Stock market tips: MUST do & must NOT do(SMICE)

bundy123

Well-known member
  • May 4, 2008
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    Stock market tips: MUST do & must NOT do




    What you must NOT do

    1. Do not panic

    The market is usually volatile. Take this fact as truth and avoid panic.
    If the prices of your shares have plummeted, there is no reason to want to get rid of them in a hurry. Stay invested if nothing fundamental about your company has changed.



    2. Don't make huge investments

    When the market dips, go ahead and buy some stocks. But don't invest huge amounts. Pick up the shares in stages.
    When the market dips --buy them. When the market dips again, you can pick up some more. Keep buying the shares periodically.
    Everyone knows that they should buy when the market has reached its lowest and sell the shares when the market peaks. But the fact remains, no one can time the market.
    It is impossible for an individual to state when the share price has reached rock bottom. Instead, buy shares over a period of time; this way, you will average your costs.
    Pick a few stocks and invest in them gradually.



    3. Don't chase performance

    A stock does not become a good buy simply because its price has been rising phenomenally. Once investors start selling, the price will drop drastically.


    4. Don't ignore expenses

    When you buy and sell shares, you will have to pay a brokerage fee and a Securities Transaction Tax. This could nip into your profits specially if you are selling for small gains



    What you MUST do

    1. Get rid of the junk

    Any shares you bought but no longer want to keep? If they are showing a profit, you could consider selling them. Even if they are not going to give you a substantial profit, it is time to dump them and utilise the money elsewhere if you no longer believe in them.



    2. Diversify

    Don't just buy stocks in one sector. Make sure you are invested in stocks of various sectors.
    Also, when you look at your total equity investments, don't just look at stocks. Look at equity funds as well.



    3. Believe in your investment

    Don't invest in shares based on a tip, no matter who gives it to you.
    Tread cautiously. Invest in stocks you truly believe in. Look at the fundamentals. Analyse the company and ask yourself if you want to be part of it.



    4. Stick to your strategy

    If you decided you only want 60% of all your investments in equity, don't over-exceed that .This will help you limit the losses and protect your capital.




    ~| Co - Admin Of SMICE [Share Market Investors Club @ EK] |~
     

    bundy123

    Well-known member
  • May 4, 2008
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    thanx for da info machan btw can u explain dis two bit more

    2. Diversify
    4. Stick to your strategy


    Diversify

    There are more than 10 sectors in Colombo Stock Exchange.
    They are,

    1. Banking , Finance & Insurance
    2. Hotels
    3. Health Care
    4. Investment Trust
    5. Plantation..........etc

    Just think if u have invested in Banking , Finance & Insurance sector only.Then if there any unfavorable incidence (Sakvithi case 1ka wage) ur total portfolio will be coming down.U ll hve to sell ur all shares with a huge loss.

    But if u have invested another sector(like Plantation) also, u can recover ur loss(losses arising from Banking shares) by selling Plantation shares.

    Stick to your strategy

    U do not invest ur entire money in share market.

    Example :If have Rs. 1,000,000.U can invest ur money,

    * Rs.500,000 in Share Market
    * Rs.300,000 in Fixed Deposit
    * Rs.200,000 in Gold



    ~| Co - Admin Of SMICE [Share Market Investors Club @ EK] |~
     

    GTRZ

    Administrator
    Staff member
  • Apr 27, 2006
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    Good thread bro. Keep it up.

    But you are missing some very important point. Research!

    Research about your investing companies, get up to date with their company news and changes. That's a MUST to take decisions about your stock.