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Good Morning dear friedns,
We all are trying to beat the index return to generate alpha fort our portfolio. Nobody in the market invests thinking to have below-average return because you could invest in nifty ETF and generate 15%+ CAGR over a few decades.
But the reality is only a few among us will ever be able to beat market return because what we all do is we try to chase the big shots in the market. We blindly follow what they buy, and we don’t even think before investing in a company if a TV analyst suggests it. Now here is a fact to ponder over. If all the million people who are watching the analysts buy the stock and if the stock moves up significantly in a couple of decades don’t you think all in the market will be able to beat market return and doesn’t it merely overrule the basic market fundamentals? In reality, the stock tumbles after the retailers enter the store, and the analyst uses the platform to dump their holdings to retailers.
So next time before blindly buying any recommendation, try to understand the fundamental of the company. When a stock doesn’t perform due to external market condition, but the operational value still becomes constant, that’s the time you should enter in the store. When entire rhetoric around the company turns negative in every media, when retailers do panic selling, that’s the time big players enter in that stocks. A company’s performance always reflects in the price in the long term, but in short term price fluctuation and volatility will allow the investors to enter a much below the original level.
Always believe in studying a company’s business. The business which has longer-term sustainability will ever get high premium. Try to catch those stocks at the most pessimistic mood of the market. Have faith in your stuff and believe in your analysis. You must give some time to study the company if you are interested in beating the market return. Or else invest in Nifty ETF and stay supported for a longer time to get the benefit of the growth of India, \
Don’t buy just because someone has recommended purchase something without knowing the back of the company.
happy investing,
Stocktrading F&O team