Advice for new stock market investors

by khalid on 14/05/2009 · 2 comments

new-investor

new-investor

This is for those investors who invested their money at steep prices. Most of these investors do not know much about stock markets. They have just entered into these markets to make some easy money.

They should consider the following points :

1. Indian stock markets are not investment centres at current valuations. They became gambling centres in the recent days. Can anyone finally make money in gambling?

2. Do you know what happened to the investors during Harshad Mehta days and IT boom time?

3. Do you know, like Ambanis now, Wipro’s Premji became the second richest man in the world for some days due to these stock markets? Anil Ambani will become the world richest man after Reliance Power listing. Are you thinking that they can stay there?

4. Never believe in the words of broker. They will change their words according to the market sentiment. Just analyse their statements by going through the archives of business newspapers or moneycontrol.com. Do you what they have said about Ispat Industries when it was at Rs 14?

5. Don’t lose your hard earned money in the stock markets by investing at these valuations. Stock markets already discounted 2009-10 earnings also. I know it is very difficult to control one after seeing the euphoric mood among your friends. Have patience. Better opportunities will come for investments at reasonable valuations.

6. Accumulate more knowledge about various companies and businesses by regularly reading business newspapers and magazines.

7. Know basic fundamentals about stocks like P/E ratio, Book value, historical stock prices, when to buy/sell shares etc.

8. Day trading may give you some short term gains but long term investors are always the real winners in stock markets. Never indulge in day trading. Leave it for big brokers.

9. Never invest in stock markets just basing on tips of brokers and friends. Do your own research on the company and business and its growth prospects and valuations.

10. Never invest in Z, S and other unknown company shares with poor management. They may hit upper circuits in bull markets. You will finally left with some papers with no buyers. Biggest losers in any bull market are these kind of investors who may never able to sell their shares of those unknown companies.

11. Never enter into stock markets to make big money in small time. You need to work hard by doing enough research on companies before making big money. Long term investors in good companies will always become millionaires.

12. Compared to secondary markets, IPOs are safe bets. Focus on primary markets by investing in good IPOs.

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{ 2 comments… read them below or add one }

Pushpendra Sharma March 4, 2011

Want to invest Rs 1 Lakh in share market for one year.please suggest few good stock and purchase price for them.

Thanks in advance.

Reply

khalid March 4, 2011

Hi Pushpendra,

For long term perspective you can consider some large cap stocks like Tata Motors, Dena Bank, Lupin Limited. These stocks have potential of around 20% to increase.

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