Long Term Vs Short Term Investments

Patience pays when Investing in Stock Markets

This is March 2013 and I already have been in stock markets for last 8-9 years. Till this time, I have not been able to recover the money that I lost in market crash of 2008. Now that I look back, I think of myself being so naive to put all my money at one go on getting little profits in few stocks and without judging the right price of stocks.

I am now more of a fan of long term investment. There are day traders who make some bucks some days, but they cannot extend their luck for infinite. They follow charts, horoscopes and numerous other trading techniques but the at the end they mostly end up in loss. I have not come across a single day trader who is been able to make money and yet I find them in huge numbers, risking all their money. Just  other day I was reading about trader, who was losing money everyday and yet was putting more money and in end said that if you don't see me anymore, assume me dead. And I never saw him anymore after some days in the same board again.

There is no fix price for a stock and it fluctuate like a pendulum of clock, trick is to be at the right side of pendulum to make maximum gains. If you do stay invested in right stock at right price, then returns are huge. Whenever you pick any stock, just write down the reason why its in your buy list at first place and then see it again after 6 months to a year, to see if there has been change in stock, markets and if its still the right price to be in stock.

A stock may give you a more handsome return than a FD, as in FD you are earning a mere 8-9%, but in stock you are earning the profit that company is making. Of course share price does not reflect the right price of stock all the time, at times it is depressed and that is the best time to make entry, when others are fleeing, just jump onto it.

I have tried couple of short term trading techniques such as Futures, options etc but have failed in most of them. My long term investments have given some profits, but some are still under the cost price. So, the dilemma continues, go short or long in stocks.

Best approach is to be as near as bottom of the stock as possible. Of course no one knows the bottom price of stock, but enter at the price where there seems to be very low margin of risk.

Buying good stock at high price is not good strategy. Always go for price where there is big margin of safety. Don't enter at price where valuations look stretched otherwise you will end up at wrong side of pendulum.

That's it for my first blog on stock investments, will continue next time. If you like this blog, please click the 'like' button next and follow me on my twitter handle 'SuperDealsIndia'.

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