Do not hold a rotten egg

Do not hold a falling stock hoping it will rise soon

I'm sure you've heard success stories of stock market. How Warren Buffett, Rakesh Jhunjhunwala became billionaires, but there are two sides of every coin. Today I'll show you the truth of stock markets.

Warning: Do not read this if you have a weak heart, or hold any of the companies listed here...

At this point you might be thinking that you don't care for individual companies, and invest only in companies listed in NIFTY, or SENSEX.
Or, you can just put some money in each of the 51 companies listed in NIFTY and as NIFTY keeps growing, your net money will grow. Wrong.

The NIFTY you see today is not the same NIFTY it was just 10 years back. Thats right. Companies got dropped, and companies got added. These companies are mainly based on market capitalization. When a company loses its market cap too much, it gets dropped out of NIFTY.
Here are some of the companies that got dropped out of NIFTY. Please don't imagine what would have happened to your investment if you had these companies. If you do, then please keep a heart doctor nearby...

1. Reliance communication:
Just 9 years back, in 2008, the stock traded at a lifetime high of 844 rupees. Its currently at 38 rupees. Just checked and its trading at 38.20 rupees.

If you invested 100,000 rupees in this stock in 2008, then you now have 4500 rupees left with you...

2. Suzlon Energy:
Added in NIFTY in 2006, and made a lifetime high of 412 rupees. Today trading at 19 rupees...
It made a lifetime low of 5.70 rupees just 3 years back. BTW, it made a new 52 week high today...

A TV anchor would report: The stock has touched a new 52 week high, and has gained 400% in the last 3 years!
WOW! (eyes wide open)
Reality is that if you bought the stock back then with 100,000 rupees, you now have just 4611 rupees with you.

3. Unitech:
Another stock which was in NIFTY in 2008, and made a lifetime high of 546 rupees
Please hold your breath for this one.
Its trading at 5.85 rupees today, as on 20 March, 2017...
That's about 1% of its lifetime value. Can an investor ever imagine to regain what they lost here???
Even if the stock blasts, and rises 10 times, it would still be at just 50 rupees...

Your total investment of 100,000 rupees is now reduced to just 1000 rupees...

There are hundreds of such stocks like DLF, Bartronics, Himachal Futuristics, Jaiprakash Associates, Kingfisher Airlines. These stocks have lost anything from 80% to 99% of their value.
So if you had invested 100,000 rupees in one such stock, you'd be left with about 5000 rupees to 1000 rupees approx...

Sure there are stories like WIPRO, INFY, Eicher Motors etc, but then there are also RCOM, UNITECH, SUZLON.

What should you do to protect yourself?

1. Never fall in love with a stock
Sell it at the right time and get out of it. Before it becomes a bottomless pit for your wealth.

2. Always remember that stock market investments are risky
Sure, the markets are going up, but if your investment is not, then its time to rethink your portfolio.

3. Have indicators
Indicators like SMA, EMA will show you when to get out of a stock... And there are many more including candle stick behaviour, patterns on charts.

Whatever your trading style, trader or investor, charts don't lie. TV might, but charts don't.
If you are a short term trader, look at shorter timeframe charts. If you are an investor, look at longer timeframe charts. Yearly charts probably.
Don't sit on a rotten egg...

This post is copyright, and was taken out of the "Munafa Training Material." Its not an ebook.
Its the exact same stock market training material we use in our 5 day paid seminars, which is compiled into a single PDF file.

http://www.munafasutra.com/page/ebook

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