Anil Ambani is fond of saying that the stock market is like an echo, which continually reiterates the same cycle. Similarly, in the case of Indian mutual funds and other financial instruments, the same patterns are repeated time and again. However, one cannot single handedly claim that all such trends are the prerogative of the market alone. A lot depends on individual investing patterns too.
So, anil ambani grows richer as stocks surge but still a pale. What investors need to understand is that the cycle does not repeat itself. It depends on individual investors too! The question that begs itself is whether investors are able to replicate the same investing patterns in the future.
The stock market has become a highly volatile instrument due to several reasons. Some argue that the credit crunch led to a sharp fall in share prices, while some others believe the financial mess at the country’s banks has played a major role. However, whatever the reason is, the impact on the market was profound. And the reason why the impact was so deep is that the financial sector was such a large part of the economy.
Now, looking back, it seems to be the decline in the share prices that caused by investors to pull out of the markets. The logic clearly is that when the share prices of a particular company tumble, so does the confidence in that company. This confidence can ultimately result in higher prices for the stocks.
Thus, as the confidence in companies dips, more investors are willing to pay for stocks in the hope of seeing a recovery in their investments. This results in a rally for the particular stock. And this cycle continues as the companies begin to add to their profits and the investors to start pouring in even more money as the prices of stocks soar upward.
Of course, the scenario here is not that simple. Ambani himself did not grow wealthy during his time with the company. He started off with nothing and later worked hard to help the company achieve unprecedented success. However, the implication here is that the same can be achieved by any investor, irrespective of whether they personally have the experience or not.
This is the crux of the problem. Many people think that they can simply buy up shares of these companies at dirt cheap rates and earn lots of money in the process. Well, there is one big problem with this idea. Many investors buy up shares thinking they will eventually earn huge profits, only to see their investments fall like flies in comparison to the original costs. They thus sell off the stocks and take the money that they initially invested with them.
Thus, there are plenty of reasons why the Anil Ambani grows wealthier as stocks surge but still a pale. And it all has to do with the basics of investing – whether you are a newbie or a seasoned investor. If you invest your money intelligently, you will always earn good money. If you invest it impulsively, you may end up broke. If you plan to invest in the stock market, then you need to learn the basics first and then just go about it in the right way. Otherwise, your money will be squandered on some bad deals.