American TV personality Jim Cramer once said, “Every once in a while, the market does something so stupid it takes your breath away.”

This statement resonates even among the followers of the Nepali stock market. But for most passionate investors, the uncertainties only whet their interest.

It is not easy to invest in the volatile Nepali share market and consistently earn profits. Everyone knows that you need to buy shares when the prices are low and sell them when they are high. But only those who can take quick action by sensing the market-pulse, say market veterans, can sell near the highest point and buy near the lowest point to maximize profits.

The recent bull run offers investors a hard lesson. When Nepal went into lockdown due to the Covid-19 pandemic in March 2020, NEPSE dropped from 1,670 to 1,150 points, triggering panic selling among new investors. But those who sold their stocks cheaply were soon ruing as the market climbed to an all-time-high 3,200 points only months later.

Also read: Of the beginning of NEPSE and its bears & bulls 

But then, soon again, the index plunged to a low of 2,500—and some experts even declared the start of a downtrend.

Those who bought shares when the index hit the all-time high mark were stranded, with the price of their stocks declining rapidly for over a month. In stock market parlance, they wore the ‘topi’ (a stock bought at a high price that is difficult to hold as the market tumbles). But some sold most of their stocks when the market recorded an all-time high anticipating a downfall, and returned to buying shares only when the index plunged by some 500 points.

This shows that those who know the tricks of the trade and can control their emotions can make money in the market, but it’s not easy.

ApEx talked to experts and an online NEPSE counselors’ team for some tips. Hopefully they will help you navigate the choppy waters of today’s stock market.

Also read: Digitization: Need for constant improvement 

Investing Nepal, Online advisors

We have been addicted to getting fast results and believe that the share market is an easy place to make money, which is not true. No investor in the world, no matter how talented, has a strategy or a stock portfolio that will give them constant and sustained growth for 10-20 years with no downfall in between.

This is itself a trick of the trade as tricks, by their nature, are only ideas based on what has worked in the past.

Most of us own certain stocks in companies or have filled out an IPO issue form because our friends, relatives, or someone we know told us we could make quick money. Or, we are just following the trend. Whatever the reason, we depended on others. This is a wrong investment practice.

So, the first step would be to develop genuine passion for investing and learning new things.

Beginners in the stock market follow the trend and think with their hearts rather than their heads. Experienced investors always take measured and rational steps, keeping their emotions in check. So, as a beginner, it is important to shut out the noise and think rationally.

Staying updated with factual data and analyzing that data are among the most important traits of a good investor. Constantly staying updated with the current happenings in the share market and performance of companies is the key. These tricks can be used anytime, irrespective of the market situation.

Also read: The vicissitudes of Nepali stock market 

Mukti Aryal, financial expert

We are still in a bull run and I think it will last for at least another year. Yet ups and downs in the market are normal. The market is gaining balance because of the high volume of investors and the growing number of institutional traders.

When there are frequent corrections, the market can sustain longer bulls. The share market is like a rubber band; the farther you stretch, the greater will be the subsequent contraction.  

The market is underpinned by strong fundamentals, so if the listed companies grow and can give decent dividends to their stakeholders, NEPSE will grow accordingly.

I suggest you study the companies you want to invest in and not panic. You would do well to keep your expectations low right now. The biggest mistake an average investor makes is harboring false hopes about potential returns. Being specific (what you want and how to achieve it) is important in setting a goal. Having a specific goal in turn makes it easier to achieve.

Also read: Women in stock market: The more the merrier 

Ambika Prasad Poudel, Expert and investor

In the market cycle, every time we head towards a bearish trend from a bullish one, we lose around 70-80 percent of investors who had entered the market during a bull run. Similarly, when we move towards a bull from a bear, we add new investors in almost the same ratio.

This is the nature of the market and this is also a reason there are only a few long-surviving traders and investors. When the market is on a bull run, investors become optimistic, assuming the market will forever grow. This mindset has not changed in all these years and it is the reason for most traders’ failure. If you realize and analyze this thing, this can be the most useful investment trick.

The market is relatively low these days. Ultimately, in the capital market, there are more losers than winners. So, it is wise to adapt quickly to the changes in the market—either by selling or buying. That is the only way to survive.

Dr. Keshav Shrestha, Financial manager

You have to learn a few things before investing, but even if you have entered the market without much understanding, work on it now—it’s never too late. Stop taking loans at high rates just to invest in shares. This is one important tip I would give in today’s market scenario.