Why stock expert's predictions fail?

Stock market is one of the areas which fascinate each and every soul which is craving for making money. At the same time they get confused and sometimes even get demotivated because of foggy ideas and opinion that surrounds this concept.

Most of the time investors blame experts for not guiding them properly. Usual comments are "Experts will be there when market performs well, but camouflage themselves when it fails". People should understand that experts can only guide us but can't spoon feed us.

However there are some legitimate basic reasons that can be attributed to failures of expert's opinions sometimes.The basic reason that can be attributed is the awareness of investors and the information reach or access to information is more and easy when compared with earlier days.

Few years back, only few people invested in shares and they had some knowledge about the companies and the announcements the company makes every day or monthly. The source of information could be newspapers, business magazines.etc. But now the awareness among the people has increased and they are provided with medias, web-sites, and mobile phones through which all information about company announcements reaches all investors at lightening speed.

So whatever information got by one person is more or less the same. The idea behind this is democratization of knowledge. As a result only information oriented analysis and buying of shares based on that has become and will become a concept of less meaning in the upcoming years.

As all know share market is suppose to be like a bargain in which you watch or expect people to buy in future and you buy today. Every individual has this sense of risk-security and so he wants to ensure atleast some people do the same mistake what he does if his idea goes wrong. So stock analysis only based on information will have less significance.

Also no one could accurately predict what could happen. All can just sense the trend or understand the fundamentals and technical aspects. Also it's a developing area every technical knowledge in that area is an outcome of experience. If something like today has already happened, say a particular trend we can predict tomorrow it may happen based on analyzing the situation.

So analysts can only assist us but not perfectly predict daily market changes but by understanding the fundamentals of company they can suggest us a company for investment which in long term will pay us valuable returns.

Introduction to Share Market Beginners

Share market is an area which fascinates each and every individual who is craving for more money. Some common phrases are "If we want to earn just try with share markets; my friend has made lot of money in that ".

As beginners we should understand one thing. If we are planning to invest in share market, first we have to categorize our self.

Are we a long term investor?

Are we a short term investor? (Daily trading).

Note:

In share market we are 95% secured if we are ready to wait (provided company fundamentals are good. Exclude cases like enron, worldcom.etc) .The problem comes when we have invested in a bank we can withdraw same amount with interests till date for any of our emergency.

Assume our money is in form of stocks we got an emergency by today evening 7 pm of 1 lakh. We have seen our stock's worth in today's closing was our investment 1 lakh+ whatever market price added to it. We think we have more than required and sell it tomorrow. But tomorrow fate decided the other way market falls our stock value becomes 90 thousand. If we sell that's where the problem comes.

It may even go upto 1.25 laks next week /next month. Can we wait? That's the million dollar question.

Case1 - short term investor (Risky)

Remember its here we play not invest.

1. Make investment break ups: If we have "x" Rs in our hand don't get carried away to buy shares for all "x" Rs. Always we should have fifty percent in our hand.
2. Reinvest only when profits: Make the profits what we earn on the first trade if daily trader (if so happens) to buy extra shares. Suppose if 0ur stock didn't go up after first investment wait till (may be months) till our holding goes up.
3. Capital maintain: Always ensure that our capital is maintained with till date interest rate of banks. Though depository participants suggests us its always better we should have basic ideas of the company. We have lot of information sources (net, softwares).
4. In case of IPO: Buy and sell within max 1 week of IPOS. Invest in established stocks. If we feel trend of IPO is good come back and invest.
5. Sell well ahead of your expected need: Suppose we have a marriage and we wanted money for that. If we feel that today our investment + return (m-cap) is good may be 30 days ahead of marraige.sell it today. We are secured.
   

The very simple formula will be if we crave for more we have more chances to lose more.

Case 2 - Long term investor

It's here we invest. We are most secured in this case because we don't consider money invested to be used for emergency. Any company will one day have a growth curve. Even a sick company value can be raised by psychological factors of investors.

Use that opportunity!

Welcome to Share Market Investment Tips Blog

Are you a person crazy about shares and how it functions? Are you an individual who looks at others as genius when they discuss about shares and stock market investments? Don't get frightened about that!

In this site our main aim is to help beginners with interest in shares and stock market investments with fundamentals. This will be a good guide to help you reach the pinnacle from where you are.

We will provide you theory about share market, how it functions, how to invest, what's mutual funds, when and how to buy etc. as day progresses and your knowledge progresses.

So wait and watch.