Warren Buffett of Berkshire Hathaway, reputed to be the world's greatest investor in Stock Market, has enunciated 5 golden rules !
1) Never lose money
2) Obey Rule I
3) The stock market is designed in such a way as to transfer money from the active to the patient !
4) Buy a scrip only when Technicals and Fundamentals agree
5) In a Bull Market, only be long
In a Bear Market, only be short.
Regarding the 1st rule, well, all human beings do not want to lose money. That being the natural impluse, but the Market may catch them unawares ! So be careful not to be trapped by the market.
It is difficult to observe Rule 2, as loss can happen to any investor/speculator. However, by being very careful, and by fixing Stop Loss for every scrip, one can minimise Loss.
Regarding Rule 3, this is Dow Jones Theory in practice. " He who will study values and market conditions, and exercises one man's intellgence and known patience for six men, will make money in stocks ". This is the quality that is needed, viz, Six men's patience.
Fourth Rule states that check the fundamental analysis of any scrip. Also technical analysis for that scrip. And then, if both agree, you can invest in that scrip !
The Fifth Rule is for speculators. Be a Bull in a Bull Market and a Bear in a Bear Market !
Summing up, the Five Rules are Golden and should be observed for successful stock market investing !
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