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Thursday, January 22, 2015

Top 8 effective stock investing tips for long term Investor

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(StockInvestingTips learning series) - As frequently emphasized in my numerous posts that there is no short cut route for making money from stock markets. Every investment you make in a listed company should be carefully analyzed before putting your money
in it.

So here are top 8 most effective tips which should be known to every long-term investor, If a stock market investor can master these 8 stock investing tips then he can surely mitigate a possible stock investment loss. Each of these ten tips should be diligently understood and followed. Re-iterating my previous stand that these stock investing tips are for long term investor only.

Top 8 effective stock market investing tip

1. Don't follow 'Hot stock tip' blindly: Most important aspect of stock market investment is to analyze the company performance completely before you put in your hard earned money into it. If someone who know you personally comes with a hot stock market tip then you should not follow and chase that particular stock blindly but should analyze all the pros and cons of a lucrative stock option.

2. Share market is all about Long Term Investment : Legendary stock market investors have always been long-term-investor. One should prefer to be a long term investtor instead of short term trader. Long term stock market investor follow the baseline of 'buy and hold' . In following this principles the investor aloof themselves from several risks which are associated with short term stock market investments. Another positive aspect of long term investments is that it needs comparatively less time to watch the market trend as in case of short term investments.

3. Small-caps and Midcaps can be more rewarding: One should be always open for extending their stock investment beyond similar type of companies (wrto market capitalization). It has been seen globally that mid capa and small caps stocks often perform better then large caps. Thus an investor should spread his investments across midcaps, smallcaps and largecaps evenly.

4. Stick diligently to your strategy: Different people have different ways to analyse a same stock. This is because of their instinct and thinking. The idea is to stick to same analysis strategy while choosing all of your stocks for investment. Never change your own style of analysis while choosing different type of stocks. For example if a person change his/her stock choosing strategy for companies operating in different domain, then there are higher chances of one or more analysis leading to wrong stock selection.

5. Don't be penny-wise and pound foolish: Always refrain from investing into penny stocks or stocks with 1 share price value of under INR5. Penny stocks might have more restrictions/regulations on it. One should try to invest in a company which has strong fundamentals and strong management. Company with foolish management is a strict no-no.

6. Understand P/E ratio carefully: One should fully understand the Price per earning ratio of a stock as it is one of the most important ingredient for making a stock investment decision. Invest money if you find stock is undervalued from it's P/E ratio.

7. Buy and forget: An informed long term stock market investor should not be bothered about short term movements of his portfolio. If his decision has been made after strong analysis then there are nil chances of the investment turning bad or losing money. Never get bothered about stock market volatality.

8. Future focus: While making a long term investment decision one has to only look at future perspective of the company. If there is a newer company in a domain which is nascent and is growing tremendously with good future prospects, then investment in this company would be a sure hit.

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