Misnomers:

Misnomer1: Don’t expect huge returns:

This is a very usual advice from the advisors. From a common man’s prospective, if not for huge returns then why am I in the stock markets? The idea of such advisors is to play safe or rather escapist. If the returns to be expected from stock markets are just 10-12% then the risk inherent in the stock markets is not worth taking. For such a modest return, the investors should look forward to Bonds/ debt markets or even bank FDRs.

A very well known basic business funda is More risk More profit. Hence the return expected from Stock markets should surely be high for the risk involved.

So defying the above misnomer please adopt the Principle: “Be greedy in the stock Markets”. Be Greedy doesn’t mean being rash, impulsive or unreasonable. The idea is to sense the markets well. If you don’t understand then leave it to the experts who’ll work for you.

Misnomer 2: Avoid Day (short term) trading: Be a long term investor

Why? In stock markets, One’s loss is another’s gain. Now let’s assume that everybody becomes a long term investor. Then is it practical for all to get huge returns?  No …. Not really. It’s just not possible. Agreed but amazed too? The simple logic is that stock markets work on the principle of Zero Sum game.

When it’s not possible to determine a trend for the day then how trend for the log term could be visualised. The experts who usually resort to the ‘Long Term View theory then why contradicts it with concept of Stop Loss. In our view, a long term investment is infact a short term investment that has failed. We advise why not instead go for Swing trade or Day trade with relatively smaller stop loss?

Misnomer 3: Don’t rely on Market rumors:

Why? Why not?

Not relying upon certain rumors sometime may make one lose the opportunity also. Rumor in stock market are nothing but the behind the scene market buzz. The initiatives, the efforts, the drill of the corporate which if convert into a deal becomes BIG News. So this hearsay of the market, at times, could be of great use.

Hence always take clues from the Market Buzz or so called rumors. This means catching the News young i.e. when it’s grapevine. Once it translates into news then whole world knows it and the very opportunity is lost. So buying on grapevine and selling back on confirmation of news may give considerable returns too.

Misnomer 4: Keep investing; don’t panic in falling market or in good quality stocks

This is a common advice given by most of the experts but is not so practical. How can one sit on the fence and watching his portfolio value declining? Instead of advising them exiting, certain experts advise investors to infuse fresh money into the good quality stocks when they too are falling. If stock is falling then it’s better to stay away from the same.

Please panic it’s your money and nobody will feel the pinch more than you .Get out of the stock when it’s falling.

Misnomer 5: Buy on Dips

Buy on dips? This too is a common recommendation given by the so called market experts.This strategy doesn't give you a strong probability of making a profit in the stock market. Remember, a stock that has dipped 25% needs to rise 33% to recover the loss and a stock that has dipped 50% needs to double to get back to its old high.

Principle to follow: Every Fall is not an opportunity to buy.