Share Market – Being an Investor

“The stock market is filled with individuals who know the price of everything, but the value of nothing.” – Phillip Fisher.

Share Market : Being an Investor

The most common objective of becoming an investor in share market is to build a Money inflow. The word “Being” before the term Investor is to emphasize the importance of Share Market. Investors sustain in long run learning from pitfalls and finding growth opportunities in every action taken. One can make huge profits in share trading however the focus gets confined to shares only, ignoring the fact that shares reflects the health of the business.

The trading platform of the Share Market contains in it the opportunity to raise the richness bar of any individual albeit filled with risks of losing it all. The passion might get converted into obsession and wise selection may just lose its intelligence.  The well organized share patterns might become a holocaust by behaving abruptly.

 What is the stock market ?

A stock market is a place where one can buy and sell shares. You can buy or sell shares yourself , though not directly, but through a registered stock broker . There are many stock broker existing in Indian stock market .

 

A person becomes an investor when he allocates his capital with expectation of financial gain There are many types of investors for example Retail investor ,Institutional Investor , Foreign Investor ,Domestic Investor , Passive Investor and Active Investor .

Golden rule for Investor

1. Invest early
2. Invest regularly
3. Invest for long term and short term It is determined according your goal

You are not investing if you buying and selling shares in intra day or short period if you selling shares before buying it. This is known as short selling. You can short selling only in  – Intraday
Technical Analysis such as candlestick charts is used to assess the share growth trend to figure out an appropriate time to buy. The fundamental principle here is – Study the past to predict the future. The past price performance in the share market becomes the key in share selection.

 

 

Share selection is a significant step manifesting the business which is being chosen.  A proper investment plan should be implemented. Understand the industry where you want to invest.

 

There are fundamental parameters which have to be considered very carefully

1  Market cap that is the number of shares multiplied by share price. It tells the value of the company in the open Market

2 Enterprise value of the company. This reflects real purchase value. Say Enterprise Value = Market cap – Cash in hand + debt

3 share price of the company with respect to industry 

4 price to earning per share value 

5 who holds what percentage implies promoters, domestic and foreign institution Holdings

6 Return on equity 

7 debt on company i.e debt equity ratio – Check Asset and liabilities of the company

8 Net Sales

9 Net Profit

10 profit after taxes 

11 cash flow in the business

 

Important attributes expected from an Investor

1- Keep your emotions aside while investing

2-Keep a safety margin

3-See the future value of Money

As an Investor, one essential quality would be – to learn and grow. Along with patience, research and with experience anyone can become a master Investor. Warren Buffett emphasizes on value of the shares along with segregating investment portfolio.

The intelligent investor by Benjamin Graham is considered as handbook of investing. He suggests to do deep research in the companies performance prior to investing rather than doing a speculative investment. Maintaining a margin for safety of capital is an essential parameter.