Key learnings from 2018 and Next stock update

Dear Readers,

It was really very tough time for the all investors and financial institutes from last one year. Specifically it was very severe for new investors who have started investment in the first half of 2018. Even though our most of the portfolios shrunk 20 to 50% but it has given the best learning experience.  Extreme adverse market conditions of 2018 has forced thousands of new investor to quit forever, I congratulate to all those investors who sail successfully through this turbulent storm. It is your patience and strong will power which has separated you from the crowd to make you successful investor for the rest of your life.

The key learning points

In equity market there is always a risk but it is very less for long-term investment and very high for short-term investment. It is advisable to plan you investment  for long-term at least for 3 -4 years.

Always invest with your own money which is not required to fulfil your urgent need at least for 2 to 3 years.  It is also not advisable to invest in equity market with borrowed money or money taken on interest or loan.

Need to stick with investment decision at least for 2 to 3 years unless there is major change in fundamental of any stock. Habit of holding the stock for longer period will lead bigger gains and bigger self confidence. Same time frequent shuffling  of stocks due to price correction related to market fluctuation will lead to low self confidence and high nervousness will result in further loss.

It is not advisable to average any stock due to fear of loss or to make up the loss. We have seen once any sector or stock start correcting then it can fall much more below than our expectation.  So it will block free cash and it will end up with bigger loss. Same time you can increase your allocation in any winning stock according to the availability of funds irrespective of rise or fall in the stock price. 

Both terms look like same but state of mind and emotions are different, first one is originated after looking at the loss linked with fear and second one  is originated from self-confidence and taken as opportunity for buying aggressively.  For example in the month of February 2019 Deepak nitrate corrected below suggested price but no one interested to buy it even after knowing that  phenol plant has already started but we received several comments for buying Surana solar & Omkar specialty.

In the month of May 2018 we have gone for 30% stop loss in case stock price fall due to adverse market conditions  or sudden change in fundamental of any stock. Specially it is good for new investors due to their limited risk taking ability in the initial phase of their investment carrier.

During initial phase of building a portfolio 10 to 20% allocation in each stock is ok and same time need to book the partial profit near hundred percent and keep the free of cost share for long-term. It will help to expand the portfolio gradually from profit and mitigate the risk.

It is not necessarily to buy every stock but need to invest according to the individual investment capacity / availability of fund and formation of individual portfolio, generally better to keep diversified portfolio with maximum exposure up to 20% per sector.

Our economic and market earning growth is on right path, it is time to get ready to be the part of major market bull run for next 4 -5 years.  Several investment opportunities are available at very good price.

We will go for next  stock in the coming weekend and it will be posted on this blog and our new site way2moneymarket.com on 20th April 2019.