We tend to buy a company's shares when it seems to exhibit good prospects. But, suddenly something happens like an earthquake or terrorist attack and the share prices tumble like the twin towers (9/11).
Retail investors remain trapped and hope that they would recover the purchase price but it rarely ever recovers.
For the last few months, many people ask about YES Bank, DHFL, Rel Capital, etc.
These kinds of once gems, becoming problem companies will also be there in the future.
The powerful Mantra is to make a decision:
Whenever you travel in a taxi and the tire gets punctured, you get down from the taxi, pay the bill and say goodbye to the taxi driver. *You only fix the tire and continue with the journey if it's your own car.*
Whenever there is a major change in the fundamentals of a company, just use this Mantra: *SELL and THINK*
Don't try to apply technical analysis to fundamentally crisis-ridden companies. Just because you have a hammer in your hand (knowledge of technical analysis), don't use it to hit everything that looks like a nail. Please try to understand the basic assumptions of technical analysis. Technical analysis is applicable to only fundamentally sound companies at a given point in time.
Retail investors remain trapped and hope that they would recover the purchase price but it rarely ever recovers.
For the last few months, many people ask about YES Bank, DHFL, Rel Capital, etc.
These kinds of once gems, becoming problem companies will also be there in the future.
The powerful Mantra is to make a decision:
Whenever you travel in a taxi and the tire gets punctured, you get down from the taxi, pay the bill and say goodbye to the taxi driver. *You only fix the tire and continue with the journey if it's your own car.*
Whenever there is a major change in the fundamentals of a company, just use this Mantra: *SELL and THINK*
Don't try to apply technical analysis to fundamentally crisis-ridden companies. Just because you have a hammer in your hand (knowledge of technical analysis), don't use it to hit everything that looks like a nail. Please try to understand the basic assumptions of technical analysis. Technical analysis is applicable to only fundamentally sound companies at a given point in time.
0 comments:
Post a Comment