[Click here to read my first post on Stock Market. The disclaimer of that post still holds good except for that fact that I have got better, meaning, seen a lot more losses. You may also click here and here and here to see my previous posts about share markets.]
During my earlier life in software industry, I was annoyed and confused to see that, in the TV in the cafeteria\breakout area, almost always news channels will be kept. I even remember a manager who uses to change the music channel to news channel even if everyone is watching the TV interestingly. That time, I didn't know why one would always watch the news channels. Later I got to know that a lot of people are looking for the market advice and the price list that is shown in the news channel.
If you listen to the advices they give in those channels, it will be humorous. Suppose if a stock price of a company increased by Rs. 10 the previous day, then in all the channels, guys sitting with power suit and power tie will tell, "The share of this company X is increasing. There is a strong support for this company. The price of its stock will go +50 rupees in one week and it will become +100 or +150 in another 3 months".
If the next day, the same stock price has decreased, they would advice, "Sell the stock immediately. A lot of negative things are reported. Bla Bla Bla.". Sometimes, in two different channels, two guys (again, in power suit... they think they are the most intelligent guys in the world. Bull Shit.) will give exactly the opposite advice. One guy would say, "Immediately buy this stock and it would go +50 rupees" and the other would say, "Close all your position. Do strong short selling" for the same company.
Why do we need to listen to those guys? Even a child could give such advices. If a stock increases, advice others to buy it and if it decreases, advice people to sell it. Nonsense. Why didn't those so-called market analyst guys tell people that the market would fall heavily before it fell on January 16 to 22 2008? They will say, this was not foreseen by anyone. If those guys can only tell things which everyone knows, why should we even listen to them?
It is also very true that, if someone has bought a share, they can boldly appear in TV and say that this share would increase like hell. After everyone buys the share, he can easily sell that for profit and go to other company share to play with. They need not do this for all the shares they play with. They can tell genuinely (there is nothing genuine here. Everything is an bullshit, but here, it means, what they genuinely think will happen) for 8 cases and they can use people as a scapegoat for 2 cases.
So, the best advice what I can give is, don't listen to advices and invest blindly to the companies which you don't know about. If you want to invest in a company, pray to god and do that :) as no factor could help you do the right thing, absolutely no factors like, charts, history, news, records, etc. will guide you do the right thing always.
Stay tuned for more blogs about share market, commodity market, and other live examples of how market could screw you completely. Please share your views and comments about share market and about this post.
Showing posts with label stockMarket. Show all posts
Showing posts with label stockMarket. Show all posts
Tuesday, August 19, 2008
Wednesday, February 20, 2008
The Dark Future
I sometimes wonder how is it possible for people to incur a great loss in shares. Why should someone lose money when the market crashes? Why don't they simply keep the shares and sell it when the market again goes up? The answer to these questions is, there is a dark concept called *Futures* in share market. It could give you in thousands and take back millions. Lets see how it works, again, I am not an expert in share market and what I say here may be wrong, and in that case, please let us know of the correct concept behind it.
As the name *Future* suggests, this concept is about the value of a share in the future. That is you buy only in lot (here lot means groups of shares, for example, Tata Motors has lot of size 412, Sathyam has lot of size 650, Moser Baer has lot of size 800, etc.). But the amount of money that the broker will take will be very less. If for example, if 650 shares of Sathyam cost 2.8 lakhs, you only need to have about 50 thousand. With 50k you can buy a lot worth 2.8l.
If the price of the share increases 2 rupees, you will gain a profit of 1300. You can book the profit and enjoy. On the contrary (actualy, there is no contrary here), if the price goes down by about 10, and if you do not have enough money to back up, you will get a call from the broker asking you to have more money in your demat account. If at the moment, you do not have the money, the broker will simply sell the shares, without even asking you, and will force you to lose 6500.
So many people get bankrupted because of this reason due to crash. They would have invested all their money in (dark) Futures, and, during the crash, if they can not put more money in their account, the broker will sell all the lots and say: 'You now have 0 rupees in your account. Better luck next time'. That is it. You are bankrupted.
