Don’t churn your portfolio

The only way to make money in the stock market to regularly buy and sell, this is our belief, but in reality it is not. With a government having a majority in the lok sabha there is a sense of stability with regards to governance, yes, we still need to see the results, but the stock market is on the rise. The currency is also getting stronger, thanks to the tough stand taken by the RBI with regards to inflation. If things go as they are going now, you should see the stock market just going up in the coming 2 to 3 years. One of the best things you can do now is buy the right stock and stick with it and watch it grow. Do not sit and watch the price on a daily basis. Do you do the same when you invest in real estate? No, because you are looking for long term appreciation.

Stock market is not a gambling den, if you are looking for long term gains, buy and then let the stock grow. Don’t go by just the P/E ratio, see if the company would be able to keep giving you a continuous earnings growth. How do you decide that? Look at what are the items or brands you use on a daily basis and then find out the companies which produce them. These are companies whose products, services or brands you trust and if you trust them then why not participate in the company’s growth. In this manner just purchase around 10 to 15 stocks from 3 to 4 sectors. Do not over diversify.

You can look at the price of the same stocks 3 years earlier and you would have noticed that if you had purchased them then, they would have given you better returns than the fixed returns where you have been getting. Remember the markets will keep going up and down, this would be because of cyclical trends and some news. People might tell you the next boom sector is x or y, just ignore that and go by what you would use. So start making a list of items you use, the name of the companies and then the sectors and you are on your way to make money.