Is there a foolproof way to making money in the stock market? Do analysis, research, a wise investment plan and professional help lead to big money from the stock market?
Maybe.
The doubt emerges from the fact that stories about people who have lost money in the stock market abound. However, most of these disaster tales are a result of poor planning, falling prey to 'hot tips' and pure greed.
A hilarious e-mail making the rounds these days tells the story very concisely and warns investors about the pitfalls of the stock market.
The e-mail says:
If you've ever bought a stock for any of the reasons mentioned below, you know it is time to hit the books.
- 1. It will double in 2 years. (Sensex at 6500).
- 2. It will double in 1 year. (Sensex at 7000).
- 3. It will double in 6 months. (Sensex at 7500).
- 4. It will double in 3 months. (Sensex at 8000).
- 5. It will double in 1 month. (Sensex at 8500).
- 6. Company is doing a private placement/FCCB.
- 7. Company is going to give a bonus issue.
- 8. Company is going for a stock split.
- 9. Debt restructuring package.
- 10. Low PE. (What does it mean, isn't it because the company has no earnings?).
- 11. Looks good on the chart.
- 12. Company has got a big order.
- 13. They are planning an expansion.
- 14. Company has won some order from China.
- 15. Wal-Mart is outsourcing.
- 16. Market will go to 15,000.
- 17. Rakesh Jhunjunwalla (a leading Indian stock broker) is buying.
- 18. Warren Buffett is buying.
- 19. Reliance Capital is buying.
- 20. A big operator is buying.
- 21. Fidelity is buying.
- 22. Japanese are buying.
- 23. Some fund is buying.
- 24. The research analyst said it's undervalued. (Analyst know nothing. Period.)
- 25. They have lots of property.
- 26. Company is going for a buyback.
- 27. RSI is low.
- 28. Good story.
- 29. It's a long-term secular bull market.
- 30. My broker says it's a good buy.
Even more stupid reasons to justify 'your' stock picks (when they're falling).
- 1. My research analyst has also bought it. (. . . the analyst know nothing.)
- 2. I am not a market timer. (Obviously.)
- 3. I am a value picker these market fluctuations mean nothing to me.
- 4. My cost of acquisition is very low.
- 5. I like the business model.
- 6. It's got good support at these levels.
- 7. I think market has bottomed out.
- 8. The stock looks oversold.
- 9. RSI is still very low.
- 10. This is just a correction.
- 11. Some big fund bought at a higher price. It will definitely go back up. (The big fund that bought thinks the same).
- 12. It's a long-term secular bull market.
- 13. A lot of money is waiting on the sidelines. (Yes and it's waiting to buy all the stocks you own.).
- 14. I am an investor I buy and hold.
- 15. It's a good company.
So next time you decide to get into the stock market, do remember these points.