Lets see in the next blog about ways to escape from the dark Futures. Share you comments as well as your experience in futures (if you have) here.
As the name *Future* suggests, this concept is about the value of a share in the future. That is you buy only in lot (here lot means groups of shares, for example, Tata Motors has lot of size 412, Sathyam has lot of size 650, Moser Baer has lot of size 800, etc.). But the amount of money that the broker will take will be very less. If for example, if 650 shares of Sathyam cost 2.8 lakhs, you only need to have about 50 thousand. With 50k you can buy a lot worth 2.8l.
If the price of the share increases 2 rupees, you will gain a profit of 1300. You can book the profit and enjoy. On the contrary (actualy, there is no contrary here), if the price goes down by about 10, and if you do not have enough money to back up, you will get a call from the broker asking you to have more money in your demat account. If at the moment, you do not have the money, the broker will simply sell the shares, without even asking you, and will force you to lose 6500.
So many people get bankrupted because of this reason due to crash. They would have invested all their money in (dark) Futures, and, during the crash, if they can not put more money in their account, the broker will sell all the lots and say: 'You now have 0 rupees in your account. Better luck next time'. That is it. You are bankrupted.
Lets see in the next blog about ways to escape from the dark Futures. Share you comments as well as your experience in futures (if you have) here.
Monday, January 21, 2008
Don't Catch a Falling Knife!
Its been a long time since we talked about Share Market isn't it? So, I just wanted to share some of the theory I have heard about Share Market. Again, I want to tell you that, I am not even close to novice regarding Shares, but I have heard about them a lot. And the theory which I want to talk about it is: Don't catch a falling knife. And that too, at this point of time, this one will prove to be a good theory everyone (every novice in market) must bear in mind.
It is a common mentality for people to do exactly what is to be done and unfortunately that applies to Share Market as well. We tend to sell rising shares (shares whose price increases) and to buy falling shares (vice versa). According to theory (why I say *theory* very often is that, there is NO PROVEN technique which could gain you money in shares. Please click here to know more) we should buy rising shares and sell falling shares.
What one might think when a share falls is that, they can buy it and sell it at a later stage. But no one knows when it will start to rise. It may continue to fall for a long time and it may take still longer period to rise or it may be there in the low price for years. So, some share is falling, it is always better not to buy it, unless it starts to rise. (Again, it may rise one rupee and fall 10 rupees).
This could also be a common case. Someone buys a share. The price goes down for some limit and then it starts to come up. The moment, it has touched the buying price, anyone will be tempted to sell it for very less profit. This could also be wrong. Since, it is in rising phaze, it may go up for some more limit. The buyer could wait for some more time for the share to go up for some more limit. (Again, it may touch the buyer's price and fall 100 rupees.)
So, enna dhaan da solla vara ***** (some bad words) nu neega kekalaam. One advisable thing to do is to, when the market crashes i.e. when it falls, do not buy any shares until the market gains some support and start to rise. (Again, who knows when, the real support, comes to market? It may act as though it has got some support and when many buy shares, it may again fall still more... enna koduami sir idhu!!!)
It is a common mentality for people to do exactly what is to be done and unfortunately that applies to Share Market as well. We tend to sell rising shares (shares whose price increases) and to buy falling shares (vice versa). According to theory (why I say *theory* very often is that, there is NO PROVEN technique which could gain you money in shares. Please click here to know more) we should buy rising shares and sell falling shares.
What one might think when a share falls is that, they can buy it and sell it at a later stage. But no one knows when it will start to rise. It may continue to fall for a long time and it may take still longer period to rise or it may be there in the low price for years. So, some share is falling, it is always better not to buy it, unless it starts to rise. (Again, it may rise one rupee and fall 10 rupees).
This could also be a common case. Someone buys a share. The price goes down for some limit and then it starts to come up. The moment, it has touched the buying price, anyone will be tempted to sell it for very less profit. This could also be wrong. Since, it is in rising phaze, it may go up for some more limit. The buyer could wait for some more time for the share to go up for some more limit. (Again, it may touch the buyer's price and fall 100 rupees.)
