Things to know before investing in stocks

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WELCOME TO DHANASHRI ACADEMY
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Things to know before investing in stocks
Investing in stocks can bring great rewards but
it comes with its share of risks and uncertainty.
A first time investor and a veteran alike can
sometimes get fazed by market volatility.
However, we can learn to handle our investments
better from legendary investors like Peter Lynch
who was not affected by market fluctuations.
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Know What to Buy
Mr. Lynch desired to know everything about the
company and carried out his ground checks before
investing in it. He also advocated investing in
companies which one is familiar with or whose
business is relatively easy to understand. In the
words of Mr Lynch himself- "Investing without
research is like playing stud poker and never
looking at the cards."
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Before youpurchase, explain why you are buying
it
The reasons for our purchase should never be
based only on someone else's suggestions. In
order to explain why you are buying something you
need to know what you are buying.
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It is futile to predict the economy and
the interest rates
One needs to cut market noise and concentrate on
core fundamentals when selecting investment
options. Mr. Lynch said, "If you spend more than
13 minutes analysing economic and market
forecasts, you've wasted 10 minutes."
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Good managementis important, buy good
businesses
Mr. Lynch invested in the 'story' a company
offered. What a company is going to do to deliver
the desired results formed the crux of his
investment decisions. If a company has a business
that anyone can relate to and the management has
a clear plan to deliver on expectations, then
this check is cleared.
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Be flexible, humbleand learn from
mistakes
No one is perfect and we all make mistakes. Not
living in a make-believe world that our bad
investment choices will someday magically turn
good is a humble start.
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There is always something toworry about
Investments are subjected to various risks and
market conditions. No investment plan can curtail
all the risks. One can only mitigate risk to
achieve higher degree of success with their
investments.
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Be unfazed byshort-term market
volatility 
While picking securities, Peter Lynch stuck to
what he knew or could easily understand. He
mostly invested for the long run and was unfazed
by short term market volatility. Attempt to
understand the Peter Lynch approach to investing.
You will realize that a share is not a lottery
ticket but a part-ownership to a business.
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