Stock Market
Myths & Reality
Myth : Magic tips can create wealth overnight.
Reality : No such magic tips exist. Investment in stocks where an uptrend is in formation and profit-booking at an appropriate level creates wealth over a period of time. Faith in the underlying trend makes the difference.
Myth : Trend has no role in Stock Markets.
Reality : Trend is the soul of a stock or Index. When the stocks form an uptrend or downtrend, they race up or fall freely.
Myth : Prices keep rising. My price will definitely come. Trends have no role in price rise.
Reality : Stocks usually register higher and highest prices when moving in uptrends. Greed always spoils the show. Hence, book profits when you feel that your stocks rose considerably in an uptrend.
Myth : When markets fall, it may fall heavily with no chance of quick recovery.
Reality : Stocks are sold for peanuts when the markets witness freefall and the fact is usually ignored that fallen stocks recover and form an uptrend depending on their strong financials.
Myth : Stocks falling in a downtrend are cheap now and buying them will one day give huge profits.
Reality : This concept is wrong as some downtrends usually take a few months and sometimes years also to reverse. Hence, locking capital in falling stocks is not a wise decision. Bet should always be on uptrending stocks, though the investment is more. Remember, apples are always costlier than oranges.
Myth : Financial discipline is not required to make profits in stock markets.
Reality : As rightly said in Gujarati, "Bhav Bhagwan Che", Price is God. 'Current Price' reflects everything i.e., impact of the information and also the balance of power between bulls and bears. To understand the price, investors need to follow market related information and also make some good research in their favourite stocks in the form of fundamental analysis or technical analysis.