Tuesday, 24 July 2012

Cultivate Investment Habit

It has been said that…..
“We Don’t Have To Be Wealthy To Be An Investor…But…
We Have To Be An Investor To Be Wealthy.”
Moving two years back I can remember that day when I enter in the India for my MBA degree, got admission in University of Pune, interest towards Stock markets triggered me for finance specialization. Along with my study I started investing in Indian equity with few of my colleagues.
My curiosity towards financial market triggered me searching the various terminology of financial market I started going through the daily news paper like “The Economic Times” and weekly paper “The wealth” and various websites like moneycontrol.com , marketwatch.com etc... Fortunately by the end fourth semester exam of MBA we four friend planned to start franchisee of Stock broking “Angel Broking ltd.” In Mumbai….now this is infant phase of our business and we are on the way to the world of Stock market.

Now we are at initial phase and I can realize that the world of trading in many people's eyes is very complicated; especially small and new investors can easily become confused by the behavior of the financial market. We often know when to enter the market, but do not know when to exit. Some time we are confused about where to place the stop loss and when exactly to book the profit. Our emotional decisions triggered by market volatility and created by market data or events lead to panic and fear. Year on year, many of us are puzzled by the many contradiction in the market .why do stocks continue to trend after you book profits? And why at times, the market reverses when you are looking for a bigger run? How can you identify the market trend, strategy, reality and significant price levels for the day? Some time charts further add to the chaos as they do not give us the complete picture, hence we cannot correctly analyse the trend of the market, which leads to more losses, combined with the competition provided by big investors, generating and sustaining profits was incredibly difficult.

Now here question arises that how to avoid the risk factor and make profit with low level of risk?? A solution and that is research and keeping the track record of the stocks. Yes it is the research by which we can identify the actual trend of the market. Here research means keeping the track record of companies overall performance which includes the various financial data. Any news related to the concern company have high impact on the demand and supply of the share which determine the price movement, Supply and demand in stock market is driven by various factors which affect the price of stocks. Due to the globalization the impact of international financial market is normal phenomena to developing country like India and Nepal. As the 85% of trade happens through the dollar hence US market also do have high impact on our country. Besides EU and US market country like Saudi Arab, Russia, and Iran…etc which are rich in oil production also have great impact on our financial  market.
Indian market is largely affected by the US market and European markets...any changes in economic structure in these markets do affect our market…

NO to investment...five typical r
1.      Shares are too risky
2.      I can't invest just now
3.      I wouldn't know where to start
4.      I don’t have enough money to invest
5.      It’s not the right time I will wait for the market to fall /rise

Now this also typical investor behavior age wise
There is plenty of time
Family obligations
I need to but......... J

Now just have look to this small case….
one of the greatest investor of the era this might change our thinking process towards…investment

WARREN BUFFETT….Investment Guru
Yes he is the man who made an enormous fortune from astute investments, particularly through his company Berkshire Hathaway, of which he is the largest shareholder and CEO.
Berkshire Hathaway has about $2 billion in holdings.
With an estimated net worth of about $46 billion, the 79-year-old Buffett, is often called the 'Sage of Omaha'.
As a child, Buffett was a paper boy for the Washington Post and attempted to cover more than one route at the same time. Showing a spontaneous talent for making money, Buffett also started earning that early by collecting and selling lost golf balls.
He even started playing the stock market with one of his sisters at 11. At 12, he was betting on horses and by high school he started a business (pinball machines) with a friend, which earned him $50 a week.
Not only did he own a business by the time he graduated, he also had bought himself 40 acres of farmland in Nebraska. 
Buffett was strongly influenced by economist Benjamin Graham's theory that it is wise to look for stocks of companies which are undervalued as they will probably prosper with a little time.
Buffett started his investment company, the Buffett Partnership, at 25, using $5,000 of his own funds and collecting $100,000 from friends and family. One of the smartest moves made by Buffett's company at that time was to invest in American Express.
In June 2006, Buffett made a commitment to give away his fortune to charity, with 85 per cent of it ($30 billion) going to the Bill and Melinda Gates Foundation. Buffett's donation was the largest act of charitable giving in the world's history.
 Hence the moral of the story is there exists a need for a regular investment habit, throughout the Various Life Stages of an Investor…THE SECRET TO BECOMING WEALTHY
“You Don’t Have To Be Wealthy To Be An Investor …But… You Have To Be An Investor To Be   Wealthy.” JJ

So, what’s going in your mind?
If you want to be a successful stock market investor, you should think about buying pieces of "good" company at "bargain" prices.
Yes, that sounds simple, but if you actually could find a good company at a bargain price, wouldn't it make sense to buy it?
Doesn't that sound like an investment strategy that should work?
The only problem is figuring out what's a "good" company?
Well, a "good" company is a company that can earn a high return on capital.
ROI......?? It's a pretty simple concept really........

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