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AVOID STOCK MARKET MISTAKES

Avoid Stock Market Mistakes

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This presentation will provide an insight into some common mistakes that first time investors should avoid and should be aware of before they start investing.

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Page 1: Avoid Stock Market Mistakes

AVOID STOCK MARKET MISTAKES

Page 2: Avoid Stock Market Mistakes

Scared of making a mistake in the stock

market?

Page 3: Avoid Stock Market Mistakes

Due to a plethora of brokerage houses providing online trading facilities, stock market trading has become very easy these days.

This ease of access is great because it encourages more people to explore investing for themselves, rather than depending on mutual funds or expert advice.

However, there are some common mistakes that first time investors should avoid and should be aware of before they start investing.

Some of these mistakes are:-

Avoid “First Time Investor” mistakes

Page 4: Avoid Stock Market Mistakes

Putting all your money in one investment channel

You should never put all your eggs in one basket. Investing 100% of your capital in a one market, whether it is the stock market, commodity futures or even bonds is not a good move.

If one market does not perform well, then all your investments will go for a toss. Diversifying your investments reduces losses.

Although you may eventually decide to put all your available capital into these markets once you are familiar with them, it is better to risk a little bit of capital at a time. This way, the lessons learned along the way are less costly, but still valuable.

Page 5: Avoid Stock Market Mistakes

Chasing News Making investment decisions of the basis of sudden news, speculation,

and rumors is a terrible move for first time investors.

The best case scenario is that you get lucky, and then keep doing it until your luck fails. The worst case scenario is that you get stuck jumping in late (or investing on the wrong rumor) time and time again before you give up on investing.

Rather than following rumors, the ideal first investments are in companies you understand and have a personal experience dealing with and which you believe are fundamentally sound and currently undervalued.

Page 6: Avoid Stock Market Mistakes

This is strictly not true, as the low cost of a stock might mean that the corporation doesn't have a great fundamental base. The market reasons out the basics over the long-term.

Even if you see such shares shooting up pretty fast in the small-term, over the long-term their costs will crash. So instead of being concerned about the costs, consider the business of the corporation.

Use the fundamental research techniques to define whether to obtain the stock or not. Remember investing in shares means you're purchasing in the business.

Cheap-priced shares means safe investment

Page 7: Avoid Stock Market Mistakes

Hints & Tips are a sure shot way to earn money in the markets

No, that isn't true. Most agents tend to give hints meant for traders and not investors. Traders follow a different strategy from investors. So these hints don't work well for the investors. As an alternative, do your personal investigation and then select the shares to invest in because nobody can predict for sure what will happen in the market.

Page 8: Avoid Stock Market Mistakes

Leveraging Up

Leverage is a double edged sword. Using leverage magnifies both the gains and the losses on a given investment. Learning to control the amount of capital at risk comes with practice, and until an investor learns that control, leverage should be best taken in small doses.

Page 9: Avoid Stock Market Mistakes

When you are starting to invest, it is best to start small and take the risks with money you are prepared to lose. As you gain confidence and become more adept at evaluating stocks and reading the market sentiment, you can start making bigger investments. Leverage, penny stocks, news trading, etc. can all become part of your investing strategy as you learn. The trick is learning to invest in more stable markets before you jump into the volatile markets.

Start Small

Page 10: Avoid Stock Market Mistakes

So remember these mistakes when you're planning to invest in shares. It is healthy to obtain primarily great shares with a long term view to accumulate wealth.

Page 12: Avoid Stock Market Mistakes

• Registered office: Kotak Securities Limited, 1st Floor, Bakhtawar, 229, Nariman Point, Mumbai - 400021. SEBI Registration No: NSE INB/INF/INE 230808130, BSE INB 010808153/INF 011133230/INE 011207251, OTC INB 200808136, MCXSX INE 260808130.

• Disclaimer: Investments in securities are subject to market risks, please read the SEBI prescribed Combined RDD prior to investing.

• * Awarded Best Brokerage Firm in India by AsiaMoney in 2006, 2007, 2008 and 2009