Data for Thought

A tempting way to lose money

Retail investors tend to get attracted to low-price stocks. But betting on them could result in high losses

A tempting way to lose money

The buying price of a stock definitely plays a role in determining your returns. But a 'low price' itself should not be your only selection criterion. If a stock is priced at Rs 5, would you buy it? As most stock investors know, the stock price alone conveys little. One has to assess the valuations and the potential of the business before buying a stock. A very low stock price actually means something wrong with the company. Otherwise, why would a sound company trade at ultra-low prices?


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