Introduction: Stock Market tips

Stock market investors come from varied income strata and this piece of writing is to create a sense of balance when they opt for investments. I honestly do not have any data to back up my claims but in general I have a feeling, majority of the retail investors come to the stock market thinking that stock investment is as good as starting a business and it's a sure way to make money just because someone they know made windfall profit. But new investors have to be careful in their judgment as only few retail investors beat the market. You might argue that you could be one of those few. Of course you can if you have the requisite skills and I define it as vague as the stock market in the following few lines.

In my view, most people can make money in the bull market (If you happen to be the one who lost money in bull market, then do not ever come back to the stock market).

But the one who makes money in the bear market (If investment started at beginning of bear market) or the one who booked the profit exactly at 20,000-21,000 Sensex levels or the one who at least minimized the loses (If investment started in the bull market but still holding into the bear market) is the one who can claim that they have the requisite skills to be in the stock business. If you think you do not fall in any of these three categories, please read further

What is special in those few people who beat the market?

The few "market beaters" whom we are talking about, do it as a passion in addition to just investment. Their mind constantly tickles around stocks and news and they relate almost everything with stock market. They are fortunate to receive perfect information in an "imperfect market"(It has become these days).

They put their brain on work rather than heart. They are the ones who would have happily remained in Titanic till it sank rather than fighting to get a place in the women's boat. They know how to find the anomalies in the company statements in addition to filtering out right information. They must surely have alternate sources of income which makes them not to fear about the loss and be greedy for more.

I can in fact nominate Krishna for passion as an example. I am sure that he must be putting in lot of time and thought in his investments. But he could have remained elusive and made money instead of writing blogs and in the process sharing his knowledge. That's where passion comes into the picture.

Note: The reason for Krishna as an example is to choose someone among us rather than pondering about Rakesh Jhunjhunwala and other legendary investors. He is in a different zone altogether. Some might argue that Dr.Krishna gets investment offers etc...But still even with hidden agenda, I would think he does it as a passion. There should be no question about that.

How the market works?
         Of course we all know that stocks make money based on earnings, potential profits, macro economic outlook, company management and what not...But you still need a buyer and seller and that’s where my point originates. Your loss is someone's gain and vice versa. This is precisely the reason why stock market functions always and it will be there even if the sensex hits 1000.

How many people have contentment in their life? One guy makes money and he returns to make more to lose some. The one who gained from him follows the same pattern and I am sure not many people ran away from stock market after investing once including me. Then comes the question of who should invest in the market and what income strata they should belong!

Income Strata and Investment options:

Here I am not talking about people who have the above said skills and start investing with 25,000 rupees even with Rs. 5,000 per month job. I am talking about the people who does not belong to any of the categories I mentioned as requisite skills and invests mostly based on analyst and broker recommendations or peer pressure or own misplaced confidence. If you are someone like that (Many of them are), you have to be very careful about stock investments.

If your family income is less than Rs.5 Lakhs per year and your only ambition is to save for marriage or education, there are many other avenues including gold which provides capital safety which is the need of the hour rather than investing in stocks and mutual funds which are like Indian monsoon, which is never on time and either over flooded or inadequate.