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POSTED BY ON November 28, 2010 3:48 pm COMMENTS (4)
I still havent started but was wondering how people buy stocks .
– some use Fundamentals / Technicals .
– some follow media / go by buzz / hearsay
– Some patriotic ones cant stay away from that particular stock
If all categories of people are there in market & market is so confused & Who in the end makes money !Which rule should one follow …to make money…. legally .
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Hi Prakash,
These are some of the points out of my limited experience in market:
1. First of all, don’t ever buy in the markets without your personal research.
2. For starters, invest in blue chip companies for limited down side and good gains.
3. Track some of the stocks which might be recommended or known to you for sometime to know how it moves, check its 52 week highs and lows,all time highs and lows, performance in last several quarters/years, etc.
4. Never go by stock price, For ex. if SBI’s stock price is Rs.2800 doesn’t mean it can’t give you good returns. In such case, one might get less quantity but profits can be fairly good with limited downside.
5. Try to pick companies/sectors which fundamentally sound and are also showing good momentum.
For ex. Scrips like Hero honda, Tata motors, SBI, Bank of Baroda … fundamentally good and are in good momentum
Scrips like NTPC, Reliance..fundamentally good but no momentum in the current rally( but can give you very good return in long term)
All said and done, if one does not have understanding of market and/or is new to market, I would advice to stick with mutual funds to begin with. Of the equity investment budget, let exposure to MF (in the begining) be higher (say 80%) and secondary market be low (remaining 20%). Play directly in the secondary market cautiously with a lower budget. Once one gets to understand the market little better, one can shift some of the budget from MF to direct market kitty.
How and what of mutual fund is a completely different topic that are covered under various other questions in this forum.
There are 2 types of people= strong players and weak players. Weak players enter the market at tops and exit at bottoms. Mostly, 70-90% of the traders and speculators in the capital markets lose money.
At different times, different types of investing styles like value-investing / growth-investing, top-down / bottom-up, large-cap / small cap make and lose money. There is no “holy grail” in the market i.e. no single method which is always profitable. 🙂
Overall, your asset allocation makes about 70% of your return, while 20% on the basis of sub-asset / sector and rest 10% on the individual stocks.
Prakash
Your selection procedure would depend on many things like time-frame , personal liking for stratgey or the amount of knowledge and interest.
Some people who like numbers and pictoral graphs like to go with technical analysis , a person who is very much into details and long term might choose fundamental analysis .
So now based on this you need to rephrase your question .
Manish