Stock advice

POSTED BY rajan.panchal24 ON February 2, 2012 10:14 pm COMMENTS (9)

Hi,
I am a just beginner in stock market and i have invested just 4k in several stocks for learning purpose.
1. GVK power 44 shares @ 11.35
2. India bulls wholesale services 99 shares @5.03
3.Apple finance 300 shares @2.85
4. Cinerad communications 92 @10.84
Is my choice of shares okay? Kindly guide me in choosing the correct shares.
Thanks,

9 replies on this article “Stock advice”

  1. Dear Rajan, as of now you may start investing some amount regularly into MFs. Once you feel that you can pick your own winners, You may add more stocks to your portfolio. Till that time MFs are the way.

    Here are some good (remember I’m saying good not the best, because the best may change over the period but good ‘ll remain good).

    HDFC Top 200
    HDFC Prudence.
    Franklin India Bluechip
    Quantum Long term Eq.
    IDFC Prem. Eq.

    Thanks

    Ashal

  2. BanyanFA says:

    Hi Rajan,
    Appreciate your background and that stock picking can be a tedious exercise for people who haven’t got the relevant understanding on Financials. It is good to see that atleast you made a start and didn’t end up putting a lot of money into stock markets and subsequently getting burnt – as most people do get burnt due to inappropriate stock selection and investment attitude.

    You also have an alternative to go via Mutual Fund route. Mutual Funds are a good channel for people who either don’t have time or enhanced learning about stock markets.

    Good luck
    BanyanFA

  3. Rajan Panchal says:

    Thanks everyone for all the advices…

    finally, I am not investing anymore money until I understand the basics and more. Its gonna be a difficult for me as I am not from commerce background. I am software engineer by profession.

    Lets me learn and I will come back to this forum with enhanced knowledge on stock market..

    One more thing.. I like this site jagoinvestor.com very much.. its very informative and provides a great learning experience..

    thanks again

  4. Dear Rajan, May I know now your feelings after a lot of advices to you from all of us. 🙂

    Thanks

    Ashal

  5. Ankur Lakhia says:

    Rajan,

    You are on right track, I would say. But, I suggest not to commit any more money now!! Before doing anything, you need to understand basics of stock investing. I am not aware of your educational back ground. However, if you are non-commerce person like me, you better read few books providing you basic knowledge on Profit & loss account, Balance sheet & cash flow statement. You do not need to have in depth knowledge but it is essential to have some idea on these three statements. I would recommend books by Ramachandran Kakani. However, you can find many others as well. In addition, I would recommend few books on stock investing, mainly, One up on wall street by Peter Lynch, Intelligent investor by Ben Graham and Buffettlogy (for that matter any book on Warren Buffett will do!!). Also, I would recommend you go through few of letters to Shareholders by Warrent Buffett on web site of Berkshire Hathaway.

    All this reading would provide you basic framework for understanding stock investing. Then, you need to dirty your hand with investing. There is likelyhood of losses initially. So, I would suggest not to commit big amounts right from begining. But, attempt slowly but surely. I would also suggest you browse through an online investment forum called http://www.theequity desk.com.

    Equity investing is never like instant food. So, you need to keep working on it for a long long time and rewards for that are also equally sweet. However, if you find this too much to handle or you are hard pressed with time then I suggest you opt for two-three good diversfied equity funds on SIP basis. That would work well if you keep it up for long time.

  6. Rajan Panchal says:

    Thanks ashal & justgrowyourmoney for your response..
    I just picked these stocks for learning purpose.. and the choice was random, I admit.
    since I dont understand the Stock Market jargon…
    also, most of the people say you one cannot predict stock market or how the prices of one stock will rise or come down, then whats the use of all those reading..

    I agree to certain extent that reading will help in some way but I dont know in what way..?
    and I just get overwhelmed by plethora of information on stocks.

    From where should i make a head start??

    1. Rajan – It takes guts to admit publicly that your picks were random. Actually if you are completely new to investing you can infact make a good investor with the right knowledge.

      Start with here for the basics: http://www.investopedia.com/university/stocks/#axzz1lLOL6c00

      Once you understand about the basics you must proceed to directly read the book “The Intelligent Investor” by Benjamin Graham. Day traders if at all they survive (Lets say 1 in several hundred thousand people) mighr eventually appear to be making some money but Value investors literally mint millions and millions. If your mind is not fed with fast-buck-making strategies you can eventually come out as a better investor after reading Graham. Goodluck and make sure you come back to update the forum!

  7. On the same line that Ashal has replied:

    If I recommend you buy more of the stock will you buy? What if my analysis is wrong? What if I revise my recommendation based on something that happens with these companies in future but never come back and tell this forum that my recommendation has changed? The problem with tips is that the loop is never complete. You see someone on media say that they recommend XYZ stock. You never get to know their next comment -Accumulate/Reduce/Hold.

    Barring GVK Power the trading volumes in other scrips are in few hundred or few thousands which means the price can easily be manipulated. Volume is one of the several parameters you may want to check when buying a stock.

    Now that the investment is done you are looking for what is called as ‘confirmation bias’ in Behavioural economics. You probably have decided that these stocks are not great and want to sell them. So you want a recommendation from someone else and if it matches with your decision you will execute this and will console yourself that the decision was not just yours but was also recommended by someone else. I hope you can read between the lines to make a decision. Just let this board know what you eventually do.

    And….I almost forgot…. Mutual Funds are excellent avenues to grow money!

  8. Dear Rajan, you are asking to teach how to swim when you have already jumped in the water.

    My dear friend, please read a lot. Try to understand the ratios, balance sheets, profit & loss accounts. Read the various research reports. First invest your time (in reading) not money.

    I’ll not comment on any stocks purchased by you for the reason your aim was to pick what ever is available @ 4000 Rs. & no serious research was there from your side to select any stock. may be you have act on some tips also.

    Thanks

    Ashal

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