Beat the Street

With most of the global emerging market indices soaring to their alltime highs, every tom, dick and harry wants to take home his share of moolah. But its not every ones cup of tea either. It takes a bit of discipline, paitence and rationale to be a good investor. Investor is the one with no hurry to withdraw his investment from the stock he believes in. Traders form a very different bunch than investors. I wouldn't talk of them as I've a poor trading record.

The most complex thing in life is to keep anything simple! Similarly, success in stock market can be ensured by the following simple rules of investment. They are simple yet difficult to practice.

1. Have time on your side - Starting to invest early is always better. Give a fair length of time to the stock believed in. Let the power of compounding take over.
2. Logical picking of the stocks - Enter the stocks that you understand and comfortable with. Rumour mills are not enough to pick any stock, do your own research. This is not always easier to ignore your favourite analyst's recommondations, but always be convinced about the pickings. A lot of investors sit around to debate, whether a stock is going up, instead of checking the company and it's fundamentals. Importanty, stand by the stock as long as the fundamentals are in tact.
3. Invest in mutual funds - For those with no time to hand pick their stocks or no appetite to test their wits against the market, mutual funds are an excellent way to stay invested. If one has hand-picked stocks and performing below the market's then mutual fund could be a better option.
4. Don't try too hard to time the market - Have time on your side instead of timing the market. The indices are very unpredictible and bitchy.
5. Diversified portfolio - No investment in stock market comes with a assured returns. They are inherently risky. Good investors minimize the impact of failure by investing in more number of stocks and/or sectors. A failure or two will impact much lesser in a diversified portfolio. Off late Sensex has had a burst of sectorial rallies, always leaving the diversfied portfolio something to cheer about.