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Thursday, 30 June 2011

FUTURES MARKET

FUTURES MARKET – the future less market

Discipline is the only tool which aids you to persist with your dreams. This is true to any phenomenon and so money market is not just an exception.

Let me torch you on FUTURES MARKET in this post of mine. Futures & Options are twin children which act as complimentary tools to edge against cash market holdings. But then where have we bothered about pure theories and it is a known fact that once we learn alphabets, we bet, we qualify ourselves as an Oncology Specialist and start prescribing medicines. It is absolutely true and by denying you are fooling yourselves not me. 

OPTION is just an ICE CREAM which melts since getting exposed to the atmosphere. In Option Market there is something like time value which gets deteriorated as it progress towards the expiry. After knowing the risk attached to it, if you wish to taste the liquor, place your fingers and check its liquidity, open interest position, put-call ratio and do trade strictly with a time frame of maximum two days. Why do I say so? The risk attached to option is that you don’t own a single share and it is just horse-trading your hard earned money.

 
Future market arrives with an assigned lot size for each and every specific counter and you should possess sufficient fund as Margin money to trade in Futures. This is known to everyone but to play it safe is an unexplored question. Do ensure you have double the margin money in your account to safeguard against any inverse reaction of stock market against your expectation. A better strategy would be to hedge your futures month on month, to leverage your position and take a call after watching the market and script movement carefully. This might seem a difficult task, so better use “OPTIONS” as the edging tool. Truly options are only pure hedging tools so if you trade in futures, ensure you take a contra position in option market just against your expectation because this would prevent you from windfall loss. Futures market is roughly a market which doesn’t have a future of its own and then where from it will guarantee your future??



What we want is to hatch Gold in a single day/week/month? But then it is you who get lost chasing your unknown dream in stock market whereas market has remained still. Stock Market was there during the Great Depression of 1929, it was there during the massive bull run of 2005-07 and it is there even after the Recent Recession of 2008-2009. Men do come, try, vanish and go. But market is firmly placed where it is. Now the decision is yours!!!!????

IS STOCK MARKET A BIG FAT HEN?



Should an investor, trade in Stock Market?  Can one make a Million in Futures market? Answer is YES, NO, YES??!!!!!
                                  
Firstly, as quoted in my blog post on Stock market, always enter the stock market as an investor and book returns/profits without second thought seasonally. The instant worry one gets in booking out is what will I do if the stock moves further up? It may? Why it shouldn’t? Remember, all that is spread out in market is not yours and be contended in licking the cup of your tea and stay calm. Fixed Deposit offers p.a returns but what we seek from stock market is per day return. Can a big FAT HEN deliver? I don’t know.  In stock market what we always seek is growth, instant growth and nothing else. This is your attitude. I hear your strong “NO”. Keep denying, but shun it immediately because it will convert you into a gambler. You will no longer be an investor and where from the word ‘trader’ peeps.
There is nothing called a trading stock or an investment stock, if you primarily seek a difference, former is one which possess good liquidity. Do possess a watch model - portfolio of yours purely based on fundamentals. Time your entry and exit after monitoring the market matched with economy. Rely less on the fortune tellers who occupy business channels calling them chartists, analysis executives, technicians & experts. I curse the person who gave these folks the word ‘disclaimer’.  Make it a habit of diverting your profit/returns to Fixed Deposit or better spend them for your kids/family.  Traders are stingy to spend a single penny on a lollypop but then they are open to lose 1000s in a single trade/day. It is easier said than done. I am yet to implement, but then why not we pledge/try to implement. After all “everything needs a beginning”.
Brush up your mind and inject that the stocks are assets and just by getting it dematerialized it doesn’t sit in the other half of your balance sheet. Can you liquidate your land property without fetching an Encumbrance Certificate, Parent document and getting it rightly measured by the Village Officer? How much time does it take to clear the formalities and find an instant buyer?  When everything is made to look simple you make it look simpler and simplest.
 
 
If cash market scenario itself steals so much heat then how volcanic will the mammoth Futures Market look like? Why don’t you wait for a day to have a look at my post on it later? When Stock market itself is a SHEER TEST OF PATIENCE, Why not I taste a pie

Tuesday, 28 June 2011

NETWORK MARKETING

NETWORK MARKETING – ENIGMA UNREVEALED



Of late, Part time job and Part – time income have become a full time crazy search among the middle class Indian families. Advertisement  that glitters in today’s newspapers “Read Email earn 5000 per day”, “Data entry job from home, earn thousands”, “Become an exporter, and earn lakhs without investment”. “Spell bee franchisee – investment 7 lakhs ROI – 50 lakhs per annum” and last but not the least the subject of this blog “Multi level marketing (MLM), - Network marketing”.


I am here, not to curse or praise MLM, because there are theories on either side. But more prominent are the newspaper headliners which sweep every alternative day– ‘Chain marketing chief absconds with few crores’. The history of MLM is that it was propagated as the future of marketing system by many leading institutions in their reports all over the world in the year 2000. So the craze of Network marketing crept into leading business houses of India including leading FMCG major Hindustan Unilever, Ajanta, Insurance companies Bajaj Allianz, reliance insurance, Shriram Chits, Sahara, Peerless and many others  but then almost everyone had to bite the bullet. The forerunners of all MLMs is Skybiz renamed as Skyways which flourished later as V-can/ Magnetic bed too saw a big down turn in India but then Amway which got launched after India opening up economy in 1991,  had made a steady stride from then on in Indian soil.

