Here are the few factors which we notice in daily news papers and commercial TV shows which motivates investor to buy or falling in love into certain stocks.
Also such factors lead to create a simple formula as shown below from the basic investor end who looks into newpapers and TV shows to looking for some cues to invest for the
very first time. Here are some of the simple logic framed by basic investors
Growing Economy,GDP = Economy Grows Faster =Growing Stock Prices = Profit
Tremendous Shortage = Demand = Demand for such Stock = Growing Stock Prices = Profit
More Homes+More Roads+More Airports in the future = Demand for such Sector = Growing Stock Prices = Profit
Also i had listed some of the factors aka words which motives the basic investors to buy sector based stocks based. These factors are repeated almost million and millions of times in our daily life and most of them are patriotic words(eg No1 Economy, Developing Economy). These words induce more partiotism and make the basic investors to fall in love with a wrong sector/stock. If you backtest all these Feel Good Factors it would be even worse than our trading system what we follow.
Few Feel Good Factors about the sectors what we see in newspapers,TV,Blogs in day to day life.
A combination of a growing economy and government incentives have helped push up sales for the automobile industry over the past year. An index of auto stocks has gone up nearly 120%. However, the demand for autos is not likely to abate anytime soon especially from India’s rural areas, which are getting wealthier.
Given India’s massive shortage of power in India, “a huge capacity addition” will happen over the next few years, says Mr.YYYYY, a fund manager at ZZZZZ Mutual Fund. He expects India’s annual power generation to be 20,000 to 25,000 megawatts in three to four years, as opposed to 8,000 to 9,000 megawatts currently.
There’s a lot of growth remaining for India’s mobile and telecommunications companies with millions of more subscribers still potentially to be added to India’s mobile network.
But for now, this industry is grappling with a lot of bad news.
As the economy grows faster, more companies are starting to borrow money to expand their businesses, which in turn means higher fee income for banks. Meanwhile, they have sharply reduced their bad loans or non-performing assets, notes Mr.YYYYYY, co-head of equity at ZZZZZ Management Co.
As India builds more homes, roads, airports and infrastructure projects, cement companies will be one of the biggest beneficiaries.This reasoning led to a sharp gain in cement stocks in 2009. Lately, however, investors have been pulling back from cement company stocks because these companies have huge supply available and investors worry that demand won’t keep up. Also, the cost of raw materials such as coal have been going up. Together, these factors could hurt net profits in the near-term.
If you are investing in stocks based on this strategy alone then its time to rework on your strategy