Investor Protection Guideline

Can I make risk free profit quickly in stocks?

The simple answer is NO.

Important: Always use the services of an expert. Just as we go to a doctor when we fall sick, or use an architect to design our building, we should use the services of an expert financial professional registered with the SECP.

Most investors who purchase stocks for the short term with the intention of quickly selling their stock usually end up losing their money. Notwithstanding instances where one can actually make a quick profit, the chances of losing money increase with each new attempt to make a quick profit.

With each loss, the investor is tempted to try their luck again in the hope of recovering the loss. While gains are celebrated, losses are quickly forgotten. Over a period, frequent trading becomes gambling and can be addictive, time consuming and destructive to the financial well-being of the short-term investor.It is important to remember that markets go down as well as up, a reality often ignored during joyous celebrations of a one off profit made by a short-term investor.

Equity markets react from day to day to the smallest of news, rally, and crash on sentiment. It is important to focus on the long term and ignore short-term swings in the price of your investment. World-renowned Investor Warren Buffet explains stock market investing stating: “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.

In summary, only invest money in the stock market that you can comfortably set aside for the long-term say somewhat 5-10 years and always use the services of an experienced market professional, such as a mutual fund manager who can help you build a balanced portfolio for the long term, unless you consider yourself to be an experienced market professional yourself.

Tuesday, July 3, 2018
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