Monday, January 21, 2008

Don't Catch a Falling Knife!

Its been a long time since we talked about Share Market isn't it? So, I just wanted to share some of the theory I have heard about Share Market. Again, I want to tell you that, I am not even close to novice regarding Shares, but I have heard about them a lot. And the theory which I want to talk about it is: Don't catch a falling knife. And that too, at this point of time, this one will prove to be a good theory everyone (every novice in market) must bear in mind.

It is a common mentality for people to do exactly what is to be done and unfortunately that applies to Share Market as well. We tend to sell rising shares (shares whose price increases) and to buy falling shares (vice versa). According to theory (why I say *theory* very often is that, there is NO PROVEN technique which could gain you money in shares. Please click here to know more) we should buy rising shares and sell falling shares.

What one might think when a share falls is that, they can buy it and sell it at a later stage. But no one knows when it will start to rise. It may continue to fall for a long time and it may take still longer period to rise or it may be there in the low price for years. So, some share is falling, it is always better not to buy it, unless it starts to rise. (Again, it may rise one rupee and fall 10 rupees).

This could also be a common case. Someone buys a share. The price goes down for some limit and then it starts to come up. The moment, it has touched the buying price, anyone will be tempted to sell it for very less profit. This could also be wrong. Since, it is in rising phaze, it may go up for some more limit. The buyer could wait for some more time for the share to go up for some more limit. (Again, it may touch the buyer's price and fall 100 rupees.)

So, enna dhaan da solla vara ***** (some bad words) nu neega kekalaam. One advisable thing to do is to, when the market crashes i.e. when it falls, do not buy any shares until the market gains some support and start to rise. (Again, who knows when, the real support, comes to market? It may act as though it has got some support and when many buy shares, it may again fall still more... enna koduami sir idhu!!!)

1 comment:

sakthiganesh said...

Super da...machaan. Very well said.. nee solradhu innoru maadhiri irundhadhu...veetuku vandhu solraen evening.