– Think about the Industry : For instance, if petrol prices are going up then automobile industry stocks may not be the best interest in near term. – Think about the Company : Does it have a background of consistent Year-over-year growth or has unstable earnings or sales. – Think about the Stock Price : Does it perform well for a long period of time or is it more often in the downward trend?
Stock Market is unpredictable and investing in shares, mutual funds, ETF’s or any other financial instruments, can anytime turn upside down. It it advisable to invest in shares, mutual funds and bonds and have at least five investments in each of them. This simply means, choose five shares belongs to five different sector/industry and invest similarly in mutual funds as well as bonds.
Suppose, if the stock price is going down and fundamentals are good, then you should buy more at lower price. If people are consistently buying a stock and its price is creating a new high everyday, you might want to sell and book profits immediately as its price may go down sooner or later. Carefully analyse the situation, take a deep breath and act accordingly.