7 Golden Stock Exchange Investment Tips  

You should trust your own judgment when you are investing in stocks. Here are some tips that you can use when you are investing in direct trading.

  1. Do not invest in public sector stocks: it is better to be out of PSU stocks. The logic is businesses, specially the progressive ones have long.term interests in their minds, but governments can be quite fickle; they come and go in a short-term period and their interests often are not in line with investor interest. Also PSU stocks are based on government decisions which are inconsistent and have way too many considerations that can be incomprehensible at times.

  2. No company or sector is immune to government policies: Just staying away from investing in PSUs does not mean that the government cannot influence stock performance. For instance, in 2007, when the finance ministry put a rein on cement stocks, some exited the sector but other stood their ground only to see three out of the 50 Nifty stocks in government control.

  3. Invest in pharmaceutical and telecom companies: Both are sunshine companies and are having good prospects. Most pharma companies are going strong in the stock market and since India is one of the largest telecoms markets in the world, the prospects are bright for these two industries. But be aware of the government influencing the decision making of pharma companies, they can price them and even interfere in the question of intellectual property.

  4. Give preference to portfolio performance: Performance of the entire portfolio is always important than that of one stock or fund. Also keep your portfolio objectives in mind; if it has been created to meet a certain goal; stick to it and base all your decisions in line with that goal. Do not go for mindless expansion of holdings that become static after being bough

  5. Diversify your portfolio: This is one of the basic but nevertheless, very important advice in direct stock market investing as well as mutual fund investing. Your portfolio is said to be diversified when you have an assortment of stocks from companies in different sectors. The benefit is that if some of your stocks go down in value, there will be others that will offset the loss and keep the portfolio balanced or even make the portfolio rise in a downturn. For instance, if you have a stock of a print company and an online company, you can cut huge losses if the print ad sales are at loss because the internet revenue will be strong or even better. So if you are losing in one sector, you are gaining in the other. If you had put all your eggs in one basket, then if there is a loss in that sector, you may lose heavily. So diversification is the key to a successful investment plan.

  6. Make sure you read, watch and research a lot about stock performance: We are lucky to be living in a generation where knowledge is at its zenith. You can pick out a lot of tips on good stock market investing and find out if a particular stock is doing fine or has better prospects in financial magazines, newspapers, the Internet, blogs, forum sites. You can benefit from user experiences and views on various channels of media like message-boards and blogs online, the finance and business based TV channels and trade guides. Plus, you also have investment analysts and advisors that can help you make proper choices. Just make sure that the sources of information are credible.

  7. Be careful of the exceedingly performing stock: It may happen that one stock becomes too big a part of your overall stock portfolio. It can be tough to sell a stock that is surging ahead but cutting the edges of your portfolio a bit to get a good mix of stocks is a good idea by selling them. If you hold on to the stock, a downturn in the economy may bring down the value of the entire portfolio. For instance, cement stocks gave very good returns and the sector looked very good in 2006 but if you had a portfolio that was too overexposed to cement, then your overall portfolio could be hit when the value of cement came down.