We are happy to find you here, many of you who are just ready to enter in the stock market will get there doubts cleared today. There are many other safer options for investing in our equity markets like gold or mutual funds but investing in stocks makes you different from the ordinary. I’m sure that if you follow the right path of investing you’ll end up with good returns.
If you don’t know how to start investing in the share market then you can check out our article “How to Start Investing in The Stock Market?“
Every single person who is planning to invest in stocks, have the same question in mind – “Which stock should I buy first?”
We’ll try our best to answer you with this.
INVEST IN WHAT YOU KNOW
Many well-known stock market experts have the same answer to this question and we bet nobody would disagree with this opinion. They all suggest that a beginner should start investing in the companies whose business model is understood by him/her. We’ve observed that people succeed when they follow this principle.
A normal computer engineer can consider companies like TCS or INFOSYS, by assessing their actions. A computer engineer can very well tell, whether the actions taken by the company will be fruitful for the company or not over the long-term. These actions of the company also give a good idea about the management. So invest in the companies you can assess easily. This is just an example. A pharmacist can assess a pharma company, a bank employee can assess a banking company, and so on.
Illogically we people do the opposite. We try to follow the trend or follow the crowd. We people take more interest in what others are doing and think that they are better than us. Due to this people sometimes end up losing money in companies they have no idea about. One advantage of this principle is that it narrows the criteria of companies for your selection. You’ll have to assess lesser companies now i.e. it simplifies your research work. E.g. you’re a pharmacist and you are thinking of investing in good performing companies such as Cipla, Dr. Reddy, and Sun pharma. Now all the companies are performing well but you have to choose one. Undoubtedly you can assess the two pharma companies better than the FMCG one so you should prefer one of them. This way our principle helps you in minimizing your search criteria and makes your work easier.