Now to introduce the market to you there are a couple of types of stocks, like Blue Chip stocks, Mid caps and then there are the crappy stocks. Crappy does not mean not worth taking a look at.
Now when you get into the market to be on the safe side of things, buy just a couple of the big guns only. Now when I am speaking of the big guns, I mean really big guns, don’t look at ads on television and jump.
Take some sensible advice like articles like this or reliable television channels, if you don’t have time to watch complete TV shows where anchors argue for hours and take opinion after opinion, drop by the website moneycontrol.com. If you think this is my site you are certainly mistaken, this is a very reliable portal connected to the popular business channel CNBC TV18.
Coming back to the Blue Chip Stocks, they are stocks of leading companies with a reputation for stable growth and earnings. You will be wondering why these stocks are referred to as Blue Chip Stocks,look at the image. Yes you must have guessed by now,”blue chip” is derived from poker. The simplest sets of poker betting discs include white, red, and blue chips, with tradition dictating that the blues are highest in value.
I will suggest a few HDFC Bank,ICICI Bank,SBI, Infosys, TCS and Tata Motors. So you get the idea, these are stocks of well-established and financially sound company that has demonstrated its ability to pay dividends in both good and bad times. Now these are certainly no push overs, your money will be safe in them, some times things may look bad but in the long run, these are some rocks you should stick your lifeline to. Your major investment must be here, always ensure that your capital is based around these stocks. This will ensure if your experiments or your suicidal attempts to earn a fast buck with some little known stock will not lead you to get bankrupt.
I have seen stocks like TCS go up and down, but when I monitored it over a period of a year, I found the stock had double from one Divali to another.
Now what I am going to explain is how to deal with these Blue Chip Stocks, one way is to buy a Blue Chip Stock either 1 or 2 or “n” depending on your budget, but your timing must be right.
How to figure out its the right time, watch the market trend see that the market is not a continuous upward trend since a month or 2, if so you may end up buying a stock at its peak. Wait patiently, I know waiting is very hard, when you see that stock jumping up like a fish and giving returns to all other holders. Wait for a crash or a lean phase.
How to find the appropriate buying price ? What you can do is go to a site which provides the value of the stock in the form of a graph over the past 6 months and find a low point for that stock, not too low, but a local(in the past 2-3 quarters) low value, that is where I can introduce something called as the 52 week low is a decent indicator of the same, but waiting that long and especially considering a blue chip stock crashing to a 52 week low very ofter is rare and most certainly disturbing. So disturbing that it may not be worth calling it a Blue Chip
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