3 Mistakes not to do in the stock market now

3 mistakes not to do now in stock market !

Stock market gives you great opportunities and at the same time you need to avoid these 3 mistakes to find the best quality company.

Having the mindset to invest during tough times is great. As the saying by Warren Buffet goes,

“ Be fearful when everyone is greedy and be greedy when everyone is fearful “

3 mistakes not to do now in stock market !

So now at the time of stock market crash due to COVID 19, you should see it as big opportunity for investing.

  1) Don’t invest by following them

2)   Don’t follow 52 week low

3)   Don’t invest when you don’t know

The above are easy attractive headlines which might force you to invest. Even the companies will be attractive but you need to look at the quality of the company.

Don’t invest by following them – 1

Don’t invest by following the crowd.

Most often in life we will be following the person who had done that thing effectively. Till you are grown up you will be following your parents and thereafter may be your brother/sister/cousin’s.

It is quite normal that we follow our closed one and the one whom we like.

When it comes to investing it may not work as you are different from all of your family, friends and peer group.

Just because your friend is saying if you invest, it may not be the best thing to do.

He may have the risk appetite and he may not mind losing money in the short term. You may need that money urgently because of a black swan event which happened in your life and you cannot blame your friend for making you invest in stock market.

So don’t follow the crowd.

Don’t follow 52 week low – 2

During events like corona crisis, stock market will be worst affected.

Most of the stock prices will crash and reach 52 week low and even to their 3 year low.

You need to remember that all the brand names are not going to get translated into good quality stocks.

Yes bank had gone down with a management crisis and an increase in NPA’s. NPA means Nonperforming assets. Generally, banks have to declare that number by comparing it with their total assets.

Now Indusind bank has gone down just because of an increase in their NPA. Management has said that they have everything in control but still, they are not able to soothe the nerves of investors.

Stock is moving down and down. Until the issue is resolved you can stay away if you are a first-time investor.

If you had simply followed 52 week low, then you would have ended up having stocks with issues that may blow your portfolio.

Don’t invest when you don’t know – 3

Warren Buffet doesn’t invest when he is not clear about the company. Meaning their operations. He simply stays away.

In the last 2 decades, all the software companies had a stellar run in US but still chose to stay away as he couldn’t understand their money-making abilities.

Just 2 years before he had invested a huge sum of money in Apple.

He will take time to analyze a company and its business. According to him any investment is investing in a business or company.

So he does due diligence before investing and once invested he stays invested forever.

You can also follow his advice to invest in a business, I mean in a stock.

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