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Stock Tips: Learn From The Masters Research Team | Posted On Saturday, August 19,2017, 05:00 PM

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Stock Tips: Learn From The Masters




The Stock Markets in India have risen like a rocket. The Nifty scaled Mount 10K a few weeks ago. Yes, the Nifty crossed the 10,000 mark for the first time ever. Now, bad times have hit the stock markets in India and the World over.

North Korea has been threatening to attack the US base of Guam with missiles. India and China have been staring down each other at Doklam in Bhutan. Back home Vishal Sikka, the CEO & MD of India's bellwether IT Company, Infosys, has resigned on a bitter note. All these factors have hit the Stock Markets in India and they have fallen in recent times.

You are worried. Is your stock portfolio in a mess? This is when you must turn to the masters. Do the masters have any stock tips in these troubled times?

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Stock Tips: Learn From The Masters


Investing in stocks is serious business. You have to dedicate a lot of time to research the Companies you plan to invest your hard earned money.


1. You must always invest in a business and not in a Company


This is what Warren Buffett has to say, "If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.”

What do you learn from this saying? Never buy the stocks of a Company whose business you don't understand. Check if the business offers a unique product. Just like a moat (ditch built around a fort protects it from enemy attacks), a competitive advantage like patents or a cost advantage helps a business beat its rivals.

Do take a look at the management and leadership which runs the business before buying its stock.


2. Learn from your mistakes


The mistakes you make in the stock market are your best teacher. It's said you learn from the bears and not the bulls. For those who don't follow, a rising stock market is a bull market and a falling market is a bear market.

When you invest in stocks for the first time, you are bound to make a few mistakes. You might buy the stocks of a very good Company, but pay too high a price for it. No problem...The next time you buy its stocks, you have a rough idea how much to pay. Warren Buffett says, A good price for a good company.

See Also: Stock Exchanges In India

A genius learns from the mistakes of others. Why not learn from the mistakes of the masters?


3. Don't blindly follow the stock picks of big investors


You must be well familiar with the motorcycle sidecar. If you are sitting in the sidecar, you have no choice but to trust the driver's skills. You may be tempted to copy the stock portfolio of a great investor hoping to earn bumper returns called the sidecar approach. This can be a bad mistake.

Many a time you get the news that a BIG INVESTOR has picked up the stocks of a particular company and you want to buy it, hoping to earn a good return. Most of the time you get this news only when the big investor plans to sell this stock or has already exited this stock.

A great investor has picked up stocks of different companies and diversified his holdings. You might pick up only some stocks which he has bought and in large quantities. If these stocks crash, you are in deep trouble.

Your investment horizon is different from a great investor. He can stay invested in these stocks for maybe 10 years and pocket a great return. Can you?

Heard the saying, Keep your powder dry. In old times, soldiers had to keep their gunpowder dry, so that they were always ready for war. In much the same way, you need to have some spare cash ready to grab some good stocks, if you get the opportunity. When stock markets crash, not all stocks which fall are bad. You might be able to pick up stocks of companies, which are fundamentally very sound and at a low price. Be Wise, Get Rich. 

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