Trying to beat the market? It's a waste... - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Trying to beat the market? It's a waste...

Sep 30, 2009

…of your effort and money, especially if you a young and first time investor.

The world of finance and the stock market have long had a huge fascination for many people. More so for the younger ones, who are newly venturing into the field for the first time and are bedazzled by success stories of people who have made truckloads of money in the stock market. Their ambition knows no bounds, and nor does their enthusiasm. But as many gurus have often expressed, when natural human instincts and the stockmarket come together, it can be quite a lethal combination. No one knew that better than Benjamin Graham, a prodigy in the field of the behavioral aspects of people in the market.

Graham lost his father at a young age, and subsequently his family slid into poverty. His mother, in an attempt to make things better, borrowed money to trade stocks on margin, but was tragically wiped out in the crash of 1907 where from its high the Dow-Jones Industrial Average saw a decline of about 50% within the span of a year.

Getting back to the many bright young people who enter the markets with big hopes and dreams, they enter with the expectation seeing their money grow quickly, and want to invest as smartly and aggressively as they can to achieve that goal.

This attitude is a great one to have, and can usually lead to a good amount of success in other fields where the enthusiasm and energy to keep doing something are much desired traits. But not in the stock markets! That is because continuous activity of buying and selling does not necessarily lead to continuous profits, as is often thought.

So what’s Graham’s advice? If you would like to practice active investing and make your own decisions, you are bound make some mistakes and consequently take some losses. But there is a bright side to that – you need not only bear these disappointments, but can actually profit from them in a big way by learning from mistakes and analysing where you went wrong.

Therefore Graham urges beginners in the stock market to not waste their effort and money in trying desperately to beat the market. They should instead focus on studying stock valuation, and initially test out their judgment on the price of a stock versus the value it offers with the smallest possible sums.

Indeed, an early experience in investing on your own is like gaining an education in a good university. However, whether the fees you pay for it is exorbitant or decent depends on the amount of money you are willing to put at risk in those initial times of learning. It follows that once you get that much needed experience and a sensible framework that you are confident about, the possibilities of profit are limitless over the long run.

Equitymaster requests your view! Post a comment on "Trying to beat the market? It's a waste...". Click here!

1 Responses to "Trying to beat the market? It's a waste..."

chittaranjan kundu

Oct 3, 2009

Very nice and practical advice.

Like 
  
Equitymaster requests your view! Post a comment on "Trying to beat the market? It's a waste...". Click here!

More Views on News

ITI Mid-Cap Fund: Investing in Potential Midcap Companies for Growth (Outside View)

Feb 26, 2021

PersonalFN analyses the features of ITI Mid-Cap Fund and explains the potential this fund has to offer to its investors.

NSE Glitch: Why Did the Market Go Up? (Fast Profits Daily)

Feb 26, 2021

In today's video, I'll discuss why thew stock market went up on Wednesday, 24 February 2021, when the NSE had to shut trading due to a technical glitch.

My Personal Checklist for Your Trading Success (Profit Hunter)

Feb 26, 2021

You my personal trading checklist and you will be well on your way to making it big as a trader.

Make Rs 5,000 Per Day Trading the Market (Fast Profits Daily)

Feb 25, 2021

In this video, I'll show you how to get started on the path to daily trading profits.

Refresh Your Investment Portfolio in 2021 to Align with Your Financial Goals (Outside View)

Feb 25, 2021

Timely review of your investment portfolio is the key, to enable stable returns and work towards your envisioned financial goals during various market phases.

More Views on News

Most Popular

Benjamin Graham Deep Value Stocks

Benjamin Graham is credited as the founder of value investing. In 1934, he published 'Security Analysis', and this today rema...

It's the Beginning of a New Bull Phase in Smallcaps (Profit Hunter)

Feb 24, 2021

Last time the smallcap index crossed 19k a big correction followed. Here's what makes it different this time.

Intraday Trading for a Living (Fast Profits Daily)

Feb 15, 2021

In this video, I'll cover your queries on intraday trading and also share my view on how to decide stop losses and target prices.

Top 5 Stocks Mutual Funds Bought and Sold in January 2021 (Sector Info)

Feb 16, 2021

A look at what India's top equity mutual funds bought and sold in January 2021.

I Would Recommend this Small-cap Stock Over Tesla (Profit Hunter)

Feb 16, 2021

Do you enjoy reading Tesla and Bitcoin stories? Here's a not so famous small-cap stock to profit from the rise of EVs.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Feb 26, 2021 (Close)

MARKET STATS