When I started investing, I thought of some strategies of making money in stocks.
Jotting down the experiences I had with those. It will be a series of posts (about 3-4 posts).
Jotting down the experiences I had with those. It will be a series of posts (about 3-4 posts).
Strategy A: Take companies whose stocks fell recently
I thought this could be sound thing. I'd buy the stock that fell by high margin recently (1-2 days), and then sell it off later and make quick buck. Since I was new, I thought I would put in about Rs. 1k-2k per company so that if the investment flops, I don't lose much. I started frequenting Top losers in NSE regularly and taking note of the companies which fell by highest %. In fact it became my one of the few bookmarked links.
To this strategy one of my friends suggested that, there is no point investing like that, as only small companies will have such wild days, and those are many times controlled by some big brothers who would buy/sell in large quantities and thereby control prices of such companies. He said, hence I would be very vulnerable to lose money with such companies; Such things won't happen with big companies, so I should concentrate on those.
Other than that, I had mixed experience while doing this (Some time in May 2012).
I bought Shri Lakshmi Cotsyn, Diamines, Ramky, NTPC and ING Vysya this way.
Some of these stocks started performing well. I thought I had cracked the formula and wondered why others couldn't crack such a simple thing.
However, I didn't sell them when they did well. They went down, and then I got stuck with them wondering when to sell. I also was thinking that I should go by the adage that I should invest for long term, and not short term. However, at the same time since I had no scientific reason to determine whether I should remain invested in these companies or not, I always kept thinking that probably I should sell as soon as I see profit.
Out of these companies, ING Vysya did real well. I increased my investment also in it based on a tip that I got. Later I sold it for some profit. I still have Shri Lakshmi Cotsyn, Diamines and NTPC. I sold Ramky at the earliest opportunity I got.
Out of these companies, ING Vysya did real well. I increased my investment also in it based on a tip that I got. Later I sold it for some profit. I still have Shri Lakshmi Cotsyn, Diamines and NTPC. I sold Ramky at the earliest opportunity I got.
In the course of time I read some books, got some knowledge and learned that this is not a good strategy to make money. It is just gambling.
However, though I understood some of the merits of value investing, and saw why it is the more right approach to investing, I could not yet see why short term investing going by the market behaviour is a bad strategy (It is mentally more taxing and not good for heart for sure, as it is more like betting).
So, for now I have decided that till I understand value investing well, I would continue investing like this (in moderation though) and later on also I would assign a small percentage of my investments to this kind of investments.
In my subsequent posts I would also talk about other strategies I took. All my buck is not put on this kind of investments. :)
However, though I understood some of the merits of value investing, and saw why it is the more right approach to investing, I could not yet see why short term investing going by the market behaviour is a bad strategy (It is mentally more taxing and not good for heart for sure, as it is more like betting).
So, for now I have decided that till I understand value investing well, I would continue investing like this (in moderation though) and later on also I would assign a small percentage of my investments to this kind of investments.
In my subsequent posts I would also talk about other strategies I took. All my buck is not put on this kind of investments. :)
No comments:
Post a Comment