Always Go for Quality Stocks and not for Quantity !

New investors most of time want to make a quick money in stock market (some time old investors thinks similarly). Sometimes you can do that if you get lucky. But the really big money in investing is made from holding quality stocks a long time. Many investors ask for information on cheap stocks. The usual premise is that they don’t have much money, and they want to own thousands of shares of something, that way when it goes up, they’ll make big money. The problem is these stocks don’t go up. They’re a scam for the brokers, and the spread between the bid and the ask on these stocks is enormous, making it impossible to sell them at a profit.

Instead of trying to buy thousands of shares of a worthless stock for Rs 50000, let’s see what else you can do with it. These examples are all split adjusted and show what that Rs. 50000 can do when you think to buy the right stocks at right time.

If you had bought Infosys shares in year 1991 for Rs share (split adjusted), you would own n number of shares.

Obviously it’s easy to look back to find great stocks. And you had to hold onto these volatile issues to reap these rewards. But the point is that quality stocks are worth holding for long time ? In the above examples, the owners have paid no taxes because there have not been any gains taken. The only commission paid was the original one. And as long as the stocks continue to produce good earnings, there’s no reason to sell them. Again, it’s easy to pick the good ones looking back, going forward, which stocks are the best ones to own?

Do your stock market research thoroughly. Build a portfolio of your stocks, one stock at a time, even with Rs 50000. Be sure to diversify over several industries over time. And only buy the best, no matter how few shares that might be. Then be patient, keep up with the news on the stock, and let the stock grow. That’s the way the big money is made.

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Tagged as: Money, Shares, Stocks