"There are two kinds of people who lose money: those who know nothing and those who know everything."
Well, why would the first one lose is anybody's guess; however our second breed loses cause of its overconfidence and over-interpretation of every market impacting development.
Market is funny. You bet! It falls down every time you invest? What bad did you do to the Laxmi? Why is that every t-d-h you know claims that he made fortunes on the D-street! Didn't you read that the person who has held Infosys shares since IPO is a crorepati. Well well well.. Welcome to the great Indian casino named Sensex.
I've been in the market since not so long time of about 4 years. As always, i made, i lost, i made, i lost and i made and I’m making... u know what. I started when i knew nothing. I burnt my fingers and then i learnt. I'm learning now as well. All that has changed is the no. of elements in my set named {Mistakes you can make in stock market investments}. I'll summaries some of my learning’s here which are obviously not writings on the stone wall:
Indian markets are highly manipulated by traders and insiders. ( So are other markets at different levels)
Q You as retail investors should never trade in derivatives market.
Q Never buy a stock on the tip of your dhoodhwala.
Q If you don’t understand it, stay out.
Well then what should you do? Sit on the fence and watch that dhoodhwala suddenly delivering on a bike from a cycle! No.. And a strong NO.
India is just beginning. We are blessed to live and grow in this phase of India. If you miss it now, you will never probably catch it in 5 years hence. Invest, Invest and Invest but beware. "Greed is good" claimed Al pacino in Wallstreet. We are in a phase when we are observing people prospering. Crowd has money and a strange feeling that they'll have it till eternity. What best describes an EMI of 30K on a salary of 50K! Well, their feeling is not too wrongly placed. We are feeling uncomformatable because this phase of growing India is a new phase. We have lived in the society that was evidently under served, had fewer ambitions and bought a bike in the entire earning life. But, lets realise that India has grown above that. Even India can prosper. Why do you doubt that everyone is doing well these days and standard of life is increasing? These things are norm of the day in developed nations! We are moving towards that. However still long way to go... but we are on the road. And only this time we have a marathon and not a 100mts 10 runner’s race. So join-in.
Coming back to what one should do for investing now. I'm assuming that reader is not a geek with stocks or a day trader. As a normal investor here are the top 3 golden rules:
- Don't try to time the market. You can not on a medium term.
- Don't come close to the markets if you don't want to stay invested and have patience.
- Invest through reputed mutual funds and in a fund running for atleast last 3-4 years. Dont pay heed to rosy NFOs unless they are significantly different from the existing funds.
I again urge that lets participate and make the whole system more strong with our conviction.
Thursday, September 13, 2007
NetPick
The Stock Market simply illustrated ... is there a lesson here?
Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for Rs10. The villagers seeing that there were many monkeys around, went out to the forest and started catching them. The man bought thousands at Rs10 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now
buy at Rs20. This renewed the efforts of the villagers and they started catching monkeys again. Soon the supply diminished even further and people started going back to their farms. The offer rate increased to Rs25 and the supply of monkeys became so little that it was an effort to even see a monkey let alone catch it. The man now announced that he would buy monkeys
at Rs50! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.
In the absence of the man, the assistant told the villagers. Look at all these monkeys in the big cage that the man has collected. I will sell them to you at Rs35 and when the man returns from the city, you can sell it to him for Rs50." The villagers squeezed up with all their savings to buy the monkeys.
Then they never saw the man nor his assistant, only monkeys everywhere!! !!
Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for Rs10. The villagers seeing that there were many monkeys around, went out to the forest and started catching them. The man bought thousands at Rs10 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now
buy at Rs20. This renewed the efforts of the villagers and they started catching monkeys again. Soon the supply diminished even further and people started going back to their farms. The offer rate increased to Rs25 and the supply of monkeys became so little that it was an effort to even see a monkey let alone catch it. The man now announced that he would buy monkeys
at Rs50! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.
In the absence of the man, the assistant told the villagers. Look at all these monkeys in the big cage that the man has collected. I will sell them to you at Rs35 and when the man returns from the city, you can sell it to him for Rs50." The villagers squeezed up with all their savings to buy the monkeys.
Then they never saw the man nor his assistant, only monkeys everywhere!! !!
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