Share Market Investment Tips and Ideas
The stock market is a place where fortunes can be made over the long run. That is
assuming that you investing intelligently from a long term perspective. More than
tips, investments are about ideas and research thoughts that can be executed. Investment
tips and ideas can refer to basic psychological issues pertaining to trading and
some great investing ideas to start off with.
Addressing the psychological aspect of investing
It is rightly said that investing is as much about the mind as it is about skills
and analysis. The best of investors falter but what distinguishes them is that they
collect themselves and bounce back. There are 3 unique qualities you must develop.
Firstly, investing is all about letting your head rule your heart. That means decisions
must always be analyzed. Secondly, you must be contrarian. That means you must have
the capacity to buy in fear and sell in greed. Lastly, how you handle bear markets
is what differentiates how good an investor you can actually be in the future.
Practical tips for share market investing
Stick to facts and just listen to opinions
In the stock market there is a surfeit of news and opinions. Don’t go too much by
opinions, even if that person is a reputed analyst or a trader. All opinions are
personal and you are the best person to judge a stock from your perspective. Nowadays,
business channels carry opinion bytes from analysts who may not even have seen complete
market cycles. You must focus on the facts and the news flows and just listen to
opinions for perspective.
Rely more on news websites than on recommendations
As a stock investor there is no shortage of stock tips and recommendations. Your
WhatsApp account must be full of such messages. Nowadays, almost everyone has an
opinion on social media so be wary. If someone had really struck a goldmine they
would logically put their own money rather than go around giving the idea to others.
Focus on what is happening and make your interpretation of the events. Stay away
The greatest investments are in the most obvious places
If you take some of the biggest stock market performers in the last 25 years like
Hero Moto, Bharti or Eicher; the story was there in the obvious places like the
showrooms and market places. That is where the real investment ideas emanate from,
not by sitting in front of the computer with loads of information. When Nokia lost
out to Apple and Samsung, the signals were available in China and Hong Kong well
in advance. Look for such obvious triggers.
You can never make money in a crowded trade
There is a joke in Wall Street that when the lift boy starts giving you stock ideas;
it is time to sell out. What it means is that you can never make money in crowded
trades. Hindustan Unilever and Reliance Industries were great trades in 2017, but
if you try to jump on the bandwagon in 2018, then you are not likely to make money.
That is because now almost everybody on the street knows about these two stocks.
You have to catch them young and watch them grow.
Holding profits is as important as making profits
If you made 25% on your capital in the first quarter and then ended the year with
12% returns then there is something seriously wrong with the way you are investing.
Obviously, you are not able to hold on to profits. The idea of investing is to protect
capital and to use the profits to take risk. But this risk cannot be random. You
need to be clear at what point you are going to protect your profits because, otherwise
it does not take too long for these profits to evaporate. Holding profits is as
important as making profits in investing.
What are the two tips to avoid while investing
There are two tips that you must be careful of. Ideally there are two things that
you must ideally avoid if you want to be a successful investor.
Avoid being carried away by business channels
Most business channels are aggregators and they don’t take responsibility for the
advice given in these channels. Don’t take these business channels too seriously
as they are in it for the sensation and not otherwise. You must still focus on evaluating
news to judge what is good for you and what is not.
Avoiding replicating someone else’s strategy as it may not work for you
You cannot become a millionaire by replicating the strategy of another millionaire.
That is not the way it works. Your strategy has to be unique to you and to your
specific requirements and your risk capacity. This is something a lot of young investors
do but should ideally avoid.