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.

God@Earth - A Puncture Boy

Each one of us can think, write and want to live like Mahatma Gandhi, Nelson Mandela, Gautama Buddha. But most of the times, we forget to follow the soul. If we follow our soul, we will find all the great people among us. But unfortunately it takes a lot of time to understand this as we get stuck in details, see, smell and perceive things with poor understanding, and we never get connected with the whole - the soul.

Today, I happen to meet a great guy. I dont know his name, let us call him Mr. Perfect because for me he appeared perfect. He might have been 15-20 years old or may be much younger. He works in a cycle shop in Vadapalani (Chennai, India) and the cycle shop has an extension for fixing the puncture (both bicycle and bikes). Today, it seems like a good day for me and fortunately my bike got punctured (this is a regular phenomenon). I needed to walk at least 500 meters to find this shop.

When I parked my bike, Mr Perfect was fixing puncture of a cycle. He took around 10 minutes to fix it. He was fully focused on his work. There was another elderly person who was working with a bike. I thought that the elder one is going to fix my bike. As I was thinking, Mr Perfect was so fast to fix the cycle and he just smiled at me. Again, he was fully engaged and dedicated towards his work and my God, I never seen a "Puncture Boy" like him (you can believe my words, I have seen my puncture shops in Chennai).

After he finished, he double checked whether he fixed it properly. I m not sure how many of us, the "so called" software engineers do this. He said, "Sir, I ll make sure again, it is almost 9 pm and you will not find any shops if it again goes off". I was stumbled with his customer service, surely, he is "Gung Ho". The point is, he has already worked on 50+ punctures and he never got tired. He didn't take sandwiches, snacks or juices. But, his energy level was pretty high.

Truly, a God at Earth and one of the great leaders I have ever seen. Here is the picture of Mr. Perfect.

Leadership 101 - Leader Will Always Be a Follower

If you are obsessed with something, you will love it like a mad and it applies to leadership too. When it becomes a passion, you will understand the leadership is more about following and less about being followed. You will live for the principles that you believe in. When you have your vision on moving up the career or a top post, it is very unlikely that you will reach it. But rather, you to have see top post as a by-product of your leadership. The foundation is your attitude to see followership in leadership.

This following is not running after people. This is more about giving more power to people who think right and act right. Many people call this "Inverting the Pyramid" where the people are allowed and motivated to make decisions. It is faster way of creating decision makers and leaders and right way too. If you are a true leader, you will accept that creating thinkers and leaders will be of top most priority. "Inverting the Pyramid" and following the decisions of your people will make you unmatchable team and bring up the hidden potential of individuals leading to transformation.

So, a leader always has follower's mindset. Any thoughts?

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.

Leadership 101 - Can ATM be a Leader?

The era of old (and old age) management and leadership is eroding. If you deny that you will be eroded along with old management styles. So far, we lived in the era of making money and most of the successes of corporations are upheld with single digit and sometimes double digit money matra - profit, revenue. Often, the people are called resources and head counts. But we are not far away from the world of oneness and mutual respect.

One of the key points that was discussed in "The Moonshots to Management" was that the power will go to people who add value and power will be yanked from people who do not add value and by the way, "The Moonshots to Management" was an article focusing management innovation from top notch professors and business leaders. Many people like Ken Blanchard have spoken about Inverting the Pyramid. If you haven't inverted it yet, do it now before you get buried when the pyramid inverts itself. The key differentiators in future centuries will be your people.

If you see "profit" is sufficient criteria for taking up leadership position, then an ATM that dispenses cash can be a great leader. Ask yourself what you have done for the people that you are representing and you privileged to lead. Have a time slot in your day (at least all working days) to think about your people and how you can transform them. Profit is fine for business but transformation is beyond business. Be sensible before it is too late. People will be proud to follow you. Period.

Leadership 101 - Consistency is Key

When we were kids my father gave us (to my younger sister and me) a small container which we used to save daily pocket money. My mom used to give us 25 paisa and I remember in few months we were able to save 10-20 rupees. There is another instance. My father was a bread winner to whole of my family (including my grandma who was living in a village). Out of little money what my father used to give her monthly, she saved 1000 bucks (she might have saved for years) and deposited in a local bank in my name. She was an example of being consistent. Before I became fully aware of this, I loved her, later I loved her and respected her discipline.

