Know The Market (Session-7)

1. Internal Factors

2. External Factors

Exactly market hates uncertainty so it reacts.
Having a through understanding of market environment is important in picking the right stock.

In generally, demands and supply:

more buyers than sellers-stock price rise.

a.Similarly more sellers than buyers stock prices decline.

b.Stocks rise and fall based on people's perception.

Go up or down depending upon the mood of the country and the state of the economy.
Also go up or down because of buying and selling of institutions such as mutual funds, banks, insurance companies etc.
It is very difficult to predict stock market movement.
Look for market indicators to make investing decisions.
In addition to using market indicators also look for the cues from other sources.

Macro indicators of India-

Buying Strategy-

Tactics and Strategy- Buy and hold

Easiest investment strategy is to buy and hold.
Works very well under certain market conditions: especially in bull market condition.
In bear market very difficult to follow.
Buy and hold when there is a good reason to hold.
Constantly reevaluate your portfolio.
Hold because of fundamentals and investment strategy.
Don't sell because of market condition or economy or stock price.

Tactics and Strategy - Buy on dips

Buy on the dip strategy is a popular strategy.
When a stock you own(or want to own) goes down in price, especially if you believe the decline is only temporary because the company is still fundamentally sound, you buy shares(or more shares).

Tactics and Strategy - Bottom fishing

Bottom fishers look for stocks that have hit the rock bottom and have the potential to go up.
Idea is to make money when the stock is discovered by the market and you will get a good price for your stock.
It is not a easy strategy to follow.
This strategy requires lots of patience and is not for short term.
The risk of bottom fishing is that you never know exactly when the bottom has reached.

Tactics and Strategy - Value Investing

(Warren Buffett)

A value investor will buy stocks that may be undervalued by the market, and avoid stocks that he believe the market is overvaluing.
A value investor believes that the market is not always efficient and that it's possible to find companies trading for less than they are worth.
Value investors profits by taking a position on an undervalued stock at a lower price and then by selling the stock when the price raises in future.
Value investing is an investment style, which favors good stocks at great prices.
Value investing does not take into consideration the short term fluctuations in the market.
It focuses on long term considering the stocks current valuations etc.

Tactics and Strategy - Growth Investing

Investing in stocks which are expected to grow faster than economy.
These stocks are expected to earn higher earnings compared to similar stocks.
Growth investors expect to get 15% -20% p.a, for the next 3-4 years.
Usually these companies do not pay dividends, because extra cash is used for business expansion.
Growth stocks are generally very volatile and risky investments.
After particular point of time companies become too large to grow, at such high compounded rates and then growth slows.

Tactics and Strategy - Momentum Investing

Some stock prices raise higher momentarily.
This is nothing to do with the fundamentals or future prospects of the business.
Momentum investing style is exiting and potentially profitable, but is very difficult.
This strategy requires skill and discipline.
Suitable for short term traders.
Momentum investors stay with the stock until and unless momentum remains in effect. Once momentum goes they buy & sell accordingly.

Rupee cost averaging mean - Systematic way to buy stocks

Buying a stock in small tranches as and when the share price falls, rather than in lump sum investment in order to reduce the average buy price.
Ex- Suppose you bought 100 shares of a SpLearn costing Rs-100/- each, your total investment cost is Rs-10000/-. Instead of that, if you buy 50 shares for Rs-100/- and 50 for Rs-95/-, your total cost o.f investment would Rs-9750/-
Average up : Buying a small number first and closely watch the share price, any upward movement of the share price buy more.
It helps in making more profits when sold at a higher price.

---Thank You---

1. Know The Market- Session-1

2. Know The Market- Session-2

3. Know The Market- Session-3

4. Know The Market- Session-4

5. Know The Market- Session-5

6. Know The Market- Session-6

7. Know The Market- Session-7

8. Know The Market- Session-8

Sp Learn