The situation today is nothing different. It’s true that economists can see the green shoots of recovery. But certainly they are 
not as strong as the market is proposing at the moment. Going by fundamentals, India’s growth GDP is still expected at just 7 to 7.5%. Other economic indicators too have not recovered completely from the global meltdown. Even global cues are still on the lower side. All these mean that the fundamentals are yet to recover and the market movement that we see at the moment is more of hype than anything else. Under these circumstances (especially with the media bombardment of news that talks of huge returns made by various investors), no doubt it’s easy for anyone, who does not have a deep knowledge, to get carried away. But the truth is, that’s exactly what the retail investors must refrain themselves from at the moment.
Moreover, it is time for retail investors to understand the difference between a ‘bad investment in a good market’ and a ‘good investment in a bad market’. While the first one ruins the investors irrespective of all situations, the latter pays even at the worst of the situations. But unfortunately retail investors, most of the times, fall for the first type. The reasons are many, it could be the fact that some big guy in the market invests in it. And another reason, the fact that the investor feels or gets tipped that the share is low priced and with a forward movement it can garner higher percentage gain for the investor. But Ashok Jainani warns such shares can be devastating for the financial health of the investors. He avers, “You need to know a lot more about the company (you are intending to invest in), seasonality in its business, the price behaviour and be able to anticipate major market shifts. Share prices constantly fluctuate as buyers and sellers haggle on a mutually agreeable price. Their fundamental worth however does not change minute-by-minute.” Thus his advice to the retail investors, who are keen to get going in the market at this moment, is to analyse the fundamentals of the company and the intrinsic value of the stock before investing in a particular stock. Investing just by being swayed by the market and media buzzes will certainly do no good to the investors.
A similar view is also expressed by Jagannadham Thunuguntla, CEO and Equity Head of SMC Capital, who is bullish on the fact that eventually the market will go up. Warning the investors that a quick money making approach may land them at a hopeless situation he adds; “Only those investors who adopt a patience approach (investing for a medium to long term horizon) will be able to make exemplary profits. Instead of jumping in to anything and everything that comes their way, investors have to be selective. Moreover, they need to pick only those stocks that have a reasonable valuation and strong fundamentals.”
It’s not possible for even the smartest of the investors to measure the exact high and low. So forget about it, as it’s nothing more than a bookish philosophy. But least an investor should do is investing a little sensibly and carefully. More so for the fact that it’s his hard earned money and he is investing it in the market to take back something, not to give something. Meanwhile, the market is again at a junction where investors need to be careful. Further they must understand that there is no fixed formula to win at the market place. So those who offer you top ten tips and twenty tricks of sure success in the stock market, ask them to keep their mouth shut and just follow the stocks with strong fundamentals.
not as strong as the market is proposing at the moment. Going by fundamentals, India’s growth GDP is still expected at just 7 to 7.5%. Other economic indicators too have not recovered completely from the global meltdown. Even global cues are still on the lower side. All these mean that the fundamentals are yet to recover and the market movement that we see at the moment is more of hype than anything else. Under these circumstances (especially with the media bombardment of news that talks of huge returns made by various investors), no doubt it’s easy for anyone, who does not have a deep knowledge, to get carried away. But the truth is, that’s exactly what the retail investors must refrain themselves from at the moment.Moreover, it is time for retail investors to understand the difference between a ‘bad investment in a good market’ and a ‘good investment in a bad market’. While the first one ruins the investors irrespective of all situations, the latter pays even at the worst of the situations. But unfortunately retail investors, most of the times, fall for the first type. The reasons are many, it could be the fact that some big guy in the market invests in it. And another reason, the fact that the investor feels or gets tipped that the share is low priced and with a forward movement it can garner higher percentage gain for the investor. But Ashok Jainani warns such shares can be devastating for the financial health of the investors. He avers, “You need to know a lot more about the company (you are intending to invest in), seasonality in its business, the price behaviour and be able to anticipate major market shifts. Share prices constantly fluctuate as buyers and sellers haggle on a mutually agreeable price. Their fundamental worth however does not change minute-by-minute.” Thus his advice to the retail investors, who are keen to get going in the market at this moment, is to analyse the fundamentals of the company and the intrinsic value of the stock before investing in a particular stock. Investing just by being swayed by the market and media buzzes will certainly do no good to the investors.
A similar view is also expressed by Jagannadham Thunuguntla, CEO and Equity Head of SMC Capital, who is bullish on the fact that eventually the market will go up. Warning the investors that a quick money making approach may land them at a hopeless situation he adds; “Only those investors who adopt a patience approach (investing for a medium to long term horizon) will be able to make exemplary profits. Instead of jumping in to anything and everything that comes their way, investors have to be selective. Moreover, they need to pick only those stocks that have a reasonable valuation and strong fundamentals.”
It’s not possible for even the smartest of the investors to measure the exact high and low. So forget about it, as it’s nothing more than a bookish philosophy. But least an investor should do is investing a little sensibly and carefully. More so for the fact that it’s his hard earned money and he is investing it in the market to take back something, not to give something. Meanwhile, the market is again at a junction where investors need to be careful. Further they must understand that there is no fixed formula to win at the market place. So those who offer you top ten tips and twenty tricks of sure success in the stock market, ask them to keep their mouth shut and just follow the stocks with strong fundamentals.
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