Friday, 25 March 2016

No Stock Is a Dud

A common complaint in the stock market is that stocks move up after you have sold them. During the time you hold onto them, they simply refuse to budge or rather head for the South Pole. Meanwhile, you find that many other stocks are racing up. This causes you to shift to them, and lo, you realize that they have stopped moving as well!

Then there are those you switch to so-called “better” companies from the “lousy” ones in order to benefit from the secular rise the better companies see. After some time, they discover that the lousy ones have raced ahead of the better ones.

One rule that comes handy in such situations is “No stock is a dud.” If a stock clears your criteria, you must hold onto it without getting swayed by the movement in the stock price. Don't sell it to buy something else—no matter how good the new opportunity appears to be. If a company does well, eventually it will be rewarded. Don't worry about the momentum either. Stocks can race really fast and make up for a lackluster performance in a few days.    

Even those stocks that every analyst and expert stays miles away from can show tremendous appreciation. In the current scenario, commodity stocks can well throw a surprise. Timing also matters. A stock that you bought at Rs 100 when comes down to Rs 25 is a nightmare. But if you buy it at Rs 25 and it goes up to Rs 50, it becomes a sweet dream. Again, the point remains that you should never underestimate the power of a common stock.

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