The stock market is known for building wealth over time. As much as one can gain from the stock market, losing money does not take much time. Stock market investment is a game of chance. A stock profitable for one investor may not be the right option for others. Warren Buffet, one of the most successful investors in the world, has seven secret tips that result in profits. These are strategies that are not known to many investors. They are:
Focus on the Quality of Business and not just the Stocks
Investors’ trust must be in a company’s growth rather than only focusing on the prices of stocks. Analyzing a business and market conditions will help investors evaluate the short-term and long-term performance of stocks. Prices of stocks keep varying frequently, so making investments by looking at immediate return often leads to losses.
Own a stock only if you are willing to hold it for ten years.
Buying a stock for short-term gain is not an effective strategy. That is why, as per the second secret, investors must decide if they are willing to hold a stock for 10 years. Most investors assume that trading frequently is a way to earn higher returns. But buying the right stock with a vision to hold it for a long term is the key to higher rewards.
Once you open Demat account online, move in the stock market according to your future financial goals. To achieve long-term investment goals, long-term stocks must be chosen.
Compare various stocks and look for very high bargains.
Research is never a waste of time. An investor must compare and research more and more stocks to find the right fit. Avoid following the herd mentality and conduct your research. Identify the right stock and invest at the right time for a high bargain price. Comparison of various stocks gives an insight on the risk and return from investment. Besides the stock prices, make sure to check the Demat account charges and the features of trading apps. Hidden charges from trading platforms also affect the return from investment.
Analyse how the management uses its resources.
The efficiency of the management determines how the resources are used. Efficient management will deliver good returns. If the resource management is poor, investing in the stock is highly risky. If you are a new investor, check the past performance and growth rate of the company.
Avoid investing in “Hot Stocks”.
There are a few trending stocks in the market from time to time. Hot stocks have high attention from investors. Due to the high activity around the stocks, volatility also increases. Hot stocks are the perfect example of following the herd. Investors get interested in a stock when someone else does. Avoid chasing the crowd and select your stocks by research.
What is the expected return from the investment?
Estimate the return while investing. It is impossible to speculate the exact return one can earn from stock market investment. However, by making a few assumptions, the market value of stocks is calculated. There are various financial models to compute the return on investment. One of the most used methods to forecast returns from investments is using the ‘Return On Equity’ formula.
Sell unprofitable stocks and hold only those stocks that can earn high returns in the long term.
Monitoring an investment portfolio is crucial to becoming a successful investor. An investor must know the right time to drop stocks from the portfolio. Frequent stock trading is not ideal to earn high returns. Holding and losing stocks for a long time is also not profitable. An investor needs to be intelligent and attentive to win big in the stock market.
Conclusion
Applying these secrets in the Indian stock market has resulted in profits for most investors. The roadmap to be a successful investor has been created by investors who have tried and tested different methods. Overall, the strategies help to strengthen the portfolio and make an investment plan. If you are a beginner, apply the seven secrets effectively, to earn high profits. You need to have know about stock market basics before investing your money in share market. A greate research about stock can make you winner in stock market game.
