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Equity Investments: Hot Stocks

 
Started by : Sukhendu Ghosh, Investment Advisor, Standard Chartered   10 05 2008 15:10:45 +0000
Industry : Private Banking/Wealth ManagementFunctional Area : Equities(Markets)
Keywords : Stock Market Myths
Activity:  26 views;  last activity : 07 06 2010 20:18:09 +0000

The word stock market evokes varied thoughts - risky, gamble, complex, need a lot of money, only for 'finance' people, scam, and what has you. All these are mere myths and need to be cleared. So all those who trade or related to the industry in any way, I request them to come out with such myths and to clarify them here.

 
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1 Quick returns.
2 Just like gambling
3 It's an exclusive club

Quick returns.

idea posted by Sapna Dixit Investment Advisor, Kotak Mahindra
This is an important point to note. Investors entering the equity markets with a very short-term horizon to make quick money are exposed to very high risk, as the markets are volatile in the short run and can move either way. These investors generally invest when the bull market is peaking. A rising market attracts money which would not have come to it otherwise. Confidence among investors goes up and they start believing that the markets cannot fall. Rising confidence starts bringing short-term money into the markets as investors suffer from the illusion of control. And when the cycle reverses, investors with the short-term horizon and money suffer the most. Stock markets are not the place to make quick money. Ideally, you should invest money that you would not need in the next three years in the markets.
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by Anirban Roy, Jobseeker, Jobless  | 01 28 2010 13:40:44 +0000

10 different people may have 10 different takes on the stock market. Long term investors surely make a lot of money. There are some who neither make a lot of money not loose a lot and there are others for whom stock market is as thrilling as gambling as these are the ones who keep losing money in the stock market.

again gambling and quick returns are some what inter-linked. but however nowadays people have become more aware about stock markets so they do not think it as gambling, but surely myth of quick money is always their in their minds.

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Just like gambling

idea posted by Sukhendu Ghosh Investment Advisor, Standard Chartered

A major reason as to why investors in India, and abroad, do not opt for equity as an asset class is that they believe the stock market is for gamblers. That's not true. Gambling is zero sum game, that is, gain for one is loss for the other. In gambling the result is dependent on the outcome of throwing a dice; only one participant will win. In equity markets, if five investors hold the shares of the same company, and if prices go up, all of them will gain.

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It's an exclusive club

idea posted by Sapna Dixit Investment Advisor, Kotak Mahindra

Many believe that the stock market is an exclusive club of brokers and big investors and that one needs a lot of money to profit from investments in it. The stock market was out of the reach of lay investors till some time ago. But technology has changed the rules of the game. Now, with a demat account, investors can buy just one share. The cost of transaction has come down significantly from 5 per cent of the value to 0.5 per cent. I think there is more of India in the stock market than anywhere else.

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