In an MLM, you either follow a binary system or a 9-6-3 plan or even a 3-6-9 plan. Whatever be it, the prime factor is to introduce your friend, relative, neighbor, mate etc. It all begins with a phone call to your close acquaintance initially and then call gets forwarded/diverted to X or Y. All is well if you “sign them up” * for your team else even an emergency phone call of yours will not be paid heed to. You will be lauded when you begin to succeed but then even a small collapse will help you nail your own coffin. There are many ifs and buts in MLM and so, if your sole(ul) choice is money and nothing else, just proceed. In MLM you are wholly dependent on others. You will have the craze to grow but then your growth depends on your down-legs* performance and to make them perform you follow-up* on a regular basis. The tide turns blue when they don’t meet your expectation and you end up opening a new line. Neither you stop here nor the story. You may achieve all silver, gold, diamond and platinum levels* but at the expense of making others restless & disgust.  When you emerge a winner you end up losing your real near and dear ones.

So if at all you dare to venture an MLM, sacrifice all your love and craze towards your fellow beings. Think (why only look) before you leap. After all wasting your own time, energy and effort is also money’s worth. If you ask whom am I to comment on it?? I had had experienced the gifts of MLM from 1999-2006.  I lost many an acquaintance and helped my fellow friends lose their Peace in trying to promote the business of an unknown.

I am a winner but then a loser indeed.
  

 (*terminologies attached with MLM )

Monday, 20 June 2011

NATIONAL HIGHWAYS



NATIONAL HIGHWAYS IS ON A ROLL

Till October 2006 I seldom gazed at road infrastructure. I did read about it in Current Affairs Wizard and Chronicle, it was called “Golden Quadrilateral “initiated by Mr. Atal Behari Vajpayee, the then Prime Minister. My casual reading took a ‘U’ turn when I was posted to Member Audit Board, New Delhi, wherein I was asked to audit units associated with National Highways authority of India (NHAI). There I had the opportunity to read much about the contracts and its construction- infrastructure.
Incidentally, I happen to go through the weekly news bulletin of NHAI and I read something about “negative credit” - Contractors who were awarded Build Operate Transfer (BOT) contracts hand over a cheque of few thousand Crores to Government of India (GOI) for getting the contracts awarded as a goodwill payment. I kept pondering what was this?? For getting a contract awarded you pay an official bribe??

But truly, Contractors are scope- goats indeed, because the facilitation they do to cater to the Project Directors, Manager (Finances), Auditors are so heavy that they compensate them only be reducing the quality. This applies to contractors associated with all Public Works Department. Few contractors in Delhi, Bangalore & Hyderabad were under preview for not meeting the quality (hope the bridge collapses in Hyderabad and Delhi are still fresh in memory) but nothing was blow out of proportion and they were all saved. Against my expectation NHAI isn't seen on corruption board till today and all thanks to GOI for compromising on quality by receiving Negative Credit.



Despite all these I just admire the real work done by the contractors on National roads. Once Railways ran monopoly for any travel beyond 300 kms because of time and travel convenience but now buses ply and cover distances in shorter span than railways. For instance, 300 kms in 4.5 hours at ease – between Chennai  and  Trichy and 450 kms in 6.5 hrs between Mhow  & Aurangabad.  The roads are well highlighted by fluorescent paints almost thorough-out and nice white lines are drawn along the edges of roads so that buses don’t get off the lane on the left side and don’t hit the median on the  right.  Earlier the indications of interior villages used to be shown by an iron board, painted in yellow and black along the roadside and that too looked rusted and unclear but now the boards are big and are painted in fluorescent green and white and are just perfect direction indicators. In my yesteryears, I used to read in text books about the small-small villages but now just a ride down the lane helps me locate the pen-names of villages in our state. When I travel from the central district of the state i.e., from Trichy down to Madurai and beyond south, I see name of villages followed by “Patti”. Similarly when I ride towards Palani and Pollachi I see all “Pettai” and when the same is done towards Coimbatore and further north I come across “Palayams”.  The land topography was so aptly named but how many of us knew?  So Swami Vivekanda saying “Break the wall burn the books, throw the students away from classroom let them learn from the nature” is made a partial reality by the bump-less plastered road infrastructure of NHAI.















"All is well" till the edge of 2G/3G doesn’t creep into NHAI.  If the officials attached with NHAI take the already explored corruptions as a note of caution and act firm, India would sure meet World standards in infrastructure. 


Wednesday, 15 June 2011

THINK DIFFERENT


WHY END -UP A FAILURE IN STOCK MARKET?
THINK DIFFERENT!!!

What is the COST of getting into business with STOCK MARKET? 

