Why should you invest in stocks?

“Ramesh beta, stock market is for gamblers. Nobody makes money by buying stocks. It is better to put money in savings account or in bank Fixed deposit. I had lost money and I don’t want you to lose money as well.”

Well above advice given by father to his son is pretty obvious as even his father must have lost money and hence same advice percolates to all future generations as well and worst thing is that they all follow the advice blindly. It would have happened that father didn't did his homework properly and that’s why he lost money but how come his son will also lose money if he don’t do what his father has done!!

So why we loose money?

Suresh bhai how is this stock? It is moving like a rocket...”  Sumit who calls himself an investor asks his friend.

Now his friend replies,” Ya Sumit there are rumours that company has bagged one big order through one of the government tender. I think it is good buy”.

Now Sumit goes ahead and buys the stock just on the basis of a rumour. We will spend hours to buy one cell phone analysing technical specifications like camera quality , screen size, RAM, operating system etc. but when it comes to stock we buy just on the basis of rumour.So that’s how most of us buy stocks. We usually buy when it is at a high price and then later sell at a lower price!! whereas smart investor does exactly opposite. Of course it is not possible to time markets correctly every time but we can surely maximise our returns by following appropriate strategy.

The most important thing is to identify stocks based on the fundamentals .An investor needs to spend lot of time and effort to dive deep into various parameters that are critical in discovering wonderful and rewarding stocks.Forget about losses,such stocks can give you multi fold returns and fulfil your aspirations.Some people argue that they don't have time and sometimes not enough knowledge to identify such stocks.For these people,I would strongly recommend to take help from an expert rather than investing based on rumour or half baked information.So if you have lost money in markets please identify real reasons for the same and start investing again.

Rakesh Jhunjhunwala bought stocks of company named Titan in 2001 around 2 Rs and now it is quoting at around 400  which resulted in gain of whopping  200 times. During this phenomenal run, market cap of Titan Company has increased from 300 crore to 35000 crore.

So if you have invested 1 Lakh in titan in 2001 it would have been 2 crores now in just 12 years.!!

Similar Return in a fixed deposit worth 1 lakh would have taken 62 years!!

So such stories are always present in markets and once these gems are discovered they turn out to be life changing events.

Rakesh Jhunjhunwala also let out one of his profound thoughts “In equities, the key lies in predicting what tomorrow is going to be. The tomorrows are going to determine the equity prices. We can’t see tomorrow; but we can anticipate tomorrow“.

For any queries/stock ideas please mail me at: ankurjainraj@gmail.com