How to Earn from the Stock Market in India

Share market is a place where fortunes are made but also where people go bankrupt. This article explains how to make your earn from the stock market.

People who earn from the stock market often become millionaires or achieve financial independence early.

But if that is the case, why do people lose money? 

This article shows you how you can earn from the stock market and then mentions the things that you can do to not lose money.


How to Earn Money from the Stock Market

  1. Develop your temperament 

Your success in investment is not dependent on your IQ! 

Is IQ important? Yes

Does IQ play an important role? Not Really. 

Readers of Warren Buffett(like myself) know that his greatest asset is not his genius-level intellect or his near-photographic memory – it is his temperament. 

“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments.” – Charlie Munger

In the first edition of “The Warren Buffett Way”, Peter Lynch informs the readers about what Buffett did in 1976. In that year, the stock of Geico – an insurance company – had fallen from $61 to $2! Imagine a decline of that sort and Mr. Buffett then decided to take a major stake in the company! 

How many of us can do that? 

Would you still be able to buy more of your favourite company if it went from ₹3050 to ₹100? 

  1. Think of stocks as a part of a business.

This is a game-changer. 

You need to understand that ‘stocks’ are not just tickers on a screen that move up and down. 

A stock is a part of a business. When you own a stock, you own a part of a business. 

If you think of stocks as a part of a business, you will automatically do your due diligence.

It is so obvious that it never occurs to you but so powerful that it changes your outlook. If you think of a stock as a part of a business, you will not sell it just because it has gone up by 10%. 

If you own land or any other asset – you do not sell it just because its price has gone up the next day, why should stocks be any different? 

  1. Do not check stock prices.  

I wish it were as simple to do in real life. 

It seems stupid but it will work. 

If you delete financial apps from your phone, delete any form of media that informs you about your holdings – you will see an increment in your returns.

There will work for a very simple reason, it reduces stimulation. 

When you are devoid of any stimulation, you kill an urge to ‘do something’ and by doing nothing – you compound your wealth. 

  1. Avoid Warren Buffett 

There are dozens of books on Warren Buffett and the man deserves that but the advice he offers is not for beginners. In our experience, listening to Buffett’s speeches and reading his letters are of use only if you have decent financial knowledge. 

If you are, in fact, somebody who is starting out – we would urge you to listen to and read more on and about Mr. Peter Lynch. 

Peter Lynch ran a fund for 13 years and gave a CAGR of 29%! His name is taken along with the likes of Warren Buffett and Charlie Munger but the advice he provides is meant for beginners. His investment advice is often used by households and is dubbed as “Common Sense Investing” – and rightly so. 

It is simple, it is brilliant, it makes money. 

Listen to his lectures on YouTube and read his books(3 in total). They will undoubtedly help you much more. 

How to Stop Losses in the Stock Market

  1. Have Patience

“The stock market is a device for transferring money from the impatient to the patient.”

Warren Buffett 

People have unrealistic expectations from a stock. They think of stocks as lottery tickets. 

People want to buy a stock and want it to go ten-times at least! 

I have seen a personal example of this everywhere. People I know want to buy stocks and want them to go up the very next day. This is absurd!

Stocks are not lottery tickets. A stock is a part of a business, if the business does well – you will do well. If it doesn’t, you will lose money. 

  1. Do your Due-Diligence 

The stock is not just a ticker on a screen that moves up and down – it is a part of a business.   

A relative of mine has committed this ‘crime’. He was sitting with a bunch of his friends and they talked about a power company that is going to play a part in the EV revolution. He took a stake in the company. When I got to know of this I asked him – “What business is the company in?” – he had no idea. 

Don’t act like this relative of mine.

“Behind every stock is a business, find out what its doing” – Peter Lynch

  1. Do not get carried away.  

Herd Mentality means getting carried away with what the general public is doing. Markets are efficient MOST of the time – do not follow the recent fads, they’re usually traps.

“The stock investor is neither right or wrong because others agreed or disagreed with him; he is right because his facts and analysis are right.”- Benjamin Graham, The Intelligent Investor

Just because people are buying IRCTC and its price is going up does not mean that you go and buy it! 

If you do something of this sort, you are bound to lose money. 

Profitable Investing

A lot of movies based on the stock market provide a false impression of investing. A movie is a drama, investing is not. Unlike what is shown in the movies – investing is simple, investing is hard but most importantly, investing is boring. 

If you want a thrilling experience – go to a Casino, the stock market rewards the patient investor. Warren Buffett has made 99% of his wealth after the age of 40 – that is how compounding works. 

You will not see results overnight and in all probability – you will see long periods of stagnation – that is the test of patience. 

If you are patient, if you are willing to learn and if you are humble -you will Earn a lot of money from the Stock Market If you possess the right temperament and decent bit of intellect – you will make more wealth than you will ever need. 

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