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Stock Market Turbulence, Predictions And Investor Roles

The panicky situation that prevailed in the Indian stock market lowering the sensex figures to several hundred points is now over. It all started with the domestic scams in addition to weak overseas markets followed by sudden selling by FIIs, bank’s profitability, liquidity crunch, and more. Turbulence does occur at regular intervals not only in the market of stocks in India but also other world markets. Considering the rising and falling trends in the Indian share market for the past several weeks, market analysts are of the opinion that both the NSE BSE indices will further go up with negligible falls, by the next week. As per a poll, the nifty and sensex of the NSE and BSE are likely to rise by 20% by the end of 2011. So, grab the opportunities! Learn how to face the turbulence of the India stock market. There can be no better lucrative option than investing in stocks in India. To be on the advantageous side, join a stock broking portal as a registered paid member. With your paid membership, you can not only get customized stock tips but also get recommended potential stocks of India right on your mail box and over the phone. Besides, at the same platform, you can have access to the A-Z of news and information related to the Indian share market and a multitude of other investing options.

Predicting how much return you will get or incur losses from your original investment all depends on the intensity of research you conduct besides staying updated with the latest trends of the Indian stock market. And if you have created strategies and follow all procedures involved, minimizing risks and maximizing your returns from your stocks in India becomes an easy affair. Most investors have different strategies designed for different market situations; they also create their own stock tips based on the past and present trends. Making predictions then won’t seem difficult. The more you are close to your predictions of gaining returns, the lesser are your risks to lose. Do not go for risky investments if you are beginners. And do not blindly follow the stock tips published in many an online platform; follow them if they are relevant to your goals. Confidence and knowledge go hand in hand. Once you master both the traits, success is only a step away.

What is your role in the NSE BSE market when you buy stocks in India? As an investor when you buy a particular stock, you become a partial shareholder of the company. There are two types of stocks in India, viz. preferred and common. And there are companies that pay dividends and if the concerned company earns good dividends, you also gain an added advantage. You are also entitled to vote for the directors of the said company. These happen in case of common stocks. For preferred stocks in India, which are not generally listed in the NSE BSE, fixed dividends are paid to investors.

The DJIA and Stock Market Tips

Anything can happen in the stock market in the short term. Expect both increases and declines.

A market correction is a reversal of the prevailing price movement trend for a security. A “correction” is most often used to describe a decline after a period of rising prices. A market crash is commonly defined as a 20% decline in a single day or over several days. On October 19th 1987-referred to as “Black Monday”-the DJIA plummeted 22.6% in a single session. On 10/10/08, the DJIA closed at 8451.19-around a 22% cumulative loss over 7 trading days. Market crashes do not necessarily lead to bear markets. On 10/13/2008, the DJIA closed at 9387.61–the 936.42 point increase equated to an 11% single-day gain. Up to that point, it was the largest single-day gain in the history of the American stock market since the 1930′s. On 10/15/2008, the DJIA closed at 8577.91. On 10/16/2008, the DJIA closed at 8979.26. “Testing the bottom” is a term meaning the market fluctuates up and down until a low point is reached.

A bear market is a period of decline in multiple broad market indexes such as the Dow Jones Industrial Average (DJIA) and the Standard & Poor’s 500 Index (S&P 500) over several months-at least a two-month period.

Someone once said there are three phases to a bear market:

First phase-a few people see that things are getting worse.
Second phase-most people see that things are getting worse.
Third phase-everyone is convinced that things can only get worse.

The third phase is when consumer confidence is at its lowest.

When consumer confidence is at its lowest, it is typically a good time to purchase securities.

In good markets and bad markets, well-balanced diversified portfolios invested for the long-term are the key to financial success.

Over a long period of time, the DJIA trends upward.

The Standard & Poor’s (S&P Index) odds of increasing over any 1-year period are only 7 to 3. The S&P odds of increasing over any 5-year period are 9 to 1. Stock market investment risks diminish over any 5-year period. Money not needed within 5-years might be considered for stock market investments.

Anything can happen in the short-term; however, over time the market has always rewarded long-term investors.

Be a long-term investor!

“For everything there is a season, and a time for every matter under heaven: … a time to break down, and a time to build up…”-Ecclesiastes 3:1-3 (RSV).

4 Deadly Reasons Why Beginners Fail in the Stock Market

Too many inexperienced investors end up losing money when they enter the stock market because they make some very basic mistakes. If you are considering putting some money into stocks then there are four things that you should learn to avoid.

Firstly, many people decide to buy without knowing how to choose which stock to invest in. They often rely on tips from friends or something they have heard on the internet. This is rarely going to lead to good profits. The only people who have the sort of technology and expertise to make reasonably good predictions about stock prices are professional traders. As a beginner you are not going to be able to compete with them, but you will do better if you avoid jumping on the bandwagon based on advice from unreliable sources.

Once you have bought your stocks you will see them rise or fall. Whichever way your investment goes you can end up making a serious mistake. The second and third mistakes that beginners commonly make are not knowing when to give up on a stock that is losing them money, and not knowing when to get out of a stock that has been rising. Timing is everything. When a stock is going down many beginners leave it too late to get out of the trade. They let their stocks drop so low that they cannot afford to sell up, because they feel sure that things are about to get better. Others end up leaving their money in a stock that has been going up; confident that it is a safe bet, but end up seeing their profits disappear when the price suddenly crashes. Taking expert advice on when to sell is the best way to avoid these errors.

The fourth mistake is in selecting a range of stocks to build a sensible portfolio. It is not beneficial if every time one of your stocks goes up another one is losing you the same amount of money. Your portfolio should be carefully chosen, with stocks that complement each other. You should consider how well each of your different investments work with each other, and not just think about each stock individually. Some stocks will almost always move in the same direction, while others always seem to be going different ways. Some stocks are very stable and rarely experience much movement, while others are always shooting up and down. Some stocks shadow the market, while others appear to move independently of it.

The only way you can improve your chances is to support your lack of experience with he advice of a more experienced, reputable advisor. The large number of factors needing to be considered before buying a particular stock, or building a portfolio, can only be adequately understood with considerable effort and full time dedication. Likewise, knowing when to sell is a skill requiring experience to time it well. Overall, your best investment will be the time you take to choose your investment and/or stock advisor. Let the experts do what they do best.