How to make money in stock market with investment strategies
Are you also willing to gain success in share market? But to be successful in share market is not a cup of tea. You must follow certain planning and strategies to earn money from stock market. There are some hindrances which stop out way to gain success. For this purpose, we are telling you that how can an investor achieve higher profits and returns in stock market.
Many of us keep a distance from share market just because we are unable to understand the activities of share market. A sudden fluctuation in the market makes us cautious. Following are some tips to gain success in share marketHindrances/ Obstacles in success in stock market
Heard mentality
Heard mentality refers to the habit wherein a person imitates the appropriate or inappropriate actions of a large group. On individual level, people think that the decision of a group is wiser and they like to follow most of the people in the market. When share market had surpassed the level of 20,000 then many people were willing to invest in share market.
Investors get ready to invest in such assets which are already overvalued than their actual level due to the fear of being left behind. Thus, unknowingly, then take more risk. The logic behind taking such steps is very simple. People with such mentality -'If anybody stays away from crowd, then he will be wrong', become a victim of such a big mistake. But when he includes himself into such a crowd, and begins to sink along with there rest of the people in the crowd then he hopes for some sympathy.
Endowment effect
Possibly, this is next step of heard mentality. Endowment effect means raising lots of expectations with your present assets. You don't want to sell them even when they are overvalued for others. In such a situation, investor is in deep love with his assets and he starts raising lots of expectations in return of the price paid by him for that asset. This effect follows in all assets groups. For example, if you are selling your house, then you want to sell your house at a price higher than other houses of the same locality. On the other and, if you are purchasing a house, then you want to purchase it for a price lesser than other houses in the same locality.
Overweight
This is next step of behavioral habits. Mostly investors talk of those statistics which supports their investment logic. Most of the investors had invested on infrastructure theme of 2007. This theme was based on those statistics in which we had talked about present facilities with us and the probable creation required in the future. But then investors had sidelined the problems facing in completion of projects of companies. This makes them realize the difference between actual situation and the logic and they had to pay for this from their own pocket.
Anchoring
This is one of common problems among retail investors. Most of the investors were not out of their overvalued shares during the initial shocks of recession of 2008. they were used to say that they will sell their shares only when they will receive more return than their purchase value. But had they tried to understand that the value of shares were not according to the fundamentals of the company. Investors made the purchase price their anchor and managed the overvalued s in their portfolio for a long time period.
Conclusion
At last, I hope that you can get success in share market by avoiding these obstacles. When you will start moving on the path where to know how to handle the hindrances, then you will surely gain success.