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| Investor and Market Fluctuations |
Investor and Market Fluctuations- How to deal with?
As we all know that market fluctuations is the key to run the markets upwards or downwards so Investors should know theses possibilities and should prepare themselves financially as well as psychologically. Every single investor wants to enjoy the benefit from market fluctuations but how we will find out while managing our risk that what is the right time to play with these fluctuations.
Dealing with market fluctuations is a very important art and every investor should reach to that level into their investing currier that they would able to know the real danger involved into this activity.
It is very simple to say here that don't speculate and simple also for you to feel that yes I should not do speculations in markets but it is very difficult for every investor to digest the profits and carry them.
But it is very true that you only make money into the market when you carry your profits with you.If you want to do speculation then do it with your open eyes and your own risk because you should aware with the possibilities that you will lose money at the end. In speculation be sure with your amount limits at risk and keep it seperate from your investing program.
How to deal with Market Fluctuations?
The intelligent investor always wants to get the maximum benefit from market fluctuations. He would be interseted to do that by two broader ways -
Timing
Pricing
-Timing means that the endeavor to anticipate the action of the stock market. To buy the stock when it is in an upward direction and then sell at high point and to sell it when it is in a downward direction or simply refrain yourself from buying.
-Pricing means that he buy the stocks at a fair price or when a good quality stock is below its fair value. A very common practice of a common investor is to pay less for the good quality stock.
If any investor follows the method of timing into the stock market then he will surely end up with speculation. Here so many things are dependent that how is the person qualification, understanding of each and every individual and most importantly that how much time anybody can give to the analysis of markets. If you are indulging in timing method then you have to keep a permanent eye on the market trends. Timing is speculative because here the he wants to make the profits in a hurry. The idea of waiting a year or two in the stock to get profits does not suits to him. Whenever he runs behind the timing theory then in the stock of upward trend he always buys that stock on the higher high point and one day when the stock is ready for correction that person will stuck into it with his money.
Following timings in the markets is not bad for everyone there are people who are very good analyst and make good profits with their analysis but everybody is not analysis.
The best strategy is to follow timing theory with pricing strategy. If you wants to enjoy pendulum swings then wait every time strictly to correct the stock price and then follow timing theory into it, means following timings with pricing theory. The chances of stucking here is also there but less then if you are following only timing theory, as if the stock is in an upward trend then it will hardly make lower lows but less chances to stuck at the top levels.
Market Fluctuations & Investor's Portfolio
Market fluctuations are necessary for all the investors' portfolios. Fluctuations are more widely takes place in second-line companies than the larger ones which doesn't mean that the company is not fundamentally strong and cannot recover. Any investor is not likely to believe that, day to day or month to month market fluctuations can make them richer or poorer. But what about the longer-term moves? There are many psychological problems likely to happen when your total portfolio is in profit and you are richer than you were. There are some questions which every investors need to face in their investing journey:
- The price of the stock has risen too high?
- Should I sell it at this level or wait for more?
- Should I buy more stocks at these levels?
- Are we entering in bull market phase or profit booking can come from here?
These are the questions for which every investor wants to find the answers and roam here and there.
They take wrong decisions in panic or in a hurry.
The first challenge in the markets to trail the profits with you to get more benefit and 2nd challenge is to take right decision at the right time and 3rd is to gather that much will power that you can refrain yourself from following the crowd.
There is not any sure-shot formula, I can give you here to answer all the above questions but here is what your analysis and intelligence work for you. The intelligent investor starts selling it holdings when the market is continuously going upward and start putting his money into the bonds so that when the market corrects then he will get benefited from bonds and after a sustainable correction again start investing in stocks for the same cycle to follow.
Nice work...
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ReplyDeleteNice blog .
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