Want to invest, but don’t know how and where to start? Trade wars, GDP, Auto Sector, RBI Policies are overwhelming? Let me help you approach the market right.
We Indian retail investors approach the stock market, investing a lot different than every other market players. Ideally, we should learn and then either trade with technical analysis or invest with the real fundamentals of the stock.
However, we start trading and then try to learn. Once we have lost the money, we try to find why it isn’t working?
I am also the culprit of the same process and approach to the market.
The only thing that kept me digging in the market was, I was convinced money could be made from the stock market.
It was all about knowing how. Every investor who approaches the market may not have the same view.
So when I was convinced, I did everything I could to know how small investors like me can make money from the stock market.
The Right Approach to Investing
I don’t say my approach is the only correct approach in the market. There may be others who may have done it very well with trading only. Some may have started with as an investor only. And others may have done trading even without technical analysis and some other kind of analysis – may be fractal analysis.
The critical point to note here is the belief.
Not everyone will be able to recover from the loss in the market and can be convinced ever in his or her life that money can be made in the market. It is these type of people who will continue to think the stock market is a gamble. And they are outnumbered in the crowd. Some make money, but most make loses.
As an investor, we have to approach the market correctly.
Mutual funds, to a large extent, have made sure the general people move over to financial investment.
Invest with Mutual Funds Not Like Mutual Funds
I find a lot of investors trying to invest like mutual funds.
I see it as the current trend. People try to invest in a stock which is picked up by a mutual fund.
But remember these points:
- Mutual funds approach the market top-down, but we retail investor should approach the market bottom up.
- Mutual funds will have a diversified portfolio of stock based on its benchmark, but I believe a small investor should invest with focus approach.
- Mutual funds will approach stable growth stocks, but retail investors should also have a value investing approach in the portfolio as well.
So if a retail investor wants to consider investing like mutual funds, it is better to invest with the mutual funds itself. There is nothing that should stop him from doing so.
However, if you want to be building wealth investing in the market, you have to study and invest in the right stocks at the right price. There is no alternative to it.
The Two Best Market Approaches
There is no doubt the two of the best and most popular market approaches are:
- Fundamental Analysis – What we all know about fundamental analysis from watching news channels is entirely wrong. Understand the correct fundamental analysis
- Technical Analysis – Technical analysis is not all about the application of some moving averages like 200DMA, but it is more about support and resistance.
No matter what you do, don’t lose the belief that one can make money from the stock market. It is a matter of finding the right approach that works for you and your style of being in the market, be it a trader or investor.