25 Stock Market Lessons to be Followed to Avoid Going Bankrupt in Market | Blog Brings Profit For You
  • Recover Lost Money Plan

    A number of traders have lost their money in the market due to wrong trading advice or wrong decisions and emotions. We keep on getting a number of requests for helping these traders recover their lost money. Thus, this was the genesis of Recover Lost Money Plan. We are proud to say that till date we have helped 1290 people recover their lost money. Recover Lost Money in Market

  • Our Most Successful Intraday Tip

    Jackpot tip, as the name suggests has the potential to make you a Millionaire as it is not the number of tips one trades; but it is the accuracy of a single tip which has the potential to make you a Millionaire. This tip is a value for money for all i.e whether one can see the trading terminal or not or is dealing through a broker on phone at BSE, NSE or in Future and Options segment.
    Click on Jackpot Sure Shot Tip to know more...

Subscribe to this blog

Subscribe to full feed RSS
What is Daily Market State???
Enter your Email

Preview | Powered by FeedBlitz

25 Stock Market Lessons to be Followed to Avoid Going Bankrupt in Market

Posted By On 8/04/2009 04:47:00 AM Under

It makes sense to learn from others mistakes and if you also feels so, than below few tips published in Economic Times definitely makes sense and is a must read for all those who are either planning a plunge in the market or are already in the said field. One can learn from these stock market lessons to avoid going bankrupt in share mkt. The lessons are as appended below:

1) How to invest in stocks? Just like how porcupines mate…”very carefully”.

2) Two rules for stock investing (Warren Buffett) #1 Don’t lose money #2 Don’t forget rule no. 1.

3) Never invest lump sums in equities in one go…you may also lose it in one go.

4) If you are new to stock investing…invest in small lots for the first few years

5) Do not put all your eggs in one basket…diversify between stocks.

6) A ‘balanced-diet’ is not only good for physical health but also for financial health…invest some money directly in stocks, some in mutual funds, some in bonds, some in FDs, some in real estate.

7) Invest in stocks of “good” companies (my past articles offer some insight on this aspect). "It’s only when the tide goes out, you see who’s been swimming naked" – Warren Buffett.

8) Do not invest in companies that carry high level of debt (loans). Zero debt companies are the safest. Some sectors are inherently risky due to high levels of debt – such as real estate, infrastructure and banks. Be extremely careful while investing in these sectors.

9) Invest in companies that have long track record…longer the better.

10) Don’t blindly take advice or “recommendations” from stock-brokers.

11) Don’t invest in stocks for the wrong reasons…e.g. in the height of the bubble for fear of being left out.

12) Don’t expect more than 15% returns p.a on stocks. The lower your expectations, the safer the stocks that you will invest in.

13) People do become overnight millionaires, just that they lose such millions soon enough.

14) Don’t invest in a hurry.

15) Stock investing is for the long term (5 –10 years) by its very nature…desire for quick short term returns can lead to loss of principal.

16) Systematic investing in stocks (directly or through funds) helps ‘beat’ inflation and meet long term goals – such as child’s higher education etc.., but as you near the goal – you need to start withdrawing portions of the money and invest in fixed return instruments to ensure capital protection.

17) If you need money for some event within the next 3 years, it’s better to take that money out of the stock market and invest in fixed return instruments.

18) For novice investors, Mutual funds (not NFOs, but funds that have been around for atleast 5 years) or Index funds (e.g. NIFTY BEES) offer a safe alternative.

19) Watch the P/E (price to earnings) ratio of the Index before you invest (> 24 or 25 is danger) (again…more on this in my previous articles)

20) Stocks quoting at extremely high P/E ratios carry similar risk…because you are paying for future earnings which may or may not materialize.

21) Acquire and constantly update the knowledge required to make and monitor investments.

22) If you are investing directly in stocks…do some homework – check out their products, talk to customers, employees to get a better sense of the company.

23) If you don’t understand what the company does…it’s better to stay away from the stock.

24) If you are too lazy, not interested or don’t find the time to monitor your investments - FDs, post office schemes, PPF and other fixed return avenues are better options, although they may not offer much in terms of returns after you subtract the effect of inflation.

25) If you plan to start investing in stocks for the first time, it’s safer to do so after a big crash, because the worst may be behind you.
Click Here to Get Free Stock Market Technical Analysis Tips and Charts in Email

Most Read Content