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A stock is nothing but partial ownership in the business. Consider yourself an owner of multiple local restaurants. As an owner, would you consider buying and selling your restaurants frequently? If your business faces temporary downturn, would you consider selling s restaurant and them buying it back again when it is better time for business?. Surprisingly, in stock market, many investors are ready to do the same. A mere 10% rise in stock price tempts to book profit, while a 10% drop in the stock price creates panic. The more you trade, the chances of losing money will widen. If you can consider yourself as a partial owner of the business, then you can restrict yourself from frequent trading.
Before purchasing cars, expensive cell phone or television, we conduct rigorous research, I still remember before purchasing my first car I had spent a minimum of 30 to 40 hours on the internet over a three months span, visited the showroom trice and then monitored car price trends continuously for a while. After that, I took a test drive with another friend, consulted my family members and then purchased the car. While purchase a stock, do your conduct such rigorous research? Consider the last time you make an expensive purchase, be it a car or a mobile phone or laptop or any other electronic devices. You try to collect information for reliable sources, internet, etc. and then decide accordingly. But, so you spend a fraction of that time doing the research before making an equity investment?
