It has been seen that even the veterans of the stock market oftentimes fail to predict their fortunes accurately, such is the irony. In this article, let us scan through few of the principles that govern success in the investment market, the stock market to be precise.
If you go through these points, it will be easier for you to take the right decision regarding investing your hard earned money. So, take a look at the following points.
- What to retain and what to give away
Studies have revealed that in the majority of the cases, investors tend to sell off the stocks that have earned huge profits and they retain the stocks, the value of which have gone down with the hope that they will again earn profits in due course.
However, there has to be a point when you must identify that this particular losing stock may not rise again. And in due course, it loses its value.
Regardless of whether you want to retain stocks or sell them, it is best to decide depending on how each stock of the companies have been performing in the previous years. Watch out for the trends.
- Avoid paying heed to tips
If any of your peers, a brother, relative recommends or suggests about investing in a particular stock, in your best interest, you must know why you prefer to invest in the particular stock. It is after all your hard earned money and you must do justice to it not your peers or anyone that recommends. Remember, no one in the stock market is as expert as to predict which stock will yield the best returns. So, you know best why you are investing in any stock.
- Chase the bigger dream
Let’s say, you have invested in a stock, but you find that there is an undesirable movement in the stock. What will you do? Panicking will only make matters worse. It is best not to take any impulsive step because of short-term movements in the markets. This small movement when you find your investment might be at stake is known as volatility. Look for long-term benefits.
- How important is P/E Ratio?
P/E Ratio, also known as the price-earnings ratio, is overemphasized by investors.
- Do not run after cheaper stocks
There are many instances when investors prefer to invest in stocks that are low priced. However, regardless of whether you are investing in high priced stocks or lower-priced stocks, if there is an adverse movement in the market, you lose all of the initial investment. If at all you want to experiment with your investments, you could try out the investment apps that have become very popular these days in the market.
- Adhere to a strategy before moving abruptly to another
As an investor, you know how you will proceed in the stock market because you have taken the plunge after doing your bit of homework. So, you must be well acquainted with your objectives and goals. So, no amount of tips (whether right or wrong) should misguide you. If you take a decision, you will be responsible for it. You will not have the opportunity to blame anyone else and regret later.
Last but not the least, a little bit of trial and error is not a bad idea provided you don’t depend on it always. Conviction of your actions is a requisite in the stock market.