Market-casual thoughts

Today, I wish to talk on few investment concerns. At straight, every smoker knows that cigarette smoking is harmful to health and every drinker is aware alcohol is ruinous. We get these cautions on every packet of cigarettes or bottles of wines. But some of us consume the both or any, even after the absolute consciousness. The plain purpose of above words in such a blog, related to investment myths. Any way, we don’t have such cautions available on scrips. Majority of us treats investment advices on the way, chain smokers or heavy drinkers responds to the cautions quoted above.

The path of the market seems on a slipping floor. It is not showing any boldness, responds in a very sensitive manner like a teenager. Market is reacting to every related news with an antagonistic way. 300-500 points up or down of Sensex in a single session is none a matter to us. The market is even capable to bring down or up some 2000 points in just a week or in 3-4 trading sessions. What is going on?

My clients usually ask such questions. Few of them even ask for short term recommendations. But, I am not sufficiently expert to answer them in any condition. But I wish to spread few words my own. The path of the market is mysterious. I don’t think, any one can calculate the market’s future. But we still read a lot of expert views everyday in Medias. They predicts in their way, market is passing it’s own way. Majority of them come again shamelessly and blasts new bombs. I have a collection of their statements since last few years which I kept in separate folders by names, and it is really interesting when we look now. About predictions, the only possible thing is, we can reach on certain presumptions considering various aspects related to economy or market. Nothing else!

On the other side, the unpredictable nature is one of the most charming side of market. Just recall the days of year 2008. Market was declining day by day on global cues. Was there any attractions? And before that, market were on mountaineering, everyone were making money but short live, and lost than they made. Simply, the real allure of the market concealed in, expecting the unexpected. Everyone here is to make good money by fastest means. I don’t know any one, who buy stocks to play with hard earned coins.

A big percentage of investors enter in the market with a pre-assumption of immediate gains. But normally market sides them on the shore, like oceans do with scraps. Long term investment is an established and widely accepted strategy even if very less people follows. A very few short term/Intra day traders makes good money too, but less in size compare to the patient investment. Experts says, the current volatile market is one of the solid opportunities to make good money, after the previous extreme lows which most of us missed out. But, here again, I am not proficient in that way. But I wish to be….

Let us see, how people buy stocks? A large part of retail investors buy stocks while the market moves to north. The intention is to take positions before market reaches in higher levels. When a crash occurs, most of them sell out their entire holdings irrespective of company potentials, cause the scarcity to further declines. Probably these people pay heavy brokerage almost nearest to their gains in long run.

Some investors take their positions in upcoming market and sell out on nominal gains. If a crash occurs and stays for longer time, they even divert their funds to other investment options. These people never wish to stay their money idle.

A very few category of investors get pleasant while market is crashing or on inconsistency. They always keep a considerable portion of their money idle and sit on it calmly. When market crashes, or in between sucker rallies, they put their money and manage exit meeting their pre-assigned target with legitimate profit before next crash. It is the best strategy for short term traders, but not practical for everyone .

Some people buy stocks in batches while market crashes or responds erratic, sucker rallies bring the market again in heights, they stay calm, they wait for the next more solid crash to get the same stocks (on which they have downright faith) in lesser prices. They accumulate their favourite stocks in more genuine prices. These people come normally in the category of patient long term investors and who actually makes money in the real depth. I wish to be here. Moreover, interested to deal with people who keep this mindset.

I am always in favour of long term or patient investments, but I truly respect few day traders who make consistent gains. I personally know few such smart and hardworking guys. They work hard to keep pace with the market and doing extensive research before play the game. They unearth some positive news, collect maximum details on the news, company details, graphs, charts etc.. Then put their money with brave heart. Probably the result will be fruitful according to the positive reaction to the news/info. These are the people who benefits maximum from the minimum time. A real intraday trader should have an immediate decision making capability, utter braveness, a solid background for high risk tolerance, good knowledge on the scrip/company, charts/graphs, resistance levels, awareness of the farthest possible reaction levels etc… If you have it in you, go ahead and try your luck.

But, majority of my intraday friends are on the other side. They sit in front of the system by around 9 am or before. Looks like preparing for a 100 Mtr sprint. With 2-3 mobile phones (to avoid chances of missing even a single tip from their most [un]trusted sources) to receive tips, resistance levels, entry prices, intraday targets etc.. Or, some of them closely watches the initial moves of indices, and put their/broker’s money blindly… Usually, most of the days happens bad for them. Any slight negative news usually brings the market to heavy collapse and they compelled to sell out on lose. Sometimes, the market goes up, but the scrip they bought to south only.... Most of them cannot even deliver good stocks because they usually play with margins. The interesting thing is they surely discuss their sporadic gains with us, which rarely occurs, but the loses never. Next day they sit again to recover the earlier lose with a fresh guy’s tip mostly paid ones.

I think its enough for now, usually I am hesitate to read lengthy contents, so hope my readers too.

Comments Please

Shabu Thachat – sthachat@gmail.com