Hi there,
Beginners make some common silly mistakes at the early phase of investment.
The first one is they look for the stock alone and do not calculate the financial situations.
They just go for the same sector stocks with same buying value that had given them decent profit in previous investment.For instance,X buy $85 share in Agricultural sector and get $50 profit after 6 months,Then X start to look for the same $85 value share to buy for his next investment.Another similar example of this is Y made decent money from silver industry last year then he only look for the same industry this year to make same or more amount of profit,which in fact can be a blunder investment mistake because the overall capitalization or P/E value or volume of share might have changed this time.So every time you make an investment in share market you need to do a detail research before investment.
The first one is they look for the stock alone and do not calculate the financial situations.
Another mistake is beginners just see the stock value and overlook the other investment opportunities like mutual fund offer,dividend offer,low rate offer etc.
Beginners assume that they should wait for a stock drop at the same level where you made some profit last year.But they forget that the company's financial situation and market competition changes over time to time.
Beginners are always in hurry and don't do financial research before investment which is another big mistake.
The financial fundamentals should be tracked at least quarterly.Annual reports,company announcement,liability and debt calculation,overall capitalization,volume and demand etc needs to be studied first before the good investment in stock market.
The financial fundamentals should be tracked at least quarterly.Annual reports,company announcement,liability and debt calculation,overall capitalization,volume and demand etc needs to be studied first before the good investment in stock market.
Another silly mistake that beginners assume that $80 is twice cheaper than $160.But this is not true,The value of a stock is calculated by the price of the stock divided by the earnings per share,i.e. P/E ratio.
So if P/E =30 < P/E = 50. This can also be understand by taking the concept that $80 traded stock may have only 6 million shares while $160 worth of stock might have 2 million stock.
So if P/E =30 < P/E = 50. This can also be understand by taking the concept that $80 traded stock may have only 6 million shares while $160 worth of stock might have 2 million stock.
Good Luck,
Dibesh
