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Tuesday, December 22, 2020

HOW TO BE A MILLIONAIRE BY INVESTING IN STOCK MARKET

I think we all must have listen the name of warren buffett. He is an american stock market investor, owner of Berkshire Hathaway and obviously a billionaire(Net worth of over 84 billion dollars). He stared investing in stock market when he was 13.  His massive wealth is a result of long term investing in financial market with good discipline. Warren buffett's company  has given an annual return of more than 18%  to his shareholders consistently. 




 Not only warren buffett has made such a huge wealth by investing in stock market. There are many other names like Charlie Munger(business partner of warren buffett),Benjamin Graham(guru of warren buffett), Peter lynch ( Fund manager of Magellan who gave return of more than 29% to his investor for 15 years in a row), Gorge Soros (The man who made one billion dollar in a day ). Rakesh Jhunjhunwala (Also known as warren buffett of india), Monish Pabrai( An indian american value investor) any many many many more.

By following some of  the basic steps listed below  you can also choose your path in stock 

STEP 1. START WITH BASICS 

So now in your mind you must thinking that how I can start my stock market journey. So first of all you will have to understand that what stock market is. In simple words stock market is a place where people can buy shares of a company they think that can do well in future and can sell the shares of a company which they think cannot perform well in coming years. If you want to know more about stock market you can read this amazing book by famous investor and former fund manger Peter Lynch known as Learn to Earn. This book will clear your all the doubts regarding the History, working and need of share market. If you want to buy this I have given link of amazon below from where you can purchase it.
Book - Learn to earn 
Link (Amazon)- https://amzn.to/2WyjhfM


STEP 2. CHOOSE YOUR PATH

Now after knowing that what really stock market is you will have to choose your path of investing in market. There are basically two types of methods from which you can analyse any company or based upon which you can take investing decisions. 
Those two methods are-

a. Fundamental Analysis

                                 



Fundamental analysis (FA) is a method of measuring a security's intrinsic value by examining related economic and financial factors. Fundamental analysts study anything that can affect the security's value, from macroeconomic factors such as the state of the economy and industry conditions to microeconomic factors like the effectiveness of the company's management.The end goal is to arrive at a number that an investor can compare with a security's current price in order to see whether the security is undervalued or overvalued.

This method of stock analysis is considered to be in contrast to technical analysis, which forecasts the direction of prices through an analysis of historical market data such as price and volume.

Most of the successful investors in the world use this method to analyse any company and finding it's correct value. Some of the famous fundamental stock investors are Warren buffett, Peter lynch, Monish Pabrai, etc.

Books that can be extremely helpful for you if you want to learn fundamental analysis are-


b. Technical Analysis 


Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume.Unlike fundamental analysis, which attempts to evaluate a security's value based on business results such as sales and earnings, technical analysis focuses on the study of price and volume. Technical analysis tools are used to scrutinize the ways supply and demand for a security will affect changes in price, volume and implied volatility. Technical analysis is often used to generate short-term trading signals from various charting tools, but can also help improve the evaluation of a security's strength or weakness relative to the broader market or one of its sectors. This information helps analysts improve there overall valuation estimate.

Technical analysis can be used on any security with historical trading data. This includes stocks, futures, commodities, fixed-income, currencies, and other securities. In this tutorial, we’ll usually analyze stocks in our examples, but keep in mind that these concepts can be applied to any type of security. In fact, technical analysis is far more prevalent in commodities and forex markets where traders focus on short-term price movements.

Some of the famous technical analyst investor in the world are George soros, Paul Tudor Jones,John Paulson, Nick Leeson, etc.

Books that can be extremely helpful for you if you want to learn technical  analysis are-
  1. Japanese Candlestick Patterns by Steve Nickson
  2. Getting started in technical analysis by Jack D. Schwager
  3. Techncial analysis of financial markets by John J. Murphy
  4. Technical analysis for dummies by Barbara Rockefeller
  5. A complete  guide to price volume analysis by Anna Coulling
  6. Encyclopedia of chart patterns by Thomas N. Bulowski

STEP 3. START DOING INVESTING 

Now after learning  and finalizing your path and method start investing according to your risk appetite and money management. If you a new beginner first of all you should to paper trading or virtual trading which will help you to develop confidence and you will be able to learn from your mistakes without loosing money because in stock markets risk of loosing money become high when you are new with no proper knowledge and experience. 



warning - Stock markets are highly risky and volatile. The owner of this website and author of this blog doesn't take any responsibility of your investment decisions.Consult your financial advisor before investing. 




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