Wednesday, 9 April 2014

Popular Sayings in Stock Market: Must for every investor

Stock market attracts many people who want to earn money. But majority of them forget that its for 'investing money'. There is a fine line between two and only a successful investor knows the difference. And how be successful? Learn and educate yourself. 

There are some popular sayings in stock market that i think everybody should know - 

Trend is your friend (Until it ends) - A long term trend is always your friend. 


Compound Interest is Eighth wonder of the world - Most people don't understand the power of compounding. They want to earn quick bucks in short term which is very difficult. 


A rising tides floats many boats/Everybody's a genius in a bull market - This is my favorite saying. It means that when market is going up every stock makes money. Whatever crap stock you buy will rise in this period. People should be careful about stock selection and should not be overconfident after making some  money. Real investor is one which makes bucks in every market, no matter how small are the profits. 


Time in market is more important than timing - Most people wait for a stock  to come to certain level for taking a buy/sell call. Investment is not a short term game. People should give some time to market and should invest on long term basis. 


Never try to catch a falling knife- Many people will advice you to buy a stock just because its been down 5-10%. Keep away from stocks that have dropped fast. 


Dead Cat bounces too - As a saying goes, throw a dead cat off a high enough building and even it will rebound upwards after hitting the ground. Or just because a stock is rising again, doesn’t mean the company is on the up. Buy when there is blood in streets(even if it yours) -  or as Buffets says 'Be fearful when others are greedy and greedy when others are fearful'. You not not leave market in case of heavy downfall but should take it as opportunity to buy. But don't invest all of your money at once and don't invest for short term. Buffet made huge profits by following his own advice while buying in Goldman Sachs at height of financial crisis.


Stoploss is your best friend- Most people ignore this wonderful tool. 


Buy the rumour, sell the news.

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