Simplified Laws Guide to Taxation and Legal Concern There are many similarities in the way we live and in the way we operate in Stock markets. I have penned a few of them here.
Bull and Bear Cycles
Stock markets follow a trend, the one where prices keep rising is Bull and the one where it is declining is Bear. In a Bull run, there is a pattern. Once it starts rising, for a certain period, it keeps moving up, barring a few sideways or temporarily falling. Similarly, in the bear run, the markets will have free fall.
Isn’t it the same way in life? When a good time comes, you will find everything going well for you. When things start going wrong, it is unstoppable. Whatever you touch will become bad!
Buy and hold strategy
In the stock market, there is a strategy called buy and hold. This implies buying good stocks, holding them for decades to earn multi-bagger returns. This strategy was working fine in the past, say, 20 or 30 years back. Buy HUL and hold it for 20 or 30 years, your chances of making higher returns were better. But the situation has now changed. Buy and Hold is not the widely followed strategy. People hold the shares/funds for 3 or 5 years and then change to better alternatives to earn higher returns.
You will find a similar pattern in Jobs as well. In the past, people used to stay in a good company for 30 years and retire! In today’s time, frequently changing jobs is the trend. For better pay, people change jobs once in 3 or 5 years. Exactly the same way as in the stock markets!
Systematic Investment Plan (SIP)
Keep investing in the market regularly. This model is giving better returns. In the past, there was no concept of SIP. Invest a lump sum and be done with it.
In life, once you finished your degree and got a job, that was it. There was no major overhauling required! But the trend has changed. One has to keep updating his skills regularly, just like a SIP, to get better placements.
Like this I can list many points such as mood during a bull run or bear run, the urgency to enter, delay in exit, etc. I feel it will be tedious to read too many comparisons and hence, let me conclude with one last point.
A majority of the retail investors invest based on suggestions made on TV, WhatsApp messages, SMS, etc. This way, they will invest and lose their hard-earned money.
Likewise, a majority of the population will indulge in gossips, listen to hearsay, and waste a lot of time on social media, eventually losing their priceless peace of mind!
Hope these points help you plan better. Good day to you all.
Good info