Your relatives have invested in the stock market. Your friends have invested in the stock market. Every day they tell you… Jump in …Jump in…You are a novice when it comes to investing in the stock markets. And you are afraid.
This is the simplest way to make money in the stock markets. Buy Low… Sell High…This simple but long forgotten rule, helps you make money in the stock market. You buy stocks of reputed Companies, which have good fundamentals. Buying good Companies alone is not enough to make money in the stock market. You have to buy them at the right time.
Stock markets may crash, due to global bad news (Remember the recent terror attacks in Paris). Stocks of reputed Companies with good fundamentals, crash at this time. Nothing is wrong with these stocks… Just pure panic among investors.
This is the time you must buy these stocks.
Stock markets go up and stock markets go down. This is the rule of stocks. The key is not to panic. If you have good stocks, they will rise very fast when good times return. Never sell your good stocks, when there is panic in the stock markets.
Remember: Be fearful when others are greedy and greedy when others are fearful.
Never invest the money you need for your daily expenses, in the stock market. You might be forced to withdraw this money when the stock markets crash and you would suffer a heavy loss.
You don’t need to buy stocks of 50 Companies to grow rich. About 10 to 12 good Companies, should do the job. Buying stocks of Companies which operate in different sectors, to protect you from risk in the stock markets, is called diversification. While some sectors say oil and gas do badly, others such as pharmaceuticals would do well, protecting your investment.
While diversification is a good idea, over-diversification is bad. If you buy stocks of too many Companies, you would find it difficult to manage your stocks.
SEE ALSO: Types of Order in Stock Market
Should you buy stocks of reputed Companies and sell them the following week?
Remember: You are an investor, not a trader. Stay invested in the stock market for a long time, and as long as you hold good reputed stocks, you will make money in the stock markets.
Do not time the stock market. Spend time in the stock market.
Stock markets are all about rumor.ABC Company is acquiring XYZ Company and will soon be a monopoly. CDE Pharma is acquiring SDG Pharma and will dominate the Indian Pharma Market. These are rumors and you must buy these stocks.
Once the news is confirmed, you must assume that all investors have already taken advantage of the rumors. If you buy these stocks you will be paying a higher price for them. The stock might fall down and you would suffer a loss.
See also: What is Primary Market?
If you are a novice, emotions play a huge role in the way you invest in stocks. Hope…Fear…Panic…Greed…These are emotions you need to keep out while making an investment.
Remember these golden tips while investing in the stock markets and you just might enjoy a good night’s sleep.
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