Rules to profit in the Stock market

What is stock market? 

The stock market is a set of exchanges and markets who trade and issue bonds, equities and various other securities.

An investor should be interested in the possibilities of profiting from the swings in the market either by way of timing or by way of pricing. 

Do not allow your emotions control your investing. 

The better a companys record and prospects,  the less relationship the price of its shares will have to their book value. But the greater the premium above book value the less certain the basis of determining its intrinsic value. 

A stock does not become a sound investment nearly because it can be bought at close to its asset value. The investor should demand in addition a satisfactory ratio of earnings to price, a sufficiently strong financial position and the prospect that its earnings will at least be maintained over the years.

Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop in price. 

An investor should be comfortable owning a stock or mutual fund even if the stock market stopped supplying daily prices for the next fifteen years. 

When a company expands its share price will increase after a some time. 

The bigger a company the slower its growth. 

A great company is not a great investment if you pay too much for the stock. 

Buy stocks that have recently performed poorly and have fallen out of favour with investors. 

Buy companies that have a durable competitive advantage 

Earning per share acts as an indicator to a companies profitability. 

Never take a company's single year earnings seriously. 

Buy shares at special situations like.

Buy in low markets and sell in high markets. 

You must understand the following terms. 

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