There are some brilliant Investment Myths which go around and have been around for such a long time that people do not even know them as myths..

let us break some of them:

Buy low and sell high: Such a simple statement to make, and impossible to do in real life. Buy cheap and sell dear. People would like to think this is easy to do, but remember whether a share is high or low is something you know only in retrospect. For e.g. if you buy Hdfc ltd. today at say Rs. 2400. Six months later if the price is, say Rs. 3000 and you sell it, you would be right. However if you buy it today at Rs. 2400 and 6 months later it is at 2100, you would be wrong. So it is a nice maxim which is easy to espouse, but difficult to do.

No Risk No Reward (a.k.a Higher the Risk, Higher the Reward)..One of the worst statements that has been espoused by generations of finance professionals / professors. Look at the big runs accumulated – Rahul Dravid, SM Gavaskar, S R Tendulkar, – these were accumulated by KNOWING where is the off stump. Look at the big wealth – Buffett, Soros, Templeton – these have been done by HEDGING the risk, not by blindly punting in the market. IN retrospect THEY TOOK LESS RISK, that is why they are alive to see the power of compounding!

Buy land prices can never come down..after all GOD DOES NOT MAKE THEM ANYMORE: But people’s taste changes, usage laws change, people migrate to a different place…so RE prices can change and vary from place to place!!

Have greed when others have fear, and have fear when others have greed: A very good, brilliant saying again difficult to implement. When the index was 6000, there was a program on one of the Television channels. The 3 speakers were Comrade Raja, Shankar Sharma, and Rakesh Jhunjhunwala. Rakesh said people should not keep their money in savings bank account but put it in the share market. Raja was of course on a spiel about how Americans are here to corrupt (Oh completely as an aside did we hear any Comrade complain about Russia in Georgia?) us etc.

Shankar Sharma told Rakesh “Aha, now that the market has reached 6000, you want the common man to lose money?” and put RJ on the defensive.

However what happened to the market after that is well known! So to be fearful when others are greedy and greedy when others are fearful is nice to say, difficult to implement. as life goes on…we will break some more myths. – See more at: http://www.subramoney.com/2008/09/investment-myths-lets-break-some/#sthash.g8IGOfm2.dpuf

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  1. Yes , Agreed. Now I am more fearful than last year. I did not make much fresh investments this year, and I very well see that the stocks that I own are not worthy at these valuations. I am literally scared to sell-off or keep holding it. I did made my mind to sell off some % of my holdings couple of months back as valuations were soaring to unsustainable levels, but held my nerve to hold further, now its(smallcap) quoting another 20%-25% up !! Is this how market always works ..? I don’t know when to exit and really scared to exit as well.. Now market(ppl who are buying) are not even bothered about current results and keep talking about optimistic near future. I really what is their near future mean ..!

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