and take advice from your broker ,  however final decision should be your not someone else.

Always keep this  in mind that the majority of the brokers or financial advisers look for their profit  before even thinking about you. You should not follow their advice without cross checking with reliable references.

The hardest part in the stock investment is ,

 How to select a sector and stock ?

What is the best time for buying and selling?

Make one thumb rule , no matter what your financial goals are. Never ever take  the bait from newspapers, news and magazines , they will produce a propaganda about some stocks in their news feed time to time , Don’t react to this very aggressively. You are not the only one , who is following this, It has been circulated already in the financial network and stock has reacted on this even before coming to public. Don’t buy any stock , just because someone has said something good about a company , do your research first them follow that lead.

You have to  develop sources to obtain the reliable information , in the beginning follow a couple of magazines , newspaper , financial advisers and check  their results , how good their predictions and advice are. Filtered out unreliable source of information. Now you have some trustworthy source get honest data for analysis.

Best case scenario for selecting a stock is , look around your surrounding and ask yourself , AS a consume on a daily basis, what are the most important things I buy at any circumstances? Who is my service provider as a bank , insurances , cable , telephone , electricity , water , entertainment , education and healthcare. Look around and see , a new generation is crazy about what? Follow these products manufacture or company and their stocks.

This seems a little off the track approach , trust me this is one of the best approaches for the stock selection, reason , you know the good , bad and market consumptions of these products as a consumer very well , even a market research company can’t give better result than you.

Remember , you are not buying a mere stock, technically you are investing in a business. If you don’t know about the company business, don’t invest in this company’s stock. To give you an idea about this , as a consumer you buy these items from the market and contract services from these companies on a regular basis. You know very well about things like car , bike, air-condition , geezer , cosmetics, clothing , fan , cooler , shoes , cleaning items , tv , refrigerator , electronics gadgets and so on. And as service consumer , you know , who is offering better service and deal in the service sector as electricity , water , banking , credit card , phone , cable , transportation etc..

If you purchase stocks of these companies those are the manufacturer  these daily usable items and a  service provider, you don’t need an expert guidance from anyone. As a consumer you know very well , which product is good and have a demand in the market and not only that who are a good service provider in the service sector. You don’t have to listen or take an advice from a financial pundit to decide, which company is performing well in the market and whether you have to invest in their business or not?.

Right away , you did your homework and find out that, which products  have high demand in the current marketplace. Now find out more about its makers and try to study financial details of these companies on economic times or trading sites.

Similarly , you can figure it out about other sectors and it’s companies as well by applying knowledge and awareness. Not only that you also use other sector as well in daily life as, financial sector , mobile/cable operator, entertainment provider ,  which one is providing best deals and services , whether people are coming to their door or not , this will  give you an idea whether to invest in that sector or not?

 Same philosophy you can apply in the medical field that which company is getting new life saving medicines in the market and who is investing in new research and which group/company provides best health care services and policies.

Now , you have explored a couple of sectors to invest , select 3 or 4 sectors of your choices , where you would  like to monitor on weekly bases. For selecting a company , use your common sense and past experiences of their products, in which you have faith and comfort.

Now , you have figured it out the companies , follow the stock price of these companies for a couple of days and very soon , you will understand which one is performing good or bad in a particular time. Discuss with your agent or financial advisors about your choice and buy the stock of these companies, when you feel fully confident in investing in it. To begin with , try to invest in the companies those have a good financial history and have a tendency of paying dividend on regular bases.

Remember , you are not buying stocks for a quick profit , you are investing in a business where you see a growth in coming time. Always invest that much money which you don’t need for an emergency situation. Consider this , investing in the stocks is not a one day job , you may have to hold your positions for a long time .

If you desperately keep on counting on invested money that will induce an effect in your  decision of buying and selling of the stocks. Consider this money is a dead money them you will not feel an anxiety , fear , tension , whenever you will encounter through a bad news about stock market otherwise any financial hiccups will give you a nightmare.

Don’t buy all the stocks in one day or invest all of your money in one action. Make a plan that how much you will invest monthly or yearly bases and follow that rule very firmly , don’t deviate your rule at any cost. Always invest in the different sectors and different companies' time to time. It will give a diversification in your portfolio. It's that old saying

“Don’t Keep all the eggs in one basket”.

Now, you have some stocks in your portfolio, pay attention to their quarterly earnings , business plans and products time to time , don’t keep a blindfold on your investment.

“No companies or stock is 100% solid , any company can be banked corrupt or lost its business in future” .In that case you may lose all of your money.

I am not suggesting that you have to watch all the news feed , but pay attention to any major changes in the companies' business , don’t forget you are one of the partners of this company.

 2….. For Selling a Stock…..

Now , you have invested in the stock market , it has been awhile since you have invested , your portfolio has grown up . Selling of the stock happens in two situations , either you need a cash or don’t feel much confidence in the companies' business anymore. If you need some cash , you can sell some of your stocks , depend which one was not performing well in a long time. If you are not able to decide which stock you should sell then the best case scenario  will be , sell some of your positions of all the stocks. In this case , you will not lose momentary gain of a coming future in one of them.

When you don’t see peoples' interest in the company products or competitor is providing better deal or more enhanced products , consider it as a signal for you that this company will lose its business gradually. Some time , change of technology , government policy also causes a business to dry up .Whenever you see these signs , make a selling strategy for these company stocks. Now the time has come to get rid of these companies from your portfolio.

Here , I am not going to advise any particular company , however , I will suggest that first you should follow a particular group , who has proven track record , as Tata and Reliance in Indian stock market.

Always remember , the minimum value of any stock could be “Zero” and highest value could be anything.

If you are disciplined in the stock investing , I am sure you could get the best yield from your investment.

3.……. Some Valuable Tips…….

If you notice in your neighborhood or nation property value  has kept on falling , avoid stocks related to real estate business.

If you see some service provider is loosing customers , avoid stocks of these companies.

If you read in newspaper about government policy change , keep a track of this policy to affect the related sector. In the past government policies was very lenient for foreign Insurance companies , banks and export related industries. If government changes and new government don’t continue the same policy , in that case pay close attention for the companies' stocks.

If nation GDP is keeping on falling , it’s not a good sign of the country's economy , in that case , a conservative investment will be a good idea.

If local currency is losing its value against foreign currency , in this situation , companies those are in export business or work for overseas clients will be a good investment.

These are some tips in a nutshell , end of the day , stocks market is good for small to medium investors those are willing to take an additional risk for better gain.

If you don’t want to spend your time and want to play safe , DONOT INVEST IN THE STOCKS”.

By 

Kapil Kumar  

Note: “Opinions expressed are those of the authors, and are not official statements. Resemblance to any person, incident or place is purely coincidental ” . The Author  will not be responsible for your deeds.