This is a personal blog of me sharing my memories, learnings and observations of every-day ordinary people , their acts of kindness and also of me sharing the everyday lessons life teaches me.
Stock Markets - My Rules for the Game
Hello fellas..I have recently say almost a year back taken keen interest in Stock markets and believe equity can generate great wealth in the long term. I have made some losses some gains and plenty of lessons in this short journey. Here I tell you about some rules. These are so similar to life rules that I silently wonder "Everything in life does boil down to the same things"
Listen to any stock market broker and you will listen 'what do you want to play in - Equity, futures, F&O, commodities, Mid cap, Small cap, Long calls, Short selling.' If you pay careful attention he says what do you PLAY in..Yes stock market is a game you play! And its an expensive one at that. And the best part you make your own rules. No Rule is also a costly rule you can make for yourself. You just jump in start playing and and make your own rules or Principles of Trading, Investing..There are market Gurus, analysts, tips and all the fancy teachers of this game who will say 'We will make this game so easy you just have to do as we say..and you will win. Just follow my rules' That can be a big mistake. Here I list down my rules of this game . You may make a sense of them to understand Stock Market Investing and Trading and just anything in life too ;)
The funny game between bulls and bears. Same like the devil and the angel
Rule 1) Make your own decisions.
Listen to stalk market experts, analysts, advisors , media but do your own thing. ALWAYS. In stock market one half is fundamentals, rules, all that deep analysis stuff and second is speculation, emotions, hype and frenzy. All people will tell you buy this buy that sell this on either of the two. And market either plays the Analysis game out or the Hype and Emotional game. You play your own game ALWAYS.
Rule 2) Always respect the market.
Market is our Guru and guide. Always respect the market. Its like your God. You can't ever predict God's ways and your destiny. You just accept it. Similarly accept the market, uptrend or downtrend accept it. Don't try to prove the market wrong or go against it. You will be punished. Badly and I bet you it will hurt.
Rule 3) Always know why are you buying something.
People buy shares of a company for different reasons. Some buy and hold the share for emotional attachment to the company like Reliance, Rpower etc. Some buy it for the company's performance. Some hold it because they cant see their mistake and cant book their loss (they generally will give some different reason) some buy it for the news hype surrounding it (eg Jet on Jet-Etihad deal news )..Whatever it is Be true to yourself at least. And know why you buy some company.
Rule 4) Don't touch some shares. EVER
Some shares are not to be touched. Same as some devil paths are never to be travelled. Don't ever buy Penny Stocks or unheard names which are never tracked by anyone. I made a huge loss buying this share Core Education, and a minor loss buying Eastern Silk Industries once. You will hear people say I doubled my money on this share in X days, This share will boom like anything in X months. Buy now when it is available low. Always remember if the share is so cheap then there is always a good reason for it and Respect the market for that reason. Don't go on devils path of Penny shares. When Infosys can fall 21% in a day shares like Kanco Enterprises don't stand a chance. FYI Kingfisher Airlines recent addition to Penny shares list. Stay away.
Rule 5) Short term is an aberration. Long Term is where the wealth is.
If you are playing Short term remember it takes you that much more time, study and risk and generally even your peace of mind. Intraday short term make great money for some people all time. great money for all people some time but it never does make great money for all people all the time. Heard that somewhere. I bet you have. As with success, quick wealth takes away your peace of mind. Invest for at least a one year time frame and if possible for 3/5/10 year time frame. And one more thing don't leave someone when they are at their lowest and don't go dance with them just on their Success party. Same with stocks.
Rule 6) Market teaches you a lot. Keep learning
Same with life bros. Same with life.
Rule 7) Cash is King
At all times if you are uncertain hold cash. Markets should never be entered if you are not calm, cool and confident. Meditate and then enter. Emotions like greed and fear can ruin you. And buy companies only if they make cash operationally. Read the Cash Flow of a company. If the company is loosing cash operationally then it is never worth your money.
Rule 8) Good people and Good managements always give returns. Trust them.
Bet your trust on good people in life and good managements in Companies. They will give good returns. Study for once how is the management of the company you are investing in. A dividend paying and shareholder wealth maximisation objective management are better than a company low on Corporate governance values and shady deals.