In simple words:
A share of stock is the smallest unit of ownership in a company. If you own a share of a company’s stock, you are a part owner of the company. You can read more details about Stocks here.
Things to know -
- Stocks fluctuate based on many catalyst such as news, company earnings, sector, economic conditions, government regulations, etc.
- Stocks are considered very risky, hence more risk can realize into more gains or more losses
- Stocks by nature are very volatile due all above factors
- Choosing right company stock for investment requires skills and is extremely difficult
1. I am just an average person without financial background, does it mean I cannot invest in Stocks?
2. What shall I do!!! I would also like to invest in Stocks.
3. I do not understand earnings, 10K reports, etc.
4.How shall I select Stocks as my choice of investment?
Ofcourse, you can invest in Stocks
You should be ready to take more risk with your Stock investments
Its not easy to understand all this, hence it is difficult to choose right Stocks
We will identify a method by which we can select Stocks of stable and established companies.
Choosing Stock step by step:
1. Always choose a Stock which belongs to BSE 100/200/500 Index or Nifty Midcap 50 or CNX 100/500, etc.
You can find the MoneyControl list here.
So what do we do with this Mutual Fund list?
Check out "How to use Funds Ranking Sheet" to obtain Mutual Fund ranking. We can simply enter our chosen Mutual Fund Symbols into Funds Ranking Sheet and apply configuration changes.
How to apply our Technique using base strategy:
- Identify the market direction based on our market timing tool or follow our Blog.
- If we get market "entry signal" then we trade best performing Mutual Funds from "List of MFs for Bull Market".
- If we get market "sell signal" then we trade best performing Mutual Funds from "List of MFs for Bear Market".
- Best returns are obtained when you enter a trade after you get entry or exit signal and not midway, if you are midway then best strategy might be to wait till a signal is generated.
Benefits of this technique -
- We remain invested most of the time, in other words our money is always working for us irrespective of market direction
- Bear markets, market corrections or market crashes provides us a way to be invested intelligently and make good gains
- Our losses are minimal but overall cumulative gains over longer periods are substantial
- Transaction fees for trading Mutual Funds can add up but considering our strategy and if entered after appropriate signal, the gains are far more to compensate for our overhead cost.
- Remember, these are Mutual Funds and hence slow moving financial instruments there by providing lower returns as compared to Stocks or ETFs.