Beta- Analyzing mutual funds

Guru Prasad -
 The risk of any investment made always depends on the volatility in the following investment. If we can have a factor that could tell us about the volatility of a investment and help us judge our risk and corelate it with our capability to take risk, how would that be? Well Beta factor is one such factor that could help us know the sensitivity of our stock or portfolio fund that we have chosen to invest. Beta ratio:- Understanding Beta:-  Beta is a metric used in fundamental analysis to determine the volatility of a stock with comparison to the overall market that has a fixed beta ratio of 1 always. Stocks or funds that are ranked with a beta ratio above 1 generally tend to fluctuate more and hence give access to more risk but yielding higher returns too at the same time if gone in favour. While the risk is slightly less in the funds with beta ratio below 1 they give less but yet stable return on investments generally. Hence, the beta factor can be said as a risk- reward fact...
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Mistakes that you should never make in stock market

Guru Prasad -

 People often think stock market is like gambling. But why? There are few such mistakes that people often do here that puts them in loss. What could those be :-

1. Investing on others words:- Stock market is a place to execute your passion and just satisfy your greed. Hence investing by trusting someone's words without any kind of self analysis is one of the biggest blunder you could do. You should gain knowledge and understand the strength of your stock before investing. Stocks require being updated with news as it works on the funda that "knowledge is wealth".The market doesn't have place for emotions like trust and believe on someone.


2. Taking loans to invest:- Taking loans to invest in stocks is always a risky thing and hence is never suggestible. Stock markets could change their trend at any time due to even small news as stock market runs on sentiments. Investing in such a place often ends up in the door to suicide or death for many people.


3.Investing all your money in a single stock:- Diversifying your portfolio is a very important element in stock markets. Investing all your money in one stock could lead to severe losses sometimes due to a news about the particular stock at times. Hence a diversified portfolio, always helps in managing the ups and down of the stock market. Obviously, I wouldn't suggest you to diversify it too much also but investing in 3 stocks or more based on your budget and than increasing your investments in quality stocks slowly over time in such a way that it is always possible to keep the stocks in your watchlist and have information about every news of it is necessary.  


4.Getting over bullish:- Get highly bullish on a stock looking it growing and investing in it while it is at a quality high to satisfy your greed could prove to put you in losses. It is necessary to learn buying in dips while the market is at a reasonable low or at the resistance point technically is very much necessary.


5.Selling quality stocks due to panic:- Many often sell of their stocks looking it go a little down also out of fear that it might go even more down without having enough patience. This could reduce your profit booking margin or end you in losses. As the market doesn't have much place for emotions, hence it is necessary to keep control over your emotions and have patience.

 


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