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basant
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Joined: 01/Jan/2006
Location: India
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Posts: 18403
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   Posted: 24/Jul/2006 at 4:38pm |
There is nothing to be foolish about a a particular strategy.Doesn't too much diversification indicate that you are unsure of your ideas? If you are convinced about one company have one in your portfolio if you are convinced about 200 have 200 the question is of conviction rather then numbers. I am yet to meet people who made money by holding aparticular number of stocks. yes, you may hold as much as you want but why a number. Holding more then 20 stocks would not add to any of the risk diversification as you would not be able to eliminate market risk all you can do is reduce volatility. Studies have shown that holding
Two stocks eliminates 46% of market risk
Four stocks eliminates 72% of market risk
Eight stocks eliminate 81% of market risk
Sixteen stocks eliminate 93% of market risk
Thirty two stocks eliminate 96% of market risk
Five hundred stocks eliminate 99% of market risk.
So you see diversification helps but only to some extent.
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equity analyst
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Joined: 18/Jul/2006
Location: India
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Posts: 209
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Posted: 24/Jul/2006 at 4:45pm |
Well i have been investing and trading in stocks for last 6 years,and what i have seen that both salaried class and full time expert on MKts( Brokers) have lost money in 2000 dot com crash and also in the recent mkt crash,so basically question is not that salaried people r only lossing money many high network clients who often get tips(Inside report) and are indulged in full time trading also have lost money whenever mkt crashes ,and after the mayhem we often tend to search out why did the mkt crashed and we have 100 of opinion for that, eg mkt was overvalued ,charts were overbought etc etc. After all this is human nature. I think if we keep good fundamental stocks for long term sure the stock can perform well irrespective of bull or bear mkt.
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"Markets are the places where two types of people meet up in the morning: those with experience and those with money. Towards the end of the day, they exchange their assets and go home."
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basant
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Location: India
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Posted: 24/Jul/2006 at 4:50pm |
You have really said what i wanted to that is the bottomline is to buy solid good companies and we will do well. Now evaluating these "solid" companies is matter of art and not science. That is why you have so many people who know so about about every thing, they will call you up with ideas each morning, what to sell, what to buy, when to sell, when to buy but I have seen that the person who gives the maximum number of unsolicited advise has made the least amount of money.
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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Vivek Sukhani
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Joined: 23/Jul/2006
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Posted: 25/Jul/2006 at 8:51pm |
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I beleive the person who is patient, who doesnt panic and be greedy on temptation, generally makes a killing here. I think it is imperative to be a contented and self-assured individual before you enter into the markets. Beleive you me, this market doesnt pay an agressor.....
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basant
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Posted: 25/Jul/2006 at 8:58pm |
No, it does not of all the big bulls that came into the market all have perished Harshad Mehta, Ketan Pariekh, Rakesh Jhunjhunwala has survivied because he was an investor not a trader. he trades but more then that he is known for his investment style. That is why we have him up there on the home page!!!
ALso what is more important is to remain invested in the better known companies. if you would have held Mangalam Timber for 10 years then you would have had it but on the other hand if you would have held ITC it would have made money for you. I am not talking of Infy because 10 years back Infy was undiscovered and it would have required special eyes to see it.
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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prashantmohta
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Joined: 23/Jul/2006
Location: India
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Posts: 1074
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Posted: 27/Jul/2006 at 8:09pm |
IN SHORT RUN MARKET IS VOTING MACHINE BUT IN LONG RUN IT IS WEIGHING MACHINE.
PRASHANT
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basant
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Posted: 27/Jul/2006 at 8:12pm |
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Right and another interesting analogy that I can add to this is that there is more sound before and near a voting machine then it is at the weighing machine.
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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Vivek Sukhani
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Joined: 23/Jul/2006
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Posted: 27/Jul/2006 at 8:32pm |
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This is one thing whuch I want to know... why dont we set ourselves 3 entry points when we buy a stock.I belive we must work out the ultimate bottom that ot can go, technically, fundamentally or sentimentally.And accordingly, set the entry points. This will help us to relieve us from the pain of making a wrong entry in a right company. there ought to be discipline in trading.
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