What are the common mistakes an investor should avoid?
Panic selling There is one certainty about investing in shares: that there will be a number of market panics during your investment lifetime. What you do during a market panic has a great impact on the eventual wealth that it creates. Never selling Many investors fall into a trap by misinterpreting the “buy & hold” concept. Buying and holding forever will not prove wrong every time, but it is a far from perfect approach in most cases. If the price happens to be lower than the purchase price, please do check if the reason for buying the stock have changed to make it a sell. Investing in cheap stocks Many of us believe that it is easier for a Rs 5 stock to appreciate to Rs 30 rather than for a Rs100 stock to appreciate to Rs 600. In reality, nothing can be so far from the truth. It is true that cheap stocks that survive give excellent returns but the failure rate is extremely high. Hence picking the right cheap stock that will fetch those extraordinary returns is like finding a needle in
——————————————————————————– Answer Panic selling There is one certainty about investing in shares–that there will be a number of market panics during your investment lifetime. What you do during a market panic has a great impact on the eventual wealth that it creates. Suppose you fall victim to panic selling, you hesitate from buying rapidly when the stock recovers. HavenÆt we all experienced panic selling some time or the other? Maybe in the wake of some negative political developments, eg ano confidence motion against the government? We have sold our holding fearing the stock price would tank, only to wake up the following day to discover that our fears were unfounded. We would then helplessly wait for the stock price to retreat below our selling price. And instead you’ll be on the sidelines for a fairly long while, recovering your courage to be able to buy again. Your emotional healing process will be enhanced when the prices ris
