Stock Market : Should you invest or not ?

Before I give my opinion, check out these facts and stories.

Fact 1 : An investment of Rs 1000 in Infosys 10 years before would have increased to a whopping Rs 17,46, 782.
Fact 2 : Investment of Rs 20000 in Reliance Debentures 10 years back, would have become today more than 5,00,000 Rs.
Fact 3 : Out of 88 Companies with a market capitalization of over Rs 500 crore 10 years ago, only five companies gave negative returns.
Fact 4 : People have lost all of their savings in Stock market crashes and even many of us believe it's a fictitious wealth. One day price of one stock is 1000, next day it might be 1200 and another day it might be 500.

I believe everyone might have came across such facts/stories many times. During my college life, I swore many times that stock market is a gambling, and believed that nobody should invest in it.

Around two and half years back I attended a road-show, organized by TCS for its employees. There was an Q & A session for its upcoming IPO. During the session, people came up with lot of questions on Earning outlook, valuations and P/E ratios etc. First time I realized that price of a stock is not totally a blind game, and it looks like some rationale is there behind it. There is something I should be aware of. I went through a number of articles on Rediff (Business and Get Ahead sections) and on ICICIDirect.com.

Today, Here I am, analyzing quarterly results of my stocks, checking their P-E ratios and deciding the next move. I feel that investing in stocks without understanding valuations part is almost like loosing your money blindly.

The answer to the title of this post depends a lot on every individual. Stock market doesn't behave rationally all the times, but it's not total crazy also.
I have came up with some guidelines for those looking for venturing into stock market, Read more on that in Basic Guidelines post.

Read about buying guidelines here :
Buying a stock : Step 1
Read about Sensex and Valuations here :
Sensex and Valuations