 |
| Stock Market Falls after "My" Entry! |
Stock Market Falls after "My" Entry!
Maximum of us feels and faced this phase that just after their entry into the stock, Stock Market Falls. Not only you even I also faced the same, but a maximum of times also during my investment. Today we try to talk over all the aspect related with that and understand the precautionary measures which can be taken to avoid the condition.
Things to be considered before buying any stock to avoid further fall in the stock:
Investor or Trader
The answer to stock price/Market falls is hidden behind the question that Are you a Trader or Investor?
If you are an Investor then your way of analysis is very different than, if you are a trader and the same goes with traders. As an Investor, you always do the fundamental testing and never care about the little downside and upside of the stock because your outlook is for the longer-term duration and you are buying the business of that company, not the prices. As we discussed, the valuations are of great importance while doing investing but valuation doesn't mean fluctuations of the stock. Valuation means buying of stock at their best price possible or below their intrinsic value. If we already buy a stock on particular prices thinking that the price will only go up from here but unfortunately the price of the stock goes down just after your purchase then it means that people are still bearish on the stock. In that case, you should not worry about, because if your research is good and you are bullish in the longer-term than hold the company with confidence and wait for the right time to come. If your stock price is going down and down and you are losing your confidence then it means you don't trust your research as well as a company profile and business model. We have to give some time for getting big profits for the company.
Further, if you are a trader and you are feeling that just after buying your stocks, it comes down then there is the possibility of two things either you bought the stock at the overbought zone and second is you are extremely bullish over the stock. While if both the above case is not there then it means you are not good at your technical analysis part. You as a trader should always use 3 or 4 indicators that work well for your trade. If you use so many indicators at a time then you will get confused and the right time of the trade will be passed away, also if you use only 1 or 2 indicators then also you might not get the appropriate results. Moreover, if you are not very sure then do not take the trades of very deep stop-losses to minimize your losses.
Check if in the near term stock ex-dividend date passes away
Most of the time stocks start it's really when the company declared dividends and continued at upside till then it passes its ex-dividend date. The ex-dividend date of the stock is the day that comes 1 day before the record date of the share, the Record Date is the date on which the company checks its records to transfer the dividend in shareholders account. While if anybody bought the stocks on ex-dividend day then he would not be entitled to the dividend, the seller would get the dividend of the sold stocks on the ex-dividend date. That is why on the ex-dividend date the stock starts slushing if stocks rallies due to dividend declared so we have to take care before buying the stock that in near term stock ex-dividend date shouldn't pass away.
Compatibility with broader markets
It is very important to check the compatibility of your stock with broader indices, implies that if your chosen stock comes under Sensex or nifty indices heavy weights then the stock is interdependent on broader indices, if Sensex and nifty rallies then the stock contributes into the same or if the stock will slush then it drags the Sensex and nifty down. If the stock is underperforming after your purchase made then compare that with indices, most of the time it should move with the indices. If the stock is going against the indices then it means something is cooking behind the doors into the stock.
Any rumor triggered
If any rumor triggered around during or just after your stock purchase could be another reason to slush the stock price, so need to evaluate the things related to that rumor.
Comments
Post a Comment
I have started this blog to educate people regarding saving and investment of their hard-earned money wisely to become big, investing decisions play a very important role in our life to meet our retirement expenses and brighten our future.