Investing in the stock market is all about selecting some potential stocks based on fundamental analysis and holding them in your portfolio and wait for the perfect time to square them off and generate wealth. Most of the investors buy and sell their holdings based on current news and tips. Price targets and stop losses are used to effectively invest in stocks. While this process creates lot of activity, the success rate is low. Too much trading is one of the biggest causes of underperformance of individual sectors.
As an effective measure to monitor your stock holdings, you should stop watching the stock prices and start looking after the companies behind them. It is very important to focus on the business and not the price. The daily market fluctuations should not mesmerize you, but the quarterly company reports are what you should focus on. A health report shows that the company is growing which eventually means that your stock price will also grow.
Let us discuss about some of the key pointers which will help you in managing your holdings effectively and achieve a better success rate in the markets.
These are some of the factors which can help you in an effective management of your stock market portfolio. So, without further ado, let us learn about them in detail.
1. Ignoring the Noise:
Most of the investors in the market just could not get rid of the noise, but it is the first and foremost step required for managing your holdings effectively. Most of the companies release their financial results after every quarter, and that is where investors should focus and pay their attention.
If there will be constant churn of buying and selling, it will hurt the long-term performance of that particular stock. A long-term planning with lesser activities would therefore translate to great long-term returns.
2. Focusing on the Numbers:
The numbers of a company play a crucial role in gaining the insights about the stocks. You should watch the numbers on the financial reports and work on certain questions like, why is the sale growing? Why is there a sudden surge in the earnings? Has the company increased the debt or issued new shares? Are there some new products which can be released to boost the sales and revenue?
The answer to these questions can be found in the numbers, that the company releases in the quarterly financial reports and can prove out to be very helpful in monitoring and managing your holdings.
3. Keeping an Eye on the Management:
The management of the company and their attitude towards the shareholders and the ownership can be a significant factor in tracking the future performance of the company and the prices of stocks. If the management is making open market purchases or selling stocks around the current price, it can alter the performance of stocks and thus it should be monitored regularly.
4. Investing for Long-Term:
Long term investment requires you to focus on the overall well being and performance of the business of the company. You should avoid focusing on arbitrary price targets and daily market ups and downs. If the company is showing growth and the profit margins are stable, you should definitely hold the stock and expect profits in the long term. In certain cases when the company is performing well but still the prices of stocks are down, you should consider investing more by buying more shares to increase the overall profits.
Conclusion
These are some of the factors which you should consider while managing your holdings and portfolio. For long term investments, fundamental research is the key. If you are not confident enough, it is better to get help. Market Neuron can help you in planning your long-term investment. It includes a selection of 6-10 stocks based on fundamental analysis, which you should hold in your portfolio. These can be based on either a theme or event which is expected to have its impact on the stock prices and in turn help you in capitalizing the movement.
Also, know your risk appetite before stepping into the markets. It will help you invest with more confidence. You can get your risk profiling done from a certified investment advisor to get an idea about your risk appetite.
