Going beyond the basics of the stock market


If you have watched Pokémon, you might know how all the Pokémon’s used to evolve when they reached a certain level. Pikachu would evolve into Raichu, Charmander would evolve into Charmeleon, etc. After their evolution, they turn into an advanced version of themselves with new looks, moves and, even skills. So, why not take inspiration from our favourite childhood show and advance ourselves in this journey of learning about the stock market. Till now, we have learned so many basic concepts about the stock market in the most simplified manner through my YouTube channel, course, and blogs. But now the question remains on how do we go ahead from here and what should be the next step. This is exactly what we are going to discuss in this blog.

KYS- Know yourself

You are at a stage where you know about financial markets and how they work, nifty, corporate actions, IPO terminologies, etc. but do you know yourself enough to step into the stock market? It is crucial to find out how much risk you can take. You may check out this video to understand how to check your risk profile. Other important points include understanding your investment horizon, capital and keeping your short-term liquidity intact with an emergency fund.

But wait, what factors could you consider in deciding all of this? Factors like your monthly income expenses, the number of dependents in your family, your/family’s medical expenses, your age, and your other financial goals will help you find out the answers you need before jumping into the market. Another important question to ask yourself is whether you possess the required skills to make well-informed investment decisions ahead. There are 2 branches in equity analysis namely- Fundamental analysis (FA) and Technical analysis (TA) and I think understanding both works the best to make good investment decisions. Let’s find out more about them as you read ahead.

Why learning Fundamental analysis is important?

FA helps us understand the actual value or the intrinsic value of a company based on its financials, economic environment, competitive position, and other qualitative factors. More focus is given to finding stocks that are undervalued i.e., stocks available at a cheaper price than their fair value. Investors believe that as the company is performing better, it will be recognized soon by the market, leading to a rise in its price because of the increased demand. This will help investors grow their wealth exponentially with not the only capital appreciation but also dividends and compounding. Hence, FA will help you pick financially strong and well-positioned stocks at a better price to gain the best out of the investments.

So, how to start learning about Fundamental Analysis. To find an undervalued stock, first, you must understand how to perform a financial analysis of a company. You can find out all about it in my “Fundamental analysis” course. After gaining confidence in FA, you can level up a little to learn more about the “Art of Value Investing” which will help you fetch undervalued stocks.

Courses


Why learning Technical analysis is important?

To put it simply for you, Technical analysis involves observing past price movement and patterns of a financial asset to predict future price direction. TA will help you understand the current market trend. This is possible by studying various candlesticks, charts, and indicators. Investors and traders both need to learn TA. Now, you might be wondering, “For traders, it’s understood, but why do investors need to learn TA?” The answer is simple. After performing an extensive FA of a company, don’t you wish to get the stock at the best possible price available in the market? Of course, you do! Hence, you must learn TA to know the best time and best price to enter/exit a stock. Now the big question is how do you know what is the best time & price to enter/exit stocks. I got you covered. I have designed a course on “Technical Analysis” which will help you understand TA in the most systematic, simplified, and practical way. 

Bottom line

“Safar khoobsurat hai manzil se bhi..” I am sure you would totally relate to this line from the song - Ae Dil Hai Mushkil, while you are on this amazing journey of learning about the stock market and investing. But the question that remains is what sequence you should follow while watching the courses. First, get your basics in place by completing the Basics of Stock Market course. Then you can go ahead with Fundamental Analysis, Art of value investing and lastly Technical Analysis to reach on that advanced level manzil you all wished for. I have designed these courses in the most simplified manner such that a person from a non-finance background, housemaker, student, retired, everyone, will understand it.

Zerodha