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Showing posts from December, 2009

Market Mantras

The markets tanked and then recovered in 2009. And what a recovery it was. Stocks have gone up 3,4 times in the last 6 months. Not the frontliners but some of the midcaps. The frontliners are just about back to where they fell from in Jan 2008. So, in a span of 2 years people who have stayed invested in the market are back to even. Those who had the guts to buy when there was mayhem around have actually made stupendous returns. But actually most retail investors have lost money. They came to the party late and left early, trying desperately to recuperate some of their losses!

The lessons from all this are:
1. Ignore the market. Focus on the businesses.
2. Buy when there is blood on the street (old jungle saying!!).
3. Sell when everyone and their uncles are buying (remember Reliance Power IPO?)
4. The money is made while buying, so make sure even if you get an average deal while selling, you still make money.
5. Over the long term, trading makes only one person rich - your broker!!

My Investing Mantra

Over the last decade that I have been investing and trading in the stock markets, I have had the opportunity to try my hand at many approaches to make money. I have done long term investing (bottom-up stock picking), top-down stock picking, momentum trades, technical analysis, swing trading, day trading and derivatives (main options) trading. I have made and lost money in all of these endeavours. The only thing that I have gained in knowledge and an insight of what works for me in the stock market. And I have decided to stick to my knitting in the future.

Firstly, I have put some portion of my portfolio in exchange traded index funds to capture the index returns. I have invested in both the Nifty and the Junior Nifty ETFs.
For direct stocks, I am investing in companies with the following characterisitcs:
 1. I look only at small or mid cap companies which can grow in the future.  
 2. Reasonably high RoCE or RoE with stable return ratios
 3. Consistent record of sales and profits over ye…

Make your own choice

I have a lot of people ask me about what I think about career decisions. Some come to ask for job roles in foreign countries, some ask about how to get a different job role, some enquire about career progression and some others ask about how to increase their salaries! What I always end of telling people is make choices based on what you really think is important to you. Think long term. Think if five years from now the choices you make now will make a difference to your life.

Young(er) people have a tendency to look only at a short term view of life and don't really want to think about the long term. (It's like in the stock markets, traders think long term is six months!!). It's critical, to my mind, that people think long term - atleast have a plan for the next 3 years. There has to be a road map that you carry in your head or written down somewhere which helps you in the general direction you want to go. Unless, you know where you are going, you really cannot get anywhe…

Attitude makes the difference in life

It has been nearly half a month since I am back from China. Interesting how time flies. The China trip was a great experience that something I would remember for a long time.I have bought a new Nokia E63 phone which I am using as my ipod as well so have downloaded a few audio books and listen to them while I drive to work. I have split the audio books in 25 mins pieces so I can listen to them comfortably while I drive. Most of the audio books are about personal leadership, vedanta(!!), personal finance and stock markets. So its a interesting experience to listen to these diverse topics.

I think it is good to listen to hear motivational podcasts/audiocasts on a regular basis. It really helps open up the mind to newer ways of thinking. I have always maintained the most important factor for success is a great attitude. That is the differentiator between someone who just 'floats' through life and someone who takes control of his destiny.