Golden Rules for Stock Market Investors

1. Don't be greedy: Do keep in mind that it is not always that you would be able to buy a stock when it is as its lowest price and sell it when it is at its highest. Do not be greedy. Invest smartly, with some professional help and some study on your own.

2. Avoid 'hot tips': Stay away from 'experts'. There are a large number of so-called experts floating all around. Stay away from them. Your neighbor, cousin or business journalist friend may suggest surefire picks. Success may not come as fast, as we are in unchartered territory. Use your own judgment.

3. Avoid trading/timing the market: Like in the previous point, don't try to time the market by betting on when the stock price will be highest or lowest. In most cases, such 'timing' leads to huge monetary losses and mental tension.

4. Avoid actions based on sentiments: Don't be emotionally attached to stocks: Some people -- for sentimental reasons -- tend to stick with certain stocks even though they might not bring them good value. Sentiment can be for a variety of reasons: your late father had bought the scrip and you wish to keep it; you had yourself betted on a company's stock thinking it will do good but are now too egotistic to accept your mistake can retreat, etc.

5. Don't panic if the market drops: Be patient and hold on to the scrip until some semblance of sanity prevails in the market. Don't rush to sell the stock. Hold onto your winners and sell your losers. Consult a professional and then act accordingly. Don't let a drop in the stock market alter your long-term investment plans.

6. Buy stocks if there is a 5-8 per cent drop in the market: In this bull market, a 5-8 per cent drop in prices offers you a good opportunity to buy scrips.

7. Avoid checking the price of stocks or mutual funds after you've sold them: The grass on the other side will always seem greener and can rarely bring you happiness.

8. Try to avoid penny stocks: While doing your research, attempt to understand which the company is and what it does. Value picking may score above growth picking at this stage. Do not be tempted to buy penny or mid-sized stocks at this stage, envisaging a huge windfall.

9. Sell when value is realised: Some stocks may rise sooner than you may have anticipated. In a frenzied bull run, investors may see their target prices being met in a matter of days. Here time should not be of any consequence.

If you feel that your investments are adequately valued, you should exit regardless of how long you have held them. There are times when stocks begin to quote at extraordinarily high levels within a short period after you have invested in them.

Although investors are often advised to invest for the long term in equities, if you get extraordinarily high returns within a short span, it is wiser to get out, say experts.

10. Diversify: At these record levels, there will be certain amount of risks. We suggest you diversify a bit, looking at stocks, mutual funds, commodities and gold (for a longer-term). If equities are your favourite, we expect you would be able to pick up some of these stocks again.

(don't put your all eggs in one basket)