One common mistake many new investors make is buying shares based solely on their low price in rupee terms. They often assume that cheaper stocks provide better value or more potential for growth. However, a low price doesn’t necessarily mean a stock is undervalued or a good investment. In fact, these low-priced shares may belong to companies with weak fundamentals, poor earnings growth, or struggling business models.
Investors need to focus on a company’s financial health, market position, and growth prospects, rather than its share price alone. Sometimes, higher-priced stocks can be more valuable because they belong to companies with stronger balance sheets and consistent earnings. Buying shares just because they seem affordable can lead to investing in poor-quality businesses that may not recover or perform well, resulting in losses.
New investors should evaluate the price relative to the company’s value using metrics like the price-to-earnings ratio (P/E), price-to-book ratio (P/B), and overall market sentiment, rather than simply chasing low-price stocks.
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