Based on varies studies and experience, these are a collection of 20 things you should not do in Stock Market:
- Do not invest unless you do not know. [Peter Lynch]
- Do not invest money, you may required in next 3 to 5 years.
- Do not watch your portfolio daily or weakly.
- Do not influence your investment decision by current quarter or half yearly results.
- Do not invest in Initial Public Offer (IPO). There are thousands of company you can know better in secondary market.
- Do not invest even for 10 minutes if you can not stay invested for 10 years. [Buffet]
- Do not believe in rumors, tips, future earning prediction by Bloomberg or CNN IBN.
- Do not put all the money allocated for a company on single day. Make it in six trench and invest at fix date of every month.
- Do not compare your company performance with overall market behavior. Your crop may not be ready when others are harvesting.
- Do not allocate more than 25% of net investment in a single company.
- Do not invest in more number of company than you can track. [Peter Lynch]
- Do not invest in a company having market capital below Rs. 10,000 Crore.
- Do not invest in a company having debt to equity ratio more than 0.5.
- Do not invest in a company having average PE more than 25 over last 7 years.
- Do not invest in emerging or technology business. Invest in a well established sector and companies giving technology services.
- Do not buy or sell on regular basis. Be as lethargic and lazy as you can. It is hardest part for any investor.
- Do not put unrealistic targets. Your investment goal should be 15-25% return yearly. Upper bound comes only with time and experience.
- Do not watch 'Stock T20' or '6 stock for today' on TV.
- Do not be overdependent on statistical data such as PE, PEG, CAGR and profit margins. Be imaginative and socialistic.
- Do not put more money on loosing bets. Lets it give you some profit and prove its worthiness.
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