{"id":1476,"date":"2019-02-11T07:16:00","date_gmt":"2019-02-11T07:16:00","guid":{"rendered":""},"modified":"2025-04-09T17:18:56","modified_gmt":"2025-04-09T11:48:56","slug":"most-important-investing-lesson-that-i-learned-this-diwali","status":"publish","type":"post","link":"https:\/\/www.equentis.com\/blog\/most-important-investing-lesson-that-i-learned-this-diwali\/","title":{"rendered":"Most Important Investing Lesson That I Learned This Diwali!"},"content":{"rendered":"
<\/div>\n

Diwali celebrations have ended, and so have the usual discount offers on shopping. Being a gadget freak, I couldn\u2019t help but notice that Apple\u2019s latest offering, the iPhone 11 Pro, was available for a discount of almost Rs. 11000 under the Diwali offer last week. Now, since the offers are over, the phone is available at the original price of Rs. 109,000.<\/p>\n\n\n\n

So, does the drop in price due to the discount indicates a decrease in the quality of the phone? Obviously no. It is merely the same phone with great features, but only the price has changed. But the value has remained the same.<\/p>\n\n\n\n

Now, this is exactly what happens with stock prices too. But remember the quality of the stock does not change every second, despite the change in stock prices. That\u2019s why, before purchasing any stock, one should remember Warren Buffet\u2019s famous quote in his letter to shareholders of Berkshire Hathway at the peak of 2008 financial crisis, \u201cPrice is what you pay, and value is what you get!\u201d<\/p>\n\n\n\n

Rather than judging a share by its price, evaluating a share by its fundamental strength is essential. Several economic and global<\/a> factors make the headlines daily, affecting stock prices. On the contrary, the company\u2019s performance reports are released quarterly, half-yearly, or annual. In the interim, share prices can be volatile, and companies may become undervalued or overvalued.<\/p>\n\n\n\n

Many investors incorrectly assume that a stock trading at a lower price is cheap while another with a high price is expensive. This notion often results in bad investment decisions<\/a>.<\/p>\n\n\n\n

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Diwali and Stock Market<\/a><\/div>\n\n\n\n
Diwali Investing Tips<\/a><\/div>\n<\/div>\n\n\n\n

<\/p>\n\n\n\n

Stock price and value are two different things<\/strong><\/h2>\n\n\n\n

An investor must understand that we can never determine a stock\u2019s actual value by its price because there is a massive difference between them. The stock\u2019s price only depicts the company\u2019s current or market value, which is the price agreed upon by a buyer and seller. Or in short, the demand and supply in the stock market<\/a>. When there are more buyers, the stock price<\/a> will increase, whereas when there are no buyers, the stock price<\/a> will fall.<\/p>\n\n\n\n

A stock\u2019s actual value depends on its intrinsic value<\/strong><\/h2>\n\n\n\n

The intrinsic value of a stock depicts its real value, which includes both tangible and intangible factors. It can be determined only after a detailed fundamental analysis using the company\u2019s business model and financial statements. Investors often make the crucial mistake of looking only at the stock price because that number appears everywhere, be it stock tickers, news channels, or business newspapers. It has very little significance.<\/p>\n\n\n\n

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Portfolio Diwali Cleaning<\/a><\/div>\n\n\n\n
Samvat 2081<\/a><\/div>\n\n\n\n
Stock Market during Diwali<\/a><\/div>\n<\/div>\n\n\n\n

<\/p>\n\n\n\n

To help you better understand this, let me share an example. The current stock price of HDFC Bank is Rs. 1,232.20, while Yes Bank currently trades at Rs. 68.35. Now, some investors might think that HDFC Bank’s share price is very high compared to Yes Bank’s, and the Yes Bank stock has a better chance of doubling its share price than HDFC Bank\u2019s, which has run up significantly.<\/p>\n\n\n\n

This is a misconception because there is a reason why HDFC Bank\u2019s share commands a higher price. HDFC Bank’s 6.74 trillion market capitalization is much higher than Yes Bank\u2019s 173.17 billion market capitalization. Besides this, HDFC Bank has better asset quality, higher earnings, and lower NPAs than Yes Bank. This justifies HDFC Bank\u2019s lofty share price.<\/p>\n\n\n\n

\n
Best Financial Diwali Gifts<\/a><\/div>\n\n\n\n
Muhurat Trading 2023<\/a><\/div>\n<\/div>\n\n\n\n

<\/p>\n\n\n\n

The Bottom Line<\/strong><\/p>\n\n\n\n

Any long-term investor should focus only on the stock value rather than the stock price. Looking at stock prices alone while investing can be a bad idea. As they say, \u201cNever judge a book by its cover.\u201d Remember, if a stock has a value associated with it, its share price will go much higher under the right circumstances, whereas a low-priced stock with no value will sink even further.<\/p>\n\n\n\t\t

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Related investing topics<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n How to Invest in Share Market? <\/h3>\n \t\t \t

Considering the volatility, investing in stock markets is both an art and science.<\/p>\n <\/div>\n \n \n <\/div>\n <\/a>\n <\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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\n 5 Best Places To Live After Retirement In India <\/h3>\n \t\t \t

While some retired people set sail on voyages worldwide, others look forward to spending their time in relaxation and comfort.<\/p>\n <\/div>\n \n \n <\/div>\n <\/a>\n <\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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\n 90% People Lose Money in Stocks? <\/h3>\n \t\t \t

Isn't it shocking? But it is a fact. There are countless reasons why investors lose money in stock markets.<\/p>\n <\/div>\n \n \n <\/div>\n <\/a>\n <\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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\n Is Long Term Investing Always Safe? <\/h3>\n \t\t \t

Let\u2019s understand what long-term means before we explain why Long Term Investing may not always be safe.<\/p>\n <\/div>\n \n \n <\/div>\n <\/a>\n <\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t\n\n\n\n

Read more:  How Long-term investing helps create life-changing wealth \u2013 TOI<\/a>. <\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Diwali celebrations have ended, and so have the usual discount offers on shopping. Being a gadget freak, I couldn\u2019t help but notice that Apple\u2019s latest offering, the iPhone 11 Pro, was available for a discount of almost Rs. 11000 under the Diwali offer last week. Now, since the offers are over, the phone is available at the original price of Rs. 109,000.<\/p>\n","protected":false},"author":5,"featured_media":1477,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[9],"tags":[],"class_list":["post-1476","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"_links":{"self":[{"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/posts\/1476","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/comments?post=1476"}],"version-history":[{"count":15,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/posts\/1476\/revisions"}],"predecessor-version":[{"id":47245,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/posts\/1476\/revisions\/47245"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/media\/1477"}],"wp:attachment":[{"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/media?parent=1476"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/categories?post=1476"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/tags?post=1476"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}