There is a strong correlation between reading and success in investing in the stock market in India. While all readers may not be investors, all successful investors are voracious readers.
According to popular estimates an average Indian reads around one or two books in a year. On the other hand, successful investors read anywhere between two to three books in a week. Yes, it may sound like a lot. But so are the benefits.
It is said that an investment in knowledge pays the best dividend. And I can vouch for that. Right from my childhood, I have loved reading all kinds of books and later transitioned to books on investing as I started my career.
Personally, the habit of reading has helped me a lot in investing in the stock market in India as well as guiding others. You can check out the list of best books to read and learn about the stock market in India here.
Yet we often come across many investors who say that they don’t have the time to read.
To understand a business before investing, the ideal way for an investor to proceed is by reading industry reviews and the latest financial reports of the company. However, quoting time constraints, many investors skip this crucial and inevitable step in favour of convenient and quick tip based investing.
Majority of investors are logged continuously on to business news channels or over-active on social media groups to spot investment opportunities but fail to put in the efforts required for developing the knowledge of what drives stock prices.
As a result, an investor ends up in any of the below scenarios:
- Investing in fundamentally weak companies
- Not knowing when to exit an investment
- Exiting suitable investments which have the potential to appreciate further
There is plenty of valuable information available both online and offline for investors which can make them better investors. Still, most investors in the stock market in India are too busy looking for an extra edge in the form of news or tips.
When an interviewer asked Warren Buffett about his secret of success, he held up a bundle of papers and said, "Read 500 pages like this every day. That is how knowledge builds up, like compound interest." It is well-known that Warren Buffett typically reads six newspapers each day.
Reading is pre-requisite for an investor in the stock market in India to develop a trained and prepared mind.
Knowledge is power. To become a successful investor, it essential to read up a lot of information available in financial reports, balance sheets, books on investing and business newspapers. Click here if you wish to seek expert help. Given our mechanical and fast-paced lives, shortage of time is an issue for many of us. But then every one of us has the same 24 hours in a day.
Remember, successful investors who read a lot don’t have 36 hours in a day.
Reading helps you in making sound investment decisions in the stock market in India
Basing your investment decisions on reading and researching rather than on the news and tips can allow one to eliminate market noises and help understand what is essential and what is not.
Reading offers not only knowledge but also patience which is an essential virtue for every investor.
As the quote goes by author Dr. Seuss, "The more you read, the more things you'll know. The more you learn, the more places you will go."
This is 100% true in investing in the stock market in India too.