There are a few rules I've noticed in them that made them beat the market and even beat the super rich in the Stock Market Game, and above all they still invest when most have run many a miles away from the Stock Market. Today many are looking sarcastically on these blokes, when they say that their JOB is Stock Market Investment. Yes they have chosen the Stock Market Investment as their PROFESSION.
What are these Rules?
Rule 1 - The decision to make Stock Market Investment their Profession.
This is the 1st Rule they have. This decision is so strong, that what ever happens, they stay by it. They don't chuck up and move out to another like many people who do 9 to 5 Jobs.
Rule 2 - Securing a Fixed Income Channel.
Many of them lock atleast 80% of their cash in a Fixed Deposit. This gives them the income for their daily commitments. In addition to this some of them are working as well. Hence they have 1 or more secure lines of income flowing. The balance 20% they invest.
Rule 3 - How they invest the 20%
This is the most important part in their investment strategy. They never invest large chunks in one go. Their maximum amount of shares range from 100 to 1000 shares at a time. Their goal is to average at the lowest, and preserve their cash as much as possible.This they do even when the stock is of good quality.
Rule 4 - What to buy
They always buy value. Value may cover many aspects, such as NAV, PE, Dividends, Industry etc.
To put it simply, They have a reason, not just a reason, a valid reason to buy and sell.
Rule 5 - When to Buy, and When to Sell
It is a very very simple strategy. When the Market is coming down, they put GTC BUY orders way below the present price. When the Market is going up they put GTC SELL orders way above the present price. Isn't that simple?
Rule 6 - They keep a record of what they Transact
They know that this is a professional job. They are very serious about it. They take pride of it. As such they keep a record of what they Buy and Sell, so much so that even if they have bought shares of 50 or 100 companies they know the prices by heart.
Rule 7 - Passion vs Emotions
This is another strong quality of these Investors. These guys are not emotional about what they do, instead they have a very strong passion for what they are doing. If you do not know the difference between the 2, then it is very difficult to become a professional RETAIL INVESTOR.
Rule 8 - Generally speaking they do not consider the amount they can invest as important, but how much they invest is more important. As such even if they have 1 million rupees, they would invest into 100 shares of a company that is trading at 10 rupees. Thereafter they will keep on accumulating.
Rule 9 - They trade like a wholesale trader
A wholesale trader buy and sells the same commodity he trades in. But he wont sell the whole stock at once. He keeps a buffer stock while he trades. This allows him to keep a lower average while he does his business. If he is a wholesale trader in rice, he buys a bulk volume and sell in small quantities. This makes him to turn the stock of rice over, whilst he keeps buying in bulk. The trick is to sell as much when the demand is high, and buy as much when the supply is high. This is one of the main strategies of the Professional Retail Investors.
Rule 10 - Keep it Smple
Reading the above 9 rules will show you that, the rules of these Investors are really simple.
Professional Retail Investors has shown that the Stock Market can be used as a business with their real time experiences, which convinced me to post this article here.
No comments:
Post a Comment