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Sunday, July 15, 2012

Is making money in the stock market easier than making money as a doctor, lawyer, accountant or engineer?

That is a no-brainer, right? Of course it is much easier to make money in the stock market, isn’t it? You neither need to sit for any admission tests with three-letter acronyms like CAT, MAT, SAT; nor do you have to spend lakhs of Rupees on coaching classes, tuition fees, books, stationery, hostel charges.

Most important of all, you don’t have to spend 4-5 long years in reading thick text books written in English and then appearing for tests every semester and every year to qualify as a stock investor. You can just open a demat account and walk right in to the market and start making money without spending much time, effort or money.

Well, guess what? Because most small investors don’t go through a disciplined and well-planned learning process of several years before entering the market to earn, the chances of making ANY money in the stock market is next to impossible.

So, what about all the stories of acquaintances, friends, and relatives who have become rich overnight? Those are mostly just that – stories. You get to hear about the huge amount of money they made in one or two stocks, but you never get to hear about the even larger amounts they have lost in most of their other investments. No one likes to discuss their failures.

The real tragedy about investors losing money in the stock market is that many such investors are doctors, lawyers, accountants and engineers. They have spent many hours of effort and lots of money to get proper training for their respective professions. But they don’t think twice about spending lakhs of Rupees on a ‘sure-shot tip’ from a friend or a web site.

There are training courses run by the stock exchanges and private educational institutions – but very few people actually avail of these services.They are either too busy or too lazy. It is far easier, and more thrilling to make wild bets on unknown companies in an age-old quest of ‘getting rich quick’.

There are no short-cuts in life, and definitely none in the stock market. You may get lucky once or twice. But if you don’t know what you are doing, you are unlikely to get rich from your stock investments. Building wealth is a planned and long drawn out process. It isn’t rocket science, but you still have to learn the various steps before you can reach your financial goals.

Just like you need good teachers in order to become a good doctor, lawyer, accountant or engineer, you need a good teacher who can guide you through the intricacies of building long-term wealth in the stock market. Unfortunately, very few experienced investors have the time or desire to pass on their experiences to the younger generation. One of the reasons is self-preservation. How will experienced investors make money – if not from novice investors who enter the market in droves?

One of the main reasons for publishing my Monthly Investment Newsletter is to educate young investors about the process of selecting stocks through fundamental analysis, and then deciding on entry/exit points through technical analysis. By receiving monthly technical updates on the selected stocks, investors learn about useful technical concepts like supports, resistances, consolidation and reversal patterns, trend changes from bull to bear and vice versa.

Subscribers of the newsletter also have the option to chat with me on-line to clarify doubts or queries regarding the stocks discussed on my blog and newsletter. If you wish to avail of a paid subscription to my Monthly Investment Newsletter, please do so by July 21, 2012. Subscriptions will be offered next in Jan 2013.

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