One of the most important thing I’ve learnt from my experience is to stop running after the gambling stocks. By gambling stocks I mean, the ones with no fundamentals at all but are still going up. Each and every day you will find several such stocks going up, even freezing in the upper circuit (5% or 20%).  Such stocks will look very interesting but they are not worth risking your money into.

Why do such stocks rally up?

They rally up because a lot of people love to gamble around. There are a lot of operators around who buy such stocks in bulk and play with it. They decide when to buy and take the stock up and when to sell and take down the stock. There could even be the promoters of the company playing games in their own stock. I’m not completely sure but I know for sure that they make a lot of money by gambling like this and several people who try to get into the stock to make some quick money end up losing a lot of it.

Why should we not purchase such stocks?

You should not purchase such gambling stocks because when you buy into such stocks, you become a plot of those operators or maybe the promoters. The main idea behind such kind of activities is to trap the retail investors like us who are trying to get into the flow to make some quick money. Once we get trapped into this upper and lower circuits, we really have no option at all. Many such stocks get freezed in a circuit right from morning and give no opportunity to get out of the stock. The gamblers decide your fate and if you are lucky, you might even make a profit.

How do these stocks lure us to make a loss?

A lot of times certain specific stocks with zero fundamentals keep rallying days after days, might even get doubled in a week or two. Now if you hear such an interesting thing that a stock doubled in two weeks, you feel that there is still a lot of up move left and this is your chance to get an awesome appreciation. You plan to buy and sell it in a few days making huge profits, but does that really happen? Most of the times we purchase such stocks at its highs and then stock starts falling, infact falls really bad and you incur a big loss. Sometimes people don’t even get a chance to get out because the stock has freezed on the lower circuit for a lot of days in a row.

Don’t Risk Your Hard Earned Money!

Why do we want to risk our hard earned money into such stupid stocks that have no fundamentals? If you get a chance to buy into the companies that have really good fundamentals, then why gamble into stupid stocks? Just be on the safe side and don’t let the rally of stupid stocks bother you. If you enter into good stocks at fair prices, then they alone will give you a really good appreciation. By thinking about doubling your money in a week or a month, you might end up in making it half. Is it really worth the risk?

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