Generally we don't care when someone advices about tiny improvements. Being the young blood, we just focus on big things. We ultimately focus on "big things" and lose focus on actual process. But the people who are experienced and matured will focus on tiny and important things. I learned the paramount importance of being consistent from my previous Project Leader - Mr. RK Raja. He is man of consistency and he pushed me towards consistency. My CEO Mr. Vineet Nayar, in one of his yearly meetings talked about rain drops and how the rain drops make an ocean.

When you want to dig 100 feet deep, you need dig 1 feet 100 times consistently. If you dig 25 feet three times or 50 feet one time, it isn't sufficient. Consistency is the key to transformation.

Phishing - What an Idiot?

I never used to look at my SPAM folders and just send those emails directly to graveyard. Today, I happen to see one of the emails that appears to be from ICICI Bank. This is the phishing email and the guy was making everyone idiot. The phishing was tailored in a simple way. Observe the following picture and carefully look at the red rectangle. One rectangle highlights a text linked with a URL. The text of the hyperlink has http://www.icicibank.com/..... and the actual URL goes somewhere which can be observed from the second rectangle.

I was using Google Chrome which promptly pointed that the website was phishing site. This shows that the internet users illiterate in basic information security and the attackers take those innocent but careless people for a ride and make a big sum. This guy still uses a very foolish method to fool us. Beware, when Chrome or Firefox says something, just give it the deserved attention. This is just a thought to promote Information Security in normal life. We are so much obsessed with Internet and we need to use the knife to just cut the fruit and not our hands.

How to Build Emotional Intelligence - Get Rid Of Psychological Memory

It is easier said than done. My journey towards building emotional intelligence is very painful. But I believe that I can endure the pain because at the end of the day it makes me a nice and pleasant guy. On the way, I tend to learn so many things about humanity, human relations, psychology, how to get away from "don't walk the talk people" and yet to unaffected or affect negligibly.

Human beings have excellent memory - many many billions of terabytes. The wonderful thing about human beings is that they forget even the biggest blunders when there have benefits and they tend to blow up small mistakes which goes to an extent of taking a revenge. We need to build the habit of selective amnesia - the ability to forget our psychological memory. This is the key aspect for building emotional intelligence.

There are two types of memory - factual and psychological memory. For example, when your close friend does some unpardonable mistake which you cannot digest, you feel so much pain - the real pain due to the wound and the psychological pain due to your friend's action. In reality, it is the psychological pain that causes so much wound and prevails beyond the physical wound. You tend to spoil your inner well being and your low emotional intelligence erupts in many forms but mostly yelling at others or at your friend. The yell causes more damage to you than to your friend. The first step towards building emotional intelligence is to forget psychological but retaining the factual memory (which adds to your knowledge base) to add the scenario as your learning. The second step towards better Emotional Intelligence is getting rid of psychological memory.

Other posts on Emotional Intelligence can be accessed via this link

Leadership 101 - Doing Right Vs Being Successful

There are two ways of looking at things - "Doing Right" and "Being Successful". All actions that are right may not lead to success and all successes which are gotten might not have been gotten in right way". We call someone goof who had the capability to think in a right way and we can give many examples. Like many man made objects, the successes are also made by man. If someone becomes successful after cheating (for example, building a house with corrupt money), we still praise him for being successful (and indirectly for cheating). If someone does something in right way and still fails, he is done. Because of this feedback system, most of us just do whatever is needed to be successful. We just praise success and do not care about being right.

We, the human being, get carried away my the momentary pleasures and gather the guts to do wrong thing if that wrong thing can be hidden or widely accepted in your society. You an option out of two.

1. Being Right and Doing in right way
2. Being Successful

Success gives pleasure gives to your ego and you feel excited until success ebbs out, but "being right" is humane and divine thing, it always excites you. When you are right, there will be great force in you that will drive you towards excellence and you will understand excellence is more than successful.

Who said "excellence" is journey. When you stay in the state of "being right", for you, the excellence will be a destination. This is great lesson I learned and also learning is that "being right" is toughest in life.