Core Theories:
1: The biggest casinos in the world are the Stock Markets
2: Luck plays THE major role in profits, luck can be controlled to an extent with acumen.
Lesson 1:
Decide first why you are gambling. Is it:
a) To make money
b) Just for the kick (good alternative for a teetotaller)
c) Bored with life and nothing else to do
Suggestions: If you chose -
a) Do a thorough research, read all kinds of reports/news/articles any damn thing you can come across, build a solid repository of knowledge and then start investing - as simple as that!!!
b) Try experimenting with different things, anything you feel like. Buy/Hold/Sell, Short sell, Intra-day, Margin trading, Futures, Options, Other derivatives, Commodities whatever comes to your mind. Use a random number generator do decide your next course of action. Trust me, you WILL feel the kick! Beware of a hangover though, in case you run into colossal losses.
c) Well, playing with money is not really a great way to pass time. Get a life! Also remember, to get a life, you cant afford to fool around with money!
If you have chosen option 'a' in Lesson 1, go ahead with Lesson 2.
Lesson 2:
Gambling Rules:
1: Patience is the key to profits. Hold the stock until you get returns you desire and ignore daily fluctuations.
2: Let go of useless stocks - under-performing ones, even if at a considerable loss.
3: Always look at your portfolio from a net-worth perspective, not from a profit-profit one.
4: Understand that there is no concept called 'averaging out'. You either INVEST in a stock or EXIT a stock. or in other words you either BUY and HOLD or SELL a stock. 'Averaging out' is nothing but 'investing' in a stock that is already loss making in your portfolio. It just means you are buying into the same stock once again at a lower price. In which case, the returns you get on the 'original' purchase is anyway a loss. It's just that you are expecting your returns on the second purchase to compensate more than the loss on the original. So the idea is not to try and 'average out' holdings, the idea is to buy the same stock once again if and only if the fundamentals are good and you think that the price decline is just a momentum and not reflective of a deteriorating business. Therefore:
Unless fundamentally sound but undervalued, SELL and EXIT and not BUY and HOLD again and again into it.
More lessons to come soon...
1: The biggest casinos in the world are the Stock Markets
2: Luck plays THE major role in profits, luck can be controlled to an extent with acumen.
Lesson 1:
Decide first why you are gambling. Is it:
a) To make money
b) Just for the kick (good alternative for a teetotaller)
c) Bored with life and nothing else to do
Suggestions: If you chose -
a) Do a thorough research, read all kinds of reports/news/articles any damn thing you can come across, build a solid repository of knowledge and then start investing - as simple as that!!!
b) Try experimenting with different things, anything you feel like. Buy/Hold/Sell, Short sell, Intra-day, Margin trading, Futures, Options, Other derivatives, Commodities whatever comes to your mind. Use a random number generator do decide your next course of action. Trust me, you WILL feel the kick! Beware of a hangover though, in case you run into colossal losses.
c) Well, playing with money is not really a great way to pass time. Get a life! Also remember, to get a life, you cant afford to fool around with money!
If you have chosen option 'a' in Lesson 1, go ahead with Lesson 2.
Lesson 2:
Gambling Rules:
1: Patience is the key to profits. Hold the stock until you get returns you desire and ignore daily fluctuations.
2: Let go of useless stocks - under-performing ones, even if at a considerable loss.
3: Always look at your portfolio from a net-worth perspective, not from a profit-profit one.
4: Understand that there is no concept called 'averaging out'. You either INVEST in a stock or EXIT a stock. or in other words you either BUY and HOLD or SELL a stock. 'Averaging out' is nothing but 'investing' in a stock that is already loss making in your portfolio. It just means you are buying into the same stock once again at a lower price. In which case, the returns you get on the 'original' purchase is anyway a loss. It's just that you are expecting your returns on the second purchase to compensate more than the loss on the original. So the idea is not to try and 'average out' holdings, the idea is to buy the same stock once again if and only if the fundamentals are good and you think that the price decline is just a momentum and not reflective of a deteriorating business. Therefore:
Unless fundamentally sound but undervalued, SELL and EXIT and not BUY and HOLD again and again into it.
More lessons to come soon...
