Busting the Myths of Stock Market | Part 1

“Do not let any Stock Market Myths become a hurdle in your investment journey”. But What is Stock Market Myth – There’s a lot of saying either unrealistic, outright wrong beliefs or views about stock market investments, a.k.a Stock Market Myth.

“Stock with a low P/E ratio is cheap” is one of the most common beliefs in the market. But does it work? Not always; that’s why investors are warned that following these myths naively could result in poor investment decisions.

There’s a lot of myths going on from the very past about investments in stocks. It is very crucial for investors to know about the most common myths, so their decision is not solely based on one wrong belief.

The Most Common Myths About Stock Market Investment

Today we are to convince you of very common myths related to share markets. Out of many, there are four myths that have been crossed by many people.

#1 Risky

People say investments in the stock market are very risky, but it is dependent on their investment perspective. If they are coming into the stock market for the long run, then there are absolutely fewer chances of risk in comparison to investors who invest with a short term perspective only. Long terms are considered as making an investment for a more than one year period.

Suppose an investor sells shares after a holding period of more than one year. Gains on those shares will come under LTCG ( Long Term Capital Gains). Moreover, shareholders might receive some dividend (Dividend is a return on investment in shares & it is completely company’s decision whether to declare a dividend or not. Dividend is declared on Face Value of the share). Both Dividend and LTCG are exempted from tax (Disclaimer: Subject to limits).

#2 Strong Financial Background

Investors need to have very strong knowledge about finance to succeed in the stock market. It is an absolutely wrong approach. We will clear this one by giving you examples of top stock market experts.

List Of Successful Billionaire Indian Investors:

1. Mr. Rakesh Jhunjhunwala – CA

2. Mr. Ramdeo Agarwal – CA

3. Mr. Parag Parekh – Masters degree in Commerce & Economics

4. Mr. Porinju Veliyath – Law graduate

5. Mr. Viay Kedia – Bcom

6. Mr. Ramesh Damani – HR Specialisation

7. Mr. Radhakishan Damani – Undergraduate

You just need to have inquisitive about the stock market. Here logic works more, or analytics skills are more required.

#3 Lots of Money Requirement

Small investors cannot make money from the stock market; you need lots of money to invest in stock markets. This statement is false as there’s no minimum limit to start investing in stocks. You can start with the very minimum amount you have. There is no bar set.

#4 Renowned Companies

It’s been said renowned companies never give strong returns. Another unrealistic belief – They do as they are established ventures, but not all of them give strong returns. Investors, though, need to look out for the company’s turnover (Top Line), their profit before tax, or profit after tax (Bottom Line) and share price for at least five years data. Along with that, do check for present trends and what are their future planning. Through these three, investors can easily identify to invest in which renowned companies.