When we buy equities, we start looking at the price next day or next week. For many who call themselves investors,ong run is 1 month. But do you think the management of the business of which we buy shares really looks at their business growth in such a short period.
In equities, the rule of Farming applies.
Equity investments, the buying and selling of stock, are conducted on regular trading exchanges. No matter the kind, all stock markets have the potential to be volatile and experience dramatic fluctuations in share values. These substantial price swings can sometimes have very little to do with the stability and good name of whatever corporation's value they represent; instead they are caused by social, political, governmental or general economic issues occurring within the origin country of the corporation. Equity investments can essentially be viewed as taking on a greater risk of loss for the chance to earn a potentially higher return. Equity investing, to be successful, requires a substantially higher level of research and monitoring investments. There is generally a much higher turnover rate in the holdings of equity portfolios as compared to bond portfolios. Equity investments represent an ownership interest in a company, while bonds only represent a financial interest.
This basic rules states that -
- You first have to sow a seed.
- Keep watering it for it to grow.
- Wait for some time with patience.
- With passage of time, you will get fruits of your hard work and patience.