The thing about investing in the stock market is that it is extremely easy to do so. That can be a dangerous thing, as it can get you addicted to the process of stock trading recklessly. However, the golden rule of investing is that you can only invest when you are certain that doing so provides you with an inherent advantage. Now that is precisely what you have no way of knowing in the case of stock-market investment.
So what’s the way out? Never invest in the stock market? No, but the least you can do is to never be adventurous when investing in the stock market. This is something that I have learnt very well in my almost two decade old experience as a serious observer and researcher of the dynamics of the stock market.
At 10paisa.com, we focus on small cap investment related research for the simple reason that small cap investment helps both reduce the exposure to risk as well as spreads it out. Also, we recommend periodic profit booking and stock rotation for the same reason.
You may have just about started off investing in the stock market, or may even have some experience doing so, but you can never assume that you are very knowledgeable about stock market investment. In fact, what you may know might not even be the tip of the iceberg in terms of the number of multiple factors that go into determining stock prices.
We at 10paisa.com are a SEBI registered research analyst and even though we bring a world of expertise and relevant experience, we have chosen to operate largely in the small cap space, as that is the only way one can obtain the kind of deep insight one requires to understand what it takes to create wealth by investing in the stock market. This is not something that a lay investor whose primary activity is something else can do.
This is a specialist’s job, for not only do you have to narrow down your focus to a specific section of the stock trade, you also have to keep an eye on the bigger picture and how that might impact future earnings. For instance you might bet big on automobiles today, but the growing spectre of pollution might force the government to crack down on the industry in the near future. It therefore makes sense to be conservative in the extreme when it comes to investing in the stock market. It makes equal sense to accept the counsel of stock market investment analysts and experts with deep insight who can hand-hold you through the process of creating wealth by investing in the stock market. That it can be done is evident in the stories of the many who changed the course of their lives for the better by investing in the stock market.
You could be one of them, but for that you have to invest in the right way and not play Russian roulette with your money.