Tuesday 7 June 2011

Answer to "How to Invest"

Dear Readers,
A lot of investors in India are looking for value picks which they want to add up in their Portfolio & earn multibagger returns over the next 2 to 3 years.
The biggest mistake which the Indian investors make is making their complex calculations or their own analysis without getting deep into the waters of Investments. But if you just think back & just study the stock markets in a simple way & not try to become rich overnight, I am sure, you can earn 10 bagger returns in 10 years or 10 times returns in 10 years. This is based on the simple funda of stock allocation to different sectors rather than deploying your entire capital to one stock.





Diversify your Investments
The better way to deal is to make your investments in diversified sectors & adding atleast 15-20% of your Portfolio size to defensive sectors like Pharma & FMCG stocks. One of my all time favourite FMCG stock is ITC Limited, though I wont advise you to buy at current levels of Rs 190. I would wait for a correction & may be then look to accumulate the stock.


There is nothing called "Good Stock"
Think beyond this term "Good Stock". Always look to buy a company rather than a stock.When somebody tells you about a good stock to buy, think beyond a stock or a stock chart. Look at the business of the company, what they do. If you not able to do that, leave this job to your Investment planner or financial planner


Buy in Parts
Just like SIP in Mutual Funds, also try to do SIP in stocks. This would help you to get rid of market volatility. You should have sufficient cash at all levels that you should be a buyer at each level of market & thus average out your buying price in investments. These are some rules of Investment Mangement & Portfolio Mangement or Portfolio handling.


Understand the Importance of every Profession
Understand the fact that just like doctors give you advise & treat your body parts or take care of your health, likewise, a fund manager would be responsible for keeping a check on your finances (health in case of doctor, lawyer in case of court cases). I hope this will make you undersyand in a much better way.


If you want some more advice regarding a particular stock, you are most welcome to leave a comment & ask...



If you like reading this article, kindly read

Regards
Mayank Gupta
Portfolio Manger
mayankportfoliomanager@yahoo.com

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