How do you buy your stocks?
This is particularly directed towards the men.
I read a lovely article the other day which said that for buying stocks, men should take a tip from the lady of the house. Observe her how she buys her vegetables. She will examine it closely, spread it out (say, in case of a cauliflower) and check for discolouration and worms. Check the overall colour and see if it appears fresh. Only when she is fully satisfied, will she go ahead and buy it.
We should be buying stocks using the same method. Do our research, ask around, find out the market for their product, projection of future earnings, etc and only then buy the stock.
However, we generally buy stocks like we buy perfume – look at the packaging, take a whiff of it, if it feels good, we buy it. Or we get taken in by the swank advertising, or the sales person’s glib talk or by someone else’s recommendation.
How do I buy vegetables? I look at the stack and mentally divide them into two parts – one that I think is really fine and fresh and then chose one from the other part – works every time!!
I buy stocks differently – I read about one, do research on it. Study it on various websites. Compare the P/E ratio with similar stocks. I generally meet a group of my friends and the conversation will go like this:
“Buy xyz”, “why?”, “Highly recommended”, “By whom?”, “My doodhwala’s bhanja (or someone with similar qualifications)” and then comes the clincher “It is Rs.50 now. Guaranteed to go up to 125 in 6 months.” Somehow, I always fall for it – almost never works.
One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute.
I just made a killing in the stock market — I shot my broker.
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