Trying my Hands in Investing/Trading

There are many that trade in stock market. Most of us lose the money and few of us win it and go to an extent of writing a book. I always invested in mutual funds, life insurance and pension funds thinking that I will get a fat corpus when I retire and start to do something I cherish to do. Seems like that is a horizon. Horizon is always a horizon how fast you travel towards it. I got in between pragmatism and ambition. I was like a calm river, taking life as it comes and not trying to change my course on the "money" part of life. I don't wish to jump to a higher paying job just for the sake of money. Rather, I want to find new ways of multiplying the money and also invest on myself to get an alternate source of income/business/investment/whatever we call it.

As a first step, having lost big deal of money (ok, it is not so much :-)), I started to invest on myself. Everyday, I m learning something like investment psychology, technical analysis, economy and try to connect with people who already made quite a sum (of knowledge, discipline and money). Slowly, I will be starting to post on finance (more specifically my experiences with stock markets, my learning on the subject). I hope that will be of use to some of you who also aspire to make big business. I continue to believe that stock market is not a place to make money but a place to run business.

With a big aspiration, I have started my journey towards setting up my business in my laptop and head with my friends and friends to be. Will keep you posted if something good opens up.

Multiply Your Money - Systematic Investment Plans

Money is not biggest thing in life but it is reasonably close to oxygen. And there is nothing wrong in trying to maximize your corpus. With the rising inflation and real estate reaching unrealistic limits, I always feel that I m left behind. I m not so sure what will my lifestyle and what kind of lifestyle I can afford when I retire. With my little experience in investing, I feel that we have few options like NSC, PPF, Fixed Deposits, Stocks, Real Estate, Mutual Funds and life insurance.

I am very big fan of Systematic Investment Plans because of the idea of discipline. A portion of your salary goes to stock market every month. If you ask any successful investor, he will tell you that the key to investing is discipline and investing in small chucks periodically. The simple reason why "periodic small chuck investing" works is that we buy when market is low, we also buy when the market is high and we sell when the market is higher. I have strong belief that a periodic investment (every month) of few thousands for 15-20 years in stock market gives 5-10 times the returns from fixed deposit. But there is so risk but the risk can be diversified or reduced by investing in different types of mutual funds every month.

To give you a perspective, I started to invest 3-4 years back when the market was high. We all know that market crashed and even now I have a returns between 20-50%. The high return is possible simply because I bought during market crash. If you are serious about building a corpus, I would seriously suggest you to enter into mutual funds every month. The old saying, "little drops make ocean" hold very much for systematic investment plan.

Of course, you need a good financial consultant who does more than collecting money from you. He should be able to give you ideas on investments. Anyone who is having a good portfolio of services in MF and contacts in fund houses is the right candidate. Though, I don't do this as business, I can point you to my financial consultant Mr. Anand Srinivasan if you want. With his help, I am able to build a good corpus even now and I m on track with my targets :-)

How to Trade Stocks

This is just a speculation and not proven theory. I m seeing some trend quite consistently and based on my theory (yet to be verified)

Buy stocks on Monday/Tuesday. Sell it on Thursday evening or Friday Morning. Market will certainly go down on Friday afternoon. (take care in case Friday is holiday). This gives you some quick bucks.

I advise readers to trade at their own risk and this applies only in Indian stock exchanges (NSE/BSE). Hope, many of you know that I m not a qualified stock analyst :-)

But if you made some bucks, you have to strictly give me some royalty.

Learn Trading - Enter with Exit in Mind

You might at least heard from few of the stock broking firms or from your friends that you can make great deal of money by short term trading. If they also say that there is equal chance of losing the money, you can believe their words. If they build their pitch around profits, get away from them. Even world's greatest traders and technical analysts cannot exactly pin point when the market will reverse and go against your position. But this doesn't mean that you are going to be loser always. But the loss is a possibility. There is a risk and the risk pays you off equally.

Unless it is long term investment, if you are trading for short term to medium term for some quick profits, the key is money management and taking positions in phases. We will more about more about these in upcoming posts. The more important is the mindset. For example, if you buy a stock for 40 rupees and waiting for making huge profit without any time line or price target, you are unlikely to get profit. So, when you are taking positions, it is very crucial to enter in the right price and right time. It is equal more important that you exit in right price and right time. In the next post, we will discuss why "entry" and "exit" are more important with charts.

