The Market... it is something different for each one.
Sometimes nothing changes, except how you look at it.
Funny how perceptions can make the same thing look different to different people at the same time.
That is why when someone looks at a scrip in awe, another looks at it with suspicion. Yet another views it with disgust.
When the markets come crashing down, there are those that wring their hands in despair, while others rub their hands in glee. While many hold their heads in their hands, some tend to reach into their pockets to throw in some money. Sadly, when markets dip, very few celebrate, there is more gloom and doom everywhere.
What is there to celebrate, one may ask? The answer is : “When else can you find stocks so cheap? And when will the next such opportunity arise? How many will have the guts to invest in a crash?” Surely, he who is brave will be the one to make most money when the market rises again.
How you look at the markets will vary due to host of factors such as :
Attitude : Whether you already like something or you dislike it (For eg.: Why you like Mukesh instead of Anil Ambani)
Horizon : Whether you are looking through a microscope, a telescope or just the naked eye. (Short, long or medium term)
Ego : Whether you badly need to say you were right or you are open to other views.
There are a host of other more important factors that people tend to disregard :
Knowledge : The amount of knowledge each accumulates through research, listening and reading.
Time : The time each devotes to the task will definitely reflect in the results.
Effort : The level of effort made by each person.
The outcome in trading/investment may vastly depend upon certain by-products of the above :
System : The robustness and accuracy of the systems used in trading/investment.
Discipline : The ability to continue undeterred when everyone around panics.
Conviction : The firm belief you have in the research you have done or in the methodology you follow.
There are a few things that may be given greater importance than they deserve in the stock market :
Expertise : There is no genius in the stock market. The market has proven this time and again. As Warren Buffet so succinctly put it, “Wall Street is the only place where people alight from a Rolls Royce to get advised by people who use the Public transportation system”.
Experience : No amount of experience in the stock market can ensure guaranteed success consistently.
Past success : A successful trade or investment in the past can often misguide one to believe that he has a Midas touch. Overconfidence is a killer.
Not necessarily in a lighter vein, the following too can influence one’s performance in the markets :
Luck : Of course Lady Luck has a major part too.
Fate : Destiny, if you believe in it.
God : He decides both of the above, again if you believe in Him.
The Market will behave in its own unfathomable manner. That’s what makes it so attractive. How one utilizes the market will depend upon how one looks at it, how one prepares for it and how one deals with it. Enough said. “Easier to preach than to practice”… whoever said that is surely a genius.
Great time to start a new portfolio of stocks
This is an email I sent to all our clients on March 28, 2011. I am reproducing it here :
NOW is a wonderful time to start investing in equities, so I felt I should write to you today.
The market may dip some more, mainly due to :
1. Foreign factors due to depressed economies abroad
2. Interest rates increase due to unabated inflation
3. Most companies coming out of a below average quarterly performance and probably seeing a similar one ahead.
But with interest rates rising and other economies in doldrums, India may attract a large amount of foreign investment in the near future. The economy being largely dependent on domestic consumption will surely bounce back sharply from the bottom whenever it gets there.
But this is a golden moment to begin creating a fresh new equity portfolio. Most good stocks are available at low prices and it would be apt to start picking up the stocks every time the market falls from now onwards.
Invest with a long term time frame of at least 3 to 5 years in mind so that you give your portfolio the real chance to grow well.
To make it easy for those who wish to begin a fresh new portfolio (even if you already have one), we have listed stocks that you can pick up.
VERY IMPORTANT : Remember, the strategy would be to buy a portion (say 10% to 20% of the planned portfolio value) at every market crash from now onwards. Buy at least 15 stocks if not all on the list for you must diversify your portfolio. Divide your portfolio equally by value, not by quantity of each stock.
Feedback: pal@chona.com
