Investing in the share market is nice. However just investing a small amount and getting excited about the ups and downs is what most people end up doing.

INVESTING REASONABLE CHUNKS and creating wealth in the share market is a skill – and very much doable. The question is how many people really end up doing that…well most do not. Here are four NECESSARY conditions to make good money in the long term in the equity market. Yes meditation helps, starting with a prayer helps, and these conditions are not SUFFICIENT to make money…but here is a start:

1. Be meditative: when I started investing in 1979 there was only one newspaper of significance – Economic Times – and most of us did not have access to this paper on a daily basis. So there was really no stimulus for us to get excited. Being emotionless – like what people say – is almost impossible if you are an equity investor. You love your stocks, you hate some promoters, you believe some theories will surely work out. ..So if you are in a meditative mood, and can work with logic rather than emotions, your chances of doing well are dramatically enhanced. When the market is in a bubble most of us will not be able to recognise it. The media will do stories like “how with Rs. 5000 you could have created Rs. 1,00,00,000 in 14 years” and at the bottom of the market do a story like “how PPF would have out performed your equity SIP over the last 65 months” – both ridiculously off the mark, but at some points in time accurate. Greed tells you to buy more shares when the stock just hit an all time high. In both situations doing the opposite (if doing something at all) is likely the better alternative – OR IN A REAL WORLD – not doing anything at all may be the best strategy!! Containing your emotions, taking a deep breath, or not doing anything until you have calmed down is one of the best tips when it comes to investing in the stock market.
2. Have clear Goals: I have various parts to my portfolio – in one part I am a day trader, in some parts I am a position trader, in one portion I am selling short hoping to buy it back, in one portion I am a value investor, sometime growth investor, something based on Buffett, and something based on John Templeton. Lets understand that one person need not be classified as a Graham or a Buffett – you can sometimes be s Soros too. However whatever you do should be to a plan – and that can come only from clear goals. The same is true of successful investors – how many of these great investors worked without a written plan? NONE. Having an investment plan can help you avoid terrible PANIC ATTACKS because your emotions are in charge. I can assure you that rising markets are not easy to handle – making clients to hold on from 2002 to 2007 was surely not easy. If you turn to the plan / GOAL SHEET and know which share is for which goal, it should tell you what to do. That means taking into consideration long term plans, the best path to reach those goals, and what to do in difficult situations where you feel like you have to do something. Detailing out your asset allocation strategy, and how large of a percentage you can dedicate to “fun” investments can save your skin. Getting your portfolio professionally assessed once in a while is a MUST. Your plan has to be usable; keep it simple so that you can use it and not just stick it in the soft board seen every day, but never implemented!! You have to rely on it to make investing decisions which are useful for YOU.
3. Turn off the financial media: I have spoken enough about this in various posts, will give it a skip here..hey but you know that, right?
4. Do not let your bank relationship manager, broker, friends, media brainwash you into a daily trading position. It is one of the worst ways to begin the stock market journey. I know many young kids keep thinking that some of us sit in front of the screen day in and day out. Many investors will not be able to operate a trading terminal for sure. Most investors will not know how to use a Bloomberg terminal either! Day trading is an awesome way for the broker/banker to make money out of you. Remember, the more emotional you get the more money they make. The industry has enrolled media on its side. So when somebody asks you to trade, ask him/her to go take a walk.
5. Keep track of what you are doing: again spoken about this too many times in the past, skipping for now.
6. Use profits once in a while to indulge yourself – it is terrible to be isolated in the family as a ‘money making fiend’ who knows nothing else. Taking your wife to a 5* hotel enlists her support for your ‘market’ activities…!!

there are more of course..but this is a good start…