But a serious stock market player will also admit to burning his fingers at some time or the other.
Three of our readers wrote in with the mistakes they committed.
My mistake: I sold too soon!
Enamored by other people's success in the stock market, I wanted a share of that pie as well.
I was smart enough not to put in my entire earnings in the market, I began with only Rs 5,000.
I made a profit, but my biggest mistake was not to hold on to my investments. Had I remained invested, I would have reaped in big gains.
Here are a few examples of my foolishness.
|
|
I bought it at Rs |
I sold it at Rs |
The high it reached after I sold (Rs) |
|
Andhra Bank |
22 |
28 |
122 |
|
Arvind Mills |
20 |
30 |
143.80 |
|
India Glycol |
40 |
50 |
173 |
|
Melstar |
10 |
20 |
21.70 |
|
Nagarjuna Fertilisers |
4 |
7 |
14.25 |
|
Oriental Bank |
35 |
40 |
381 |
|
Pentamedia |
8 |
10 |
13.80 |
|
PNB |
60 |
70 |
519 |
|
SRF |
25 |
30 |
154 |
Patience is a virtue in the market.
In the long term, stocks give the highest return, more than any other form of investment. Don't be greedy and sell immediately. The little you gain will be even less after you pay brokerage and tax.
If you wait longer, you will get a better price. Moreover, if you sell after a year, you pay no tax on the profit when you sell your shares.
- Aditya Sharma
Write to Aditya
My mistake: Not buying when the market slumped
Buy low, sell high.
A stock trader will probably recite this in his sleep. All investors will swear by this strategy.
However, when fear strikes, all the gyaan drummed into your head flies out the window.
Post September 11, 2001, the markets plunged as everyone thought doomsday was approaching.
Had I bought my favourite stocks the very next day, I would have been rich.
Even if I bought just one share of each of the companies mentioned below, I would have paid a total of Rs 2,142. Had I sold them on June 2, 2005, I would have earned Rs 8,261.
|
|
Price on Sep 12, 2001 (Rs) |
Price on Jun 2, 2005 (Rs) |
|
Bajaj Auto |
260 |
1,274 |
|
BHEL |
128 |
887 |
|
ITC |
684 |
1607 |
|
M&M |
66 |
520 |
|
Ranbaxy Labs |
650 |
1133 |
|
Siemens |
199 |
2,040 |
|
Tata Motors |
73 |
443 |
|
Tisco |
82 |
357 |
What kept me back? Fear that I would be the only one to override the prevailing sentiment.
Never let fear rule your judgement in the market.
There are two instances where fear may creep in: when market sentiment turns low and prices come tumbling down, investors panic and sell out of fear. This is the wrong time to sell. The stock market is cyclical and it will swing back. It is time to hold on!
This is the right time to buy all those shares you wanted really cheap. Unfortunately, fear sets in here, too. After all, you are afraid to go against the tide (like I was).
- Swapna MedheMy mistake: Buying when the market peaked
I made one resolution this year: invest.
Which translated into investing in shares. And, true to my resolution, I began instantly. I bought shares on January 3, 2005.
At the time, the Sensex was hovering around 6600, and predictions stated that it would go upto 8000.
Unfortunately, the prices of some of the stocks has since dipped slightly, while others have increased marginally.
Now, I will have to wait for the markets to rise substantially to make a good profit.
Take a look at my portfolio:
|
|
Price on Jan 3, 2005 (Rs) |
Price on Jun 2, 2005 (Rs) |
|
Biocon |
517 |
445 |
|
Gujarat Ambuja |
409 |
454 |
|
HDFC Bank |
526 |
544 |
|
Infosys |
2125 |
2230 |
|
PNB |
420 |
382 |
|
Sun Pharma |
559 |
539 |
On second thoughts, I was aware that equity is a long-term game when I bought the shares. So I am mentally prepared to hold on for a few years to make profits.
But my advice to others is: avoid buying when everyone is flocking to the market, and when the only conversation at social dos is which stock everyone is betting on.
When the greed quotient is at its peak (during a bull run), stay away.
- Hina Zaveri
Write to Hina
Do you have any experiences or mistakes you would like to share? We would love to hear from you!