How Stock Market Works?
If you are a Smart Investor you will know the Principle of Demand-Supply Impact on Price. Whenever the Demand increases the Price tends to go high. Whenever the Supply increases the Price tends to go low. The vice-versa too.
To ensure our stock will have huge demand, we have to check back on the performance. If the company have a niche produce, good brand, positioned in a growth sector we can assure there will be demand growth in future. This will ensure future price growth.
Once the price grows high, the market capitalization crosses 1000 crore. This is the level where Mutual Funds can come in with Big Money. They buy stocks and keep it aside which will make the Supply Reduce which will again accelerate the prices up. So more the price growth there is more chance of growing price again more.
LONG TERM MATTERS
So this is the reason we are repeatedly saying buy good growth stocks & hold for long term!
In my 10+ year experience I have never seen a loss portfolio above 2 years.
In India the stock market rally happens in 2 batches:
The Largecap rally will be lead by heavy weights like Reliance, Tata Motors etc. Once the Valuations are over-valued the money will shift into Smallcaps. Right now we are in this stage.
- Largecap rally first
- Smallcap rally next
SHORT-TERM INVESTORS WILL NEVER BECOME RICH
There are few folks who understood market wrongly & think about beating stock market in short-term. We too have demonstrated 100-200% returns in multiple stocks in a span of 3-6 months. But these are just additional bonuses and our aim is in the long run to gain 500% returns.
So any chance of price down by 30% is an opportunity to buy more to get extra returns in the long run.
STOCK MARKET IS FOR WEALTH CREATION
You can read our Golden Rules of Investing here.