1. Profit is made while buying and not selling. Always focus on buying at right price.
  2. Timing and pricing
    1. There is no good or bad price, but usually stocks return to their average price over a horizon.
    2. You should always wait to buy new positions after a big run. Things shall calm down and stock shall come to the average of highs and lows spread over a period of times. Law of averages never fail.
  3. Short term Stock prices are mainly driven by traders in short run. If you are gaining 40% in one month and you are not a long-term investor, sell immediately.
  4. Trading Rules : Never do two similar trades in one single day. Never average on the same day. Waiting is always beneficial. In stock markets we often see follow-up buying and follow-up selling.
  5. Invest in businesses and NOT stocks. Never invest on price.
  6. Usual long-term is minimum three years.
  7. Forget timing : Research has conclusively shown that any good stock in 20 year time frame is just 1% away from it’s all time high. Long term really works.
  8. Believe in your own gut feel and common sense more than these paid TV panelists with biased and contradictory views. There is no other place as common as TV experts with such high failure records and still in the business. Stop loss is a scapegoat used by these panelists which never fails. Look I told you to put a stop-loss!
    1. Pro Tip : Avoid TV and you shall see your gains doubled. Alternatively read news paper for more consolidated and thoughtful views.
  9. Avoid Day and future Trading : Day trading is worst than gambling unless you have the financial muscle and capital to control whole market.
  10. Stock market is designed to transfer wealth from the active to the patient. Warren Buffet
  11. Avoid Panic Selling : Stocks are priced according to the emotions in the short term. Results, temporary set back, minor scandals, rumors about management change etc. make perfect opportunity to buy. Buy the rumor and sell the fact still remains grand thumb rule for stock market.
  12. Opportunities are always there in the market to buy or sell. Just wait for the right moment. SIP is a great investment tool to capture the averages while use discretion to buy individual stocks in time of temporary crisis.
  13. In long-term there is only one way for markets to go and that is up.
  14. Equity beats Gold, Real estate or whatever you can think off combined, in any 20 year horizon.

What’s the biggest mistake that stock market investors make?