Stock and shares, commodities , bonds have always remained on the top list when one heads towards the financial community. How market would play is an all time question whether it comes to an economic crunch or it comes to a boom.
Predictions have proved to be useful techniques helping an investor to take decisions regarding investment and divestment as well. Technical analyst give their predictions based on comparative study with past data, trends, cycles, price movements and ratios of a particular scrip , company, industry or market as a whole
Fundamental analyst forecasts on the basis of intrinsic values of the stock, sales, profit, taxes, growth of the company etc.
However, there are as many factors that has the bearing over share prices and the market as well. Such factors include national and international economic health in terms of GDP, inflation, prevailing tax rates , Foreign direct investments , foreign institutional investment, foreign exchange, climatic conditions, political situations, company’s performance in terms of profit and loss, reserves, capital structure, projects and many more.
Besides all such factors I would like to rate “Sentiments” as the driving factor which indicates the market to be “Bear” or “Bull”
Here are some guidelines which would help my friends who want to have some investment in the stock market. I am sure it is going to help you a lot as it helped me reaping good returns .These guidelines have come from market experts and ten long years of my investing experiences and analysis.
Be sure- Investing, speculating or gambling
The very first rule of the market is to understand your own intentions whether you will behave as an investor to reap steady returns gradually, with nominal risk on long term investment, or speculator to reap fast returns with high risk on short term investment or as a gambler to earn abnormal profits with infinite risk irrespective of the time horizon.
Study the market
Having clear intentions of your stand , market study becomes the most important aspect of investing. Collect information about the economic conditions of the country and projections of its future movements. When economic conditions such as GDP , saving ratios, foreign exchange reserves of the country are stable and increasing it’s the right time to invest and vice a versa. Steady growth in economy helps out investors and fluctuations favors the speculators
Do not put all eggs in one basket
It is the golden rule of the market and investment. Be sure of what you are investing in. Making investment blindly in every scrip would bring your portfolio to a no profit no loss situation and even huge losses. Be very choosy about scrip by looking to its past paerformances, dividend rates, expectations of further growth, recent projects and its synergy with other industry performances.
Wait for the right time
Right time to sale and right time to purchase is the factor which will benefit you the most.
Invest at a time where the share prices are to maximum low (bottom line) and divest when it stop rising up. But the point is how to determine the optimum time? This can be determined by reading cycles of that individual stock in various economic conditions.
Boom triggers investment and depression aggravates divestment.
However , recession and depression in the economy can also be an ideal time to start investment or even speculation because of the fact that shares can be availed at all time low prices and then tends to shoot up. The only fear factor is chances of delisting which is very low in case of Big player and even for blue chips.
Tips
Here I am talking about advices one should take from equity research companies, brokers and investment houses. They at times really get hold of some very useful and internal information about a particular scrip or company which will be fruitful for investing.
I don’t know how to succeed but I know overconfidence is the key to failure. It is better to be equipped before war rather than asking for a sword in middle of the battlefield.
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