One loses money first, becomes restless next,   searches for sound sleep in the nets, devoid of peace he tends to emerge empty and loses his LIFE in full.What a twist? Am I sounding alarming for the new entrants into so called BAROMETER OF A COUNTRY'S ECONOMY? I might be, but by the above I am just cautioning you and not stopping you, of course whom am I to stop you from losing all your pleasures in life by venturing into so called TATA - AMBANI business. A blog on this,  at the very time when leading global investment institutions/brokerage houses like JP Morgan, Standard Chartered, RBS etc., are holding conferences all over the world, is just a supplement so that you are not mislead by the real BIG B'S.

Let me get into the business straight away.  Now assuming one has entered  business with STOCK MARKET, there are very many securities to be transacted with, but all we know is Equity  which is a high risk high return sought of an instrument. In Equity we have Share market and Mutual funds (the bifurcation of it runs long). In this initial post of mine, I will put forth perspective on Shares/stocks alone.


When it comes to Shares - the biggest question in the mind is whether I should  be a trader or an investor? Wow - million dollar question, indeed. Still I will try to answer it in my own way. Always step into stock market as an investor and work on percentage returns and keep booking profits then and there. By percentage returns I refer to Fixed Deposit (FD) returns, anything more than a FD return is always handsome. Hey! Come on,  I hear your yell, You know all these but despite that you are a failure. This very impatience of yours crisscrossed with over enthusiasm or frustration makes you a real failure. So be PATIENT!!



When it comes to investment, always go with 'A' Category shares. The huge amount of notional loss that is floating in your portfolio is because of venturing into Z category and mainly small cap shares. Small cap Shares are mostly operator driven and they might give you handsome return in some and hefty loss in others. 
The most important aspect - What should be the time frame of your investment? Normally go into stock market as a long term investor, and if you see handsome returns within a couple of months then it is a Jackpot, take it away without any second thought. But don't expect Jackpots every now and then. This is where we go wrong and commit all faults. Always remember that investments in Shares are prone for heavy volatility and so at a given point of time, the principal invested might deteriorate. Make it a habit to plug in investment in a staggered manner. The perspective of staggered investment should be followed only when the share price declines to more than 20% of your initial acquisition price, I quote this because, averaging is an art and many fail to make the effective use of this tool. Next, See that your portfolio has a mix of sectors and never ever stick to one sector,  hope the memories of 2008 when Infrastructure was at all time high is still alive and now those who solely rested with infrastructure are at notional loss of at-least 75%. Just to quote one - Ackruti City was trading at 4000 then and now it is quoting at 200. It is true. 



Selection of shares to be picked should be basically driven by fundamentals of the company, its peer company valuation, profitability and return on investments. The above is a difficult analysis even for smart commerce or a business administration graduates. So stick to well known companies and do administer their Profit after tax every quarter or at-least annually, this might increase your faith in investment. After all its your MONEY.


I am stopping it here.  I expect your valuable feedback and comments to proceed further on the subject. Because the above is a tiny mustard and there is so much to be explored. I do have an experience of four full years wherein I had lost more than a couple of Lakhs, Come on! Don't fear. I am blogging on this very subject so that young enterprising investors are rightly guided to emerge as winners.  

If everyone has to have a big fall before stepping onto the winning ladder then many may quit on those big fall   - So why not I THINK DIFFERENT!!!

Friday, 3 June 2011

IS SPORTS, ALL ABOUT MAKING MONEY?

There would be no disagreement on the craze that Indian Cricket had generated over a period of ten odd years. This craze among mass, led to introduction of Franchisee cricket which became popular as IPL. None should dare forget ICL, wrongly propagated as rebel league and finally axed by ICC with the money power of BCCI. Let us not probe too much into the author of franchisee cricket but what good has it done to Indian Cricket and Indian sports at large?

It was just day two after the World Cup (WC) final and it started raining IPL. The fatigue of WC made me shun IPL in full. If this was the state of my mind who watched cricket – what would have been the real body/mind frame of those on the field???
Now the regular international schedule is on and top men in the bracket are either unavailable or not playing owing to injuries and the undenied reason for this is too much of cricket. What happens if we go down clean to Windies, English and Kangaroos in forth coming season? Media will get a good tonic to boost their Target Rating Point (TRP) and the one under scanner will only be lens and helicopter cameras and nothing else. Many players will be sacked – so what? Their overflowing bank account balance, flats in dubai deserts & Mumbai high seas and Chevrolets are ready to carry them through to the rest of their life. So, what will happen to National Cricket?


I am worried about the state of sports in India rather than anything else. Ask any small kid what is our national game? A substantial number would come out with answer as “Cricket”. What have we done to our traditional Hindustan? Just roll your eyes and think what have other countries done to their national game? To name a few: America - Base ball, New Zealand - Rugby, England – Football and Cricket. Their national games have got the required identity in their nation and they prove their capability in other sports too whether it be track and field or group sports. Where have we lost the plot in protecting our nation sports? What happen to Indian Premier Hockey League? Why was that not continued after the first two years? The reply is Indian Hockey is fighting its survival.

Now, it is true that we are colonized in full and the unsung truth is that we are yet to recover from the regime of East India Company. Do you want to argue otherwise? You are most welcome, but then arguments will drain out and unsung truth will prevail.