Lots of Money To Be Made - Really.

This year is going to be start of another bull market and it is likely to run for at least next few years. After Oct' 08 lows, everyone (including myself) thought that the market is going to hit another bottom. The stock market proved again that anything can happen. It never made another low and probably won't hit a new bottom again. The stocks which traded in hundreds came to as low as to 10 rupees. For example, my preferred stock HDIL made a low in 60s and went up to 300 rupees.

By looking at the patterns, I feel that there are lots of money lying with mutual fund houses, domestic institutional investors and particularly Life Insurance Corporation of India (LIC) that needs to come to market. These educated folks don't invest like kids. They are guys who make the markets move in either direction. These folks have real huge money and many of them are sitting on reasonable proportion of cash. This tells us that those money has to come to market sooner or later.

Ideally, one should have started to invest during October so as to "bottom fish" but literally one cannot bottom fish as no one knows where the bottom is. So, the key to successful investing is systematic investment. Like SIP plans in Mutual Fund, one should go for building portfolio at crucial support levels of each stock. By this, one can reduce risk and maximize the returns. While "buying at bottom" and "seeing at rise" is a common strategy, the strategy cannot be applied directly. One has to systematically plan for investment, spilit up the prinicple amount into at least 4-6 portions and invest at every crucial support levels (or for every 2000 points drop/rise in Sensex).

When you invest/trade like a machine, you must make a real lot money. Period.

Role of Financial Consultant

How long will you work? At some point in your life, you would like to take a permanent off from your work and people call it retirement. This is the time, you will spend more time with your family, doing small things that excites you and do some traveling/pilgrimage. In order to have peaceful life, it is absolutely essential that you have enough corpus to support your family and yourself. It is quite reasonable if you want to build a corpus of 1.5 - 2 crores.

When you want to build a portfolio of products, I strongly believe and recommend you to go for a financial consultant who is experienced and who will be working for you and sensitive to your needs. Do not get in touch with inexperienced consultants who offer you products bits and pieces. For example, most of the consultants whom I met before I met my current consultant (Mr Anand Srinivasan) were focused only on specific products. They never asked me questions on current investments. As far as they are concerned, it is their business, they want to sell their products.

But with any experienced/knowledgeable consultant like Mr Anand, they start their interaction with the clients with questions. I still remember the number of questions he asked when I met him first time. He literally made my father and me to run the safe more than 5 times to bring the details of investment. He clearly analyzed my "risk-reward" in accordance with my age and finally suggested me to go for few products. Most importantly, he never pushed me to buy products from him. He was focused only on creating the corpus - slowly with discipline. Periodically, he used to visit my home and make sure that the investments are on track and make timely shuffling to reduce risks. He is one of the very few people who look things over a long term and do shuffling for short term to maximize returns. There is no wonder why I still continue seek Anand's help for all my investment.

When you want to retire with a good corpus, it is essential that you need someone to educate you and who can help you to make sensible decisions. Go for a financial consultant not brokers.

Money Investing - Multiplying Hard Earned Money

It was two years back, I was introduced to a financial consultant Mr Anand Srinivasan by my cousin to get exercise my ESOP. My financial consultant (and friend) introduced me a stock broker and my demat account was created in a day. Being a high risk taker, I was in involved in short term and intra day trading. I had to lose around a lakh and half to understand an important lesson "money management" is key to successful investing. Over a period of one year, I lost 1.5 lakh and covered my losses in just few months when I fine tune my strategy.

I generally do not believe getting a paid service for stock recommendations. I understood that over a longer period of time, the fundamentals of the companies matters most and one can play in short term to medium term with the help of technical analysis. After watching few stocks, I understood that multiplying hard earned money or at least getting a decent returns (100%) in a year is quite feasible and particularly in bear market.

In this blog, I would also like to keep my post related to stock markets and products related to stock markets like mutual funds and retirement funds. I do not assure you that my method will work magic for you. However, I strongly believe that you can take away this learning and avoid silly/idiotic mistakes that I did. I m not seasoned or paid consultant who is expert in trading but trying to become one :-)

Happy Investing and Learning.