Can someone with just low savings learn to master the market and turn that hard-earned cash into something substantial? Absolutely, one secret ingredient, Discipline! Ingredient No. two? Concentration.
Discipline means focusing your cash in the very best stocks, the ones that rise a lot and rises fast. These market lions enjoy long-term buying from institutions. This is called accumulation.
The big investors move stock prices in the market. Mutual fund companies and registered investment advisors with hundreds of millions, even billions to invest, seem to have the advantage. Yet, an individual investor can still make money by following the CAN SLIM system of selecting, buying, and selling stocks.
Note, the letter “I” in this seven-letter acronym stands for institutional sponsorship and strong demand. Avoid the penny stocks with bombastic promises from its promoters. Smart fund managers do not buy junk. Seek the high-quality names that the best funds are buying, and you boost your chances of making money.
Harness the power of growth stock screens such as the MarketSmith India’s IND 47 list, Model Portfolio list, and Stock near Buy points. A high price is a badge of quality; a high share price also allows funds to deploy a lot of capital more quickly.
Do not let a share price of INR 3000, 6000, or more stop you from seeking shares in the best quality companies at the right time. The number of shares you buy does not matter. And this is where the second ingredient—concentration—comes in. An investor with up to INR 3 lakhs to invest should really invest only in one or two names at a time.