Biggest Stock Market Mistakes to Avoid “ Don’t follow the herd blindly” – Part I

“ You learn the stock market by trial and error. Without making mistakes in the market, you will never be able to progress in it”
Rakesh Jhunjhunwalla – Veteran Indian Stock Investor


Always differentiate between gossip and research. With the technologic advancement, it is very easy to spread rumors about any scrip. SMS, chats and message boards made the task of spreading gossip very easy. Always check the source and reliability of the information. Invest with time horizon ( 1month, 3 months and 1 year and above). Never ever have more than 10 scrips in your portfolio ( at the maximum 15), otherwise tracking is very difficult.
Do your home work well
While choosing a stock for long term investment, you could use either the top-down approach or the bottom-up approach. In the former, you look for a good company in an Industry that is doing well (Eg. TISCO in the steel sector). In the latter, you scout for a company with good fundamentals, irrespective of the performance of the industry or the economy as the whole ( Eg. Reliance).
Don’t follow the herd blindly
Don’t buy (or sell) just because everybody are buying (or selling). For long term investment research the company as thoroughly as possible before deciding buy or sell. If it is not possible, invest through good balanced mutual fund schemes. Don’t buy in an overheated market and don’t sell when there is panic.

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