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Wednesday, 15 June 2011



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!!!


  1. Good post, though very lengthy boss. Try to keep it short, within 3 or four paras. People tend to get impatient- their shares value might tip down further while reading this post, you see! LOL!!!

  2. btw, change your theme if possible, your blog head is Red Heart. Find a theme that suits the blog title:)))

  3. Nivedita pl keep guiding me as above yaar -- blog head is different from blog title ah -- onnume puriyala pa

  4. Nivedita -- Shall i shorten my post now or shall i leave it as such and do it in future

  5. In future, try to keep it short da. No one has the patience to read volumes of post. Your blog title is Red Heart and blog post's title is ur topic for the day. In this case- " Why end up a failure in stock market..." is the blog post title. Hope it is now clear!

  6. CLOUD NINE: I got it. Infact Guruprasad read my blog and he clarified it in full. Will sure cut short blogs in future dear. Keep helping me out in blogging

  7. my advise is invest regularly in good MF schemes and enter in stocks in case of major corrections

  8. Good post da.. keep going.. All the best.

  9. Skanthagiri -- I had quoted in my post that MF is a broader lesson and it would be spoken in coming posts of mine.

    Yuvaraj - thanks da -- will do it in piece meal

  10. Great attempt da,ofcourse a "money saving one" for us.Thanks also for ur continued guidance in this subject.

  11. MY advise you cant seoerate MF and equity

  12. one more way of analysing your equity is create your own units and NAV by putting all your stocks.The thamasha is you can exit stocks making losses and hold on to stocks in profit to maximise NAV.