These 10 Principles Will Help You Beat the Share Market
By
Vijay Kedia who turned Rs. 10 lakh to Rs. 650 crore in 20 years of
investments at componding rate of 55% per year.
He explained the same in this
video
In his talk he said 10 points that have helped him to avoid defeat in the market.
1.
Create a fixed income outside the market for your livelihood
Never be
dependent on the income from the stock market because it is volatile.
He is applying margin of safety logic even before entering the market.
2.
Be informed and read a lot
The market rewards you as per your
perception. If you think investing is a gamble, then it is a gamble. If
you think it is a business, then it is a business. Read a lot and be a
maniac when it comes to reading; it will help you connect the dots.
Mr. Warren Buffett once held up stacks of paper and said he read "500 pages
like this every day. That's how knowledge builds up, like compound
interest."
3. Invest a
part of your savings, not the earnings, into stocks
So if you have
decided to invest 25% of your savings in stocks, invest 12% to 15% as it
is a risky business.
Also you should only invest a certain amount based
on your risk-taking capacity.
4.
Do not trade and do not leverage
Trading is a 24-hour business. Do not
invest from borrowed money. Do not trade just because you see someone
making money by trading.
5.
Invest only for five to 10 years; minimum time frame is 5 years..!
Rome was not built in a day. It takes time for a story to mature. I
always invest in small caps that go on to become mid to large
caps.
Whenever I bought a small cap, people discouraged me. No one liked
the stock. For two years the company went nowhere; after that it gave
multibagger returns.
6.
Invest only with the best management and let it worry about the
company
If you invest with the best management, you do not have to
worry. Management is playing golf, and we investors are worrying 24
hours about what will happen to the company, looking at the dollar,
macro, etc. What is the use of being an investor?
Let management worry
because management has its prestige and its name at stake.
Good management in bad business is better than bad management in good business. Example: Indigo Airlines.
7.
Your investment belongs to the market and the profits belong to you
As long as you are invested, the profits belong to the market.
Do not
spend just because the stock has risen because tomorrow stock prices can
collapse.
8. Book profits periodically
Invest profits in buying a house which is very important.
9.
Keep a balanced mind
Do not be happy in an up market, and do not be sad
in a down market. Be physically, financially and mentally sound.
He
explains how one should avoid regret. He says a stock can go up after
you sell it. Don't regret. The stock market is a place of regret. You
make money, you regret. You lose money, you regret. You make less money,
you regret. That is why it is very important to keep a balanced mind.
10.
Luck plays a crucial role. Do good karma
Be a good human being. The
stock market is a mind game. If you are doing good karma, it will come
back to you.
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