These days’ people are in a hurry to make quick money from the market. This is the reason why the retail participation on the market has overlooked the fundamentals of the market and the company they have decided to invest on. Most of the investors these days buy shares without even spending the time to gather even company’s basic information. Without knowing the future prospects of the company, people invest in a stock after knowing about it through words of mouth from broker, relatives or friends.
The retail investors generally get carried away by publicity from others or management’s speeches. Rather than that, you should look at organizations that have delivered earnings consistently and that have good corporate management. You should first look at the dynamics of companies business, their expansion plans and only after knowing that you should invest. Opening a best demat account is just the first step, the daunting task of investing starts after that. Below are some of the common mistakes that investors do:
- Ignoring Portfolio Building: You must have seen or heard that people have bought stocks a decade ago and then forgot and that is how they have made fortunes in the market. However, this is not the correct way. A common investor thinks that market or a particular share has bottomed out and so just buy it and forgets it. This may result in huge losses. Therefore building a portfolio for long-term investment is very vital. Not all sectors perform simultaneously. Hence a portfolio should be built taking various things into account and build a portfolio with stocks from various sectors like Banking, IT, Pharma, Oil & Gas and others. This will help you not just protect your wealth from uncertainties in the certain sector but also make fortune in the market in a long term.
- Unwillingness To Book Losses: Almost all the investor’s exit at a very small profit but never book losses until it’s too late. People keep holding the stock and some also add on the decline but this is not the right way to approach the market. One should look at the reasons why a stock is falling. Unless you have a complete understanding of the company, you should never average that stock on declines and also don’t hold on to such stocks. Rather than averaging if they explore time in understanding its underperformance they will be able to exit in minimum losses. Always remember that opening a best demat account and that too with the best broker is of utmost importance. They will help you understand these basic guidelines before investing.
One thing that as an investor you should know is that the stock market always over-reacts on news. Be it either way that is falling or rising. Many key things are factored in or discounted by market way back and thus when the news comes, you might not even see the favorable movements in the market. Over the years it has been observed that stock market has always behaved rationally in long term. Hence investing for the long term is the only way to make money in the market.
