How to Understand Stock Market?
“Many a time it happens that an enterprise is on the verge of bankruptcy but a new strategy by its management not only saves it from insolvency but also reaps rich profits for the company. ”
If you are desirous of making the most of the stock market, you got to have a sound knowledge regarding its functioning. Otherwise, playing with it may become a dangerous game as far as your hard earned money is concerned.You must have heard that stock markets crash and then recover again. This process though uncertain to a very high degree has some type of trend or order embedded in it. People who have deep insight into the stock market know by their intuition whether the coming time will be of boon or bane for the stock market.
Many a time it happens that an enterprise is on the verge of bankruptcy but a new strategy by its management not only saves it from insolvency but also reaps rich profits for the company.
This strategy, for example, can be the launch of a new product that is very well received by the public. So, we can say that the law of demand and supply comes to the aid of the company and the value of its shares witnesses a sharp increase.
Similarly you must be very cautious about the bearish trend of the market. The market is said to be in the bearish mode when many areas comprising it show a steep decline in a few days only. If the market drops by about 25% of its value in say a week, it’s typically a bearish market.
If you are compelled to sell in such a period you are bound to suffer great loss. So, always maintain a buffer stock in case of any such untoward eventuality. This is necessary so that you can go on with our usual business while still holding on to your shares whose value has dropped beyond your comprehension.
Such a buffer stock of money is also necessary so that you can spare some amount to buy those shares that have gone very low. Mind you, companies of good shares are sure to surge with time, so buying them in bearish periods is not a big risk. It’s not that the company would get de-listed or totally wiped out of the market arena.
Author - DeeKay
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