Investors should follow the 3D approach in share market –
Diligence ..
People entering the share markets should be diligent, irrespective of whether he / she being a trader or / investor.
It applies to all sets of investors. To borrow the Cricketing analogy, Intra-day trading in share market is like a T 20 match; short term trading is like an One Day International (ODI).
Long term investing is like playing a test match.
Though all formats play Cricket, the application of strategies and methods are different from each format. T20 should not be played like an ODI and an ODI should not be played like test match; a test match cannot be played like a T20.
Diligence required for equity investors depends on their strengths and the weaknesses, which can make or break their fortunes in equity markets.
Famed investor billionaire, Warren Buffett never cares about the short or medium term movements in stocks. He says his waiting period is forever. That’s his strategy based on his diligence.
But, not all can replicate the success in the same manner of those billionaires. Investors should do their homework in a methodical manner while getting into equity markets in order to face the good and bad times in the markets, boldly.
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| Mr. Gopalakrishnan V, Money Avenues, Chennai |
Discipline..!
After having done the diligence well, investors should follow a disciplined approach in equity investing.
As famously remarked, one should plan the trade and should trade the plan. That is also good for investment too. Set a plan and follow it in a disciplined manner. If you are a long term investor, you are an investor and not a trader of stocks.
If you are a short trader, you are just the one. Volatility is part of the equity markets, not now, right from the beginning. Just remember the Universal principle, which also applies to stocks – “What goes up has to come down; what comes down has to go up”.
That’s how stock markets work and all we need is the discipline in our approach.
The most disciplined way to buy stocks is through SIP method which can help investors overcome the volatility. The other best way for the retail investors is to do SIP in good Mutual Funds. And do not forget to check the health of your equity portfolio, once in a while.
Diversification..!
Equities in India have crashed beyond anybody’s imagination and may be some more downside is still left, given the current market conditions.
And probably once the markets bottom out the stock valuations may be very attractive. And they can potentially provide excellent returns in the longer run.
But that should not make one put all the money into stocks. Imagine in the current mayhem, if someone had put all his money only into equities or equity related instruments. He will rue his over exposure to equities.
Remember the basic rule - Don’t put all your eggs in one basket. Diversify and invest based on your goals and needs and not based on the current market conditions. Having said that, it’s a fact that equities have outperformed most asset classes in the long term.
Investors, if they wish to be successful, should master the art of playing in the chaos, like the one we are currently witnessing. It’s anybody’s guess on the issue of the market bottom in the current scenario. Chinese tsunami has created this mayhem and the Chinese markets probably will have an answer to that question.
Investors will be better placed, if they stick to the basics in equity investing and such mayhems will not unsettle such disciplined investors.
In fact, disciplined and diligent investors will deploy more money in such markets, while the novice investors will flee the equity markets in fear and panic. End of the day, successful investors follow “Greed, Optimism and buy” in such scenarios, while the unsuccessful ones follow “Fear, pessimism and sell” during this time.
Contact Details
Gopalakrishnan V
Founder & CEO
Money Avenues
askvgopal@gmail.com
www.askgopal.com - See more at: http://www.myreality.in/2015/08/maths-of-intra-day-share-trading.html#sthash.HyjO3rif.dpuf
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