"Most time shares are subject to price fluctuations irrational and excessive in both directions because of the ingrained tendency of most people to speculate or play ... to give way to hope, fear and greed. "
-Benjamin Graham, U.S. economist and professional investors
In order foundations
In a hurry to make fast money market, retail investors tend to overlook the fundamentals of the company you are thinking of investing in it Some investors buy stocks with no spare time to gather basic information about the company, as important product or service the company sells and the likely future of that business.
"Retail investors are driven by optimistic discourse of management, interim expansion plans and are always skewed towards short-term game, not wanting to lose the current increase in the share price," says Hemindra Hazari, head of research, Karvy Stock broking.
Investors should look at companies that have consistently delivered earnings growth and good corporate governance. Never invest in a company without understanding the dynamics of the business.
Cheap, but expensive
A successful investor looking for bargain stocks, which are available at prices below their value and have strong growth potential. Newbie investors often misunderstood gold this strategy as "cheap" to buy shares of large percentage gains.
Suppose you can buy a dozen eggs for the R 36, while the rotten eggs are available for only R 3 per dozen. If you have R 3 in his wallet, he buys a fresh egg or a dozen rotten?
"Retail investors look at the share prices of stocks. They tend to buy cheap shares, which can not be very valuable," says Sarabjit Nangra Koura, Vice President of Research, Angel Broking.
The return on investment in shares do not depend on the number of shares, but the performance of the company. You have a greater chance of making a profit by buying only a portion of a first-order company instead of buying thousands of penny stocks.
Shortsighted
Small investors often seek short-term gains. If you want to make a quick profit in stocks, you must have the ability to time the stock market. Stock prices fluctuate wildly over short periods. Your profit or loss depends on its ability to close the deal in time. Due to the turbulent nature of the securities markets, it is difficult to make profits in short periods of time.
"Small investors are excluded during the phases of an uptrend or in times of short-term surges. Retail Investors should assess their appetite for risk and take a long-term," says Hazari. The stock market almost always gives a positive return over the long term, in this case a time horizon of at least three or more years will be more cautious.
Also, when you stay invested in a population of more than a year, the taxman does not come knocking for his role in the outcome. Income from stocks over a year a capital gain in the long run, that does not attract any tax. For investments of less than one year, you have to pay capital gains in the short term.
Ignoring a portfolio
You must have heard stories about investors who bought shares in a company, he forgot them and after a decade or so found that had become a fortune. While this is an example of how the long-term investment is profitable, not the best.
If you are among those who think long-term investing means buying stocks at low prices and forget about them, is taking a huge risk. The economic and market situation is very dynamic. Apart from global and local policies and macroeconomic factors, there may be changes in business strategies or management.
An investor should review your portfolio at regular intervals. If the prospects of a better society, or at least stable, you should buy or keep stock. When the assumptions on which the shares purchased are no longer true, it might be time to download.
Unwillingness Paper losses
Investors enthusiastically collect small gains retail investment, but often are reluctant to book losses on stocks that are collapsing. Even if stock prices continue to fall, they continue to hold in the hope that the population will recover and make a profit at some point. This often results in major losses for investors.
When prices fall, some investors buy more shares in an attempt to reduce the average cost of your portfolio. Buy on dips is recommended, but only when the decline is due to a temporary setback and growth prospects remain positive.
"Retail investors must make an average of every second action unless they have a thorough knowledge of the company. You must try to explore the reasons for its poor performance. Average is not a tool to minimize the losses, but should be treated as a means of maximizing "says Hazari.
By investing in a stock, you must also set a stop-loss order for it. When the stock price falls to the stop-loss level, the broker will sell. If you set a stop-loss order at 10% below its purchase price, your loss is limited to 10%.
Entry into Peaks Sale in minimum
The stock market always overreacts to news, either as you climb. Ideally, the stock price should be proportional to capital and earnings prospects of the company. However, there is a share-marketfrenzy generally overpriced or underpriced.
In a bull market, investors tend to invest in stocks expensive because everyone is buying. Become too optimistic and expect stock prices to continue rising. By contrast, in a bear market, investors tend to be pessimistic and sell shares when they should be buying.
Stock markets tend to make decisions in the short run wild, but they behave rationally in the long term. Successful investors always base their investment decisions on stock value "in itself and the hunt for bargain stocks. They're going to buy shares in a company with a solid foundation when it is beaten in the market and sell when prices rise.
After Tips
Thanks to higher-priced messages that you have received SMS messages turning on a "golden opportunity to earn huge profits. If you have acted on any of these tips, you've probably lost some money. If not, you've done well to stay away from such unsolicited emails and messages.
Even solicited tips can hurt you. If you try to find tips on Internet commerce, getting lots of websites and blogs that offer free advice. Do not take advice on these sites as gospel. It is equally dangerous to buy stocks because a friend told him "your money will double in six months." Stock tips from analysts published in newspapers or broadcast on television should also be scrutinized.
Always perform due diligence before placing an order with your broker.
Let your broker
If you just sign the forms in the instructions for your agent and allow you to buy and sell shares on their behalf, will be ready for some scares. Unscrupulous agents often use this opportunity to customers' money misuse. "
Brokers do not receive a commission on the profits you earn, but are paid by the volume of trade. There have been cases of agents with money from investors to trade intra-day without the consent of investors. When you get a statement from your broker, you may see your portfolio losses carry a large amount paid to the brokers.
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