AT the peak of the technology boom in 2000, there were many investors who were holding on to stocks like Pentamedia and DSQ Software. It was quite clear that these stocks had started correcting. Many investors held on to these stocks hoping for a bounce. The bounce never came but these stocks eventually went bankrupt. Take the case of Ronald Wayne to understand the other side of this argument. Wayne was one of the co-owners of Apple along with Steve Jobs and Steve Wozniak. In 1976, he worried about the future of Apple and sold out his 10% stake for just $800. Considering, Appleā€™s current market capitalization of nearly $800 billion; that stake of Ronald Wayne would have been worth nearly $80 billion today. That should go down as the costliest miss in history. But it goes to underscore the kind of mistakes you cannot afford to make in investing.

Quite often we open our trading account and are ready to start investing in the market. Most of us have heard the famous story of how Wipro converted Rs.10,000 invested in 1981 into Rs.550 crore in 2017. Actually, it is not just Wipro but there are scores of other companies who have created tremendous wealth over the last few years. Stocks like Britannia, Lupin, Eicher Motors, TTK Prestige, ICIL etc are some of the companies that have created unbelievable wealth over the last 10 years. Understanding wealth creation begins by getting your basics about investing right. That basically means you need to understand how to find a Wipro and also how not to sell out like Ronald Wayne.