Why is investing in Equity so Difficult ?
Posted By: Admin
A year ago a friend recommended YES BANK at a price of Rs 250/-, he was so bullish on the bank and its prospects in the stock market, it seemed a cheap price at the time. Earlier this week the same YES BANK share was considered expensive at Rs 50/- and sought to find refuge at lower levels.Had you invested a year ago.. your investment of Rs 2.50 Lakhs would be down to Rs 0.50 Lakhs.
How is it that Rs 250 is cheap and Rs 50/- expensive, for YES BANK within the span of a year ?
How does this happen ? Stocks are slaves to earnings and performance, so if the underlying business is performing well and the earnings are growing well, the stock would continue to do well. On the contrary, if the underlying business is doing badly, the stock would inevitably do badly. Knowing when an enterprise is doing well and when it is not, is a full time job of equity analyst and fund managers. Which is why we believe that Mutual funds will deliver a much better return than individuals who invest in stocks based on heresay.
So why try with limited knowledge, when you have an expert fund managers that can deliver better returns for you. Invest in Mutual Funds.
Category Finsherpa | Tags Financial Freedom