So, enna dhaan da solla vara ***** (some bad words) nu neega kekalaam. One advisable thing to do is to, when the market crashes i.e. when it falls, do not buy any shares until the market gains some support and start to rise. (Again, who knows when, the real support, comes to market? It may act as though it has got some support and when many buy shares, it may again fall still more... enna koduami sir idhu!!!)
Tuesday, November 06, 2007
A Puzzle and A Joke!
Try to answer this puzzle: A man (or a woman; in this case please replace all the *he* with *she*) has to guess the number which will result by throwing 2 unbiased, perfect dices. There are 11 possible numbers (from 2 to 12) that could come by using 2 dices and he is given 11 chances. He has to guess correctly (luckily) at least once otherwise, he will be killed. In the first ten chances, he simply says 11 and in all the chances the resulted number is 10. So, he has only one chance remaining. So, what will you guess for the 11th chance if you are in his shoes? Guessing which number could save your soul?
The answer is, if you want to take some more time, you can very well think and read further. The next statement will be the answer. Okay? Ready? The answer is, whatever is the number he guesses, he has 1\11 chances of saving his soul. This is because, the result from tossing a dice is 100% random and each and every time, it is tossed, it is a separate and unique event which has no connection with the previous results.
I do not know why, but nowadays, I am little or even more interested in share market. May be it is because my time is becoming bad or because it is becoming worse. This puzzle has a 100% valid connection with share markets. If the market goes up continuously 10 days, we can not be sure that will go up on the 11th day. We can not predict how it will go even within a single day or a single hour or a single minute. For, if anyone could predict that or control that, he\she will or will soon have an own aeroplane. Share market is like a black hole which contradicts a lot of concepts. Calculation, Brilliance, Analysis, Luck, etc. concepts are devoid in share market. For me share market is like a pet lion. It could be your pet for years and years and one day it could kill and eat us.
Lets come to the joke part (it is VVPJ (very very PJ [poor joke])). I and my dad was discussing about a company's share.
My Dad: "We have 500 shares of that company but it does not seem to increase. If a share lingers in a particular price, it is an indication for a break out. Either it could go up rapidly or go down rapidly. But I guess it will go up, but could not say when"
I: "I could say easily dad. If we sell all the shares, it will go up the next minute"
That is all. The joke is over. It was to mean that, we have had a lot of bitter experience that, the moment we sell a share losing the hope, the next minute it will increase and go up rapidly.
I think I will post some more blogs about this lovely killing beast. You may click here to see my first blog about share market. Keep watching both my blog and the market.
The answer is, if you want to take some more time, you can very well think and read further. The next statement will be the answer. Okay? Ready? The answer is, whatever is the number he guesses, he has 1\11 chances of saving his soul. This is because, the result from tossing a dice is 100% random and each and every time, it is tossed, it is a separate and unique event which has no connection with the previous results.
I do not know why, but nowadays, I am little or even more interested in share market. May be it is because my time is becoming bad or because it is becoming worse. This puzzle has a 100% valid connection with share markets. If the market goes up continuously 10 days, we can not be sure that will go up on the 11th day. We can not predict how it will go even within a single day or a single hour or a single minute. For, if anyone could predict that or control that, he\she will or will soon have an own aeroplane. Share market is like a black hole which contradicts a lot of concepts. Calculation, Brilliance, Analysis, Luck, etc. concepts are devoid in share market. For me share market is like a pet lion. It could be your pet for years and years and one day it could kill and eat us.
Lets come to the joke part (it is VVPJ (very very PJ [poor joke])). I and my dad was discussing about a company's share.
My Dad: "We have 500 shares of that company but it does not seem to increase. If a share lingers in a particular price, it is an indication for a break out. Either it could go up rapidly or go down rapidly. But I guess it will go up, but could not say when"
I: "I could say easily dad. If we sell all the shares, it will go up the next minute"
That is all. The joke is over. It was to mean that, we have had a lot of bitter experience that, the moment we sell a share losing the hope, the next minute it will increase and go up rapidly.
I think I will post some more blogs about this lovely killing beast. You may click here to see my first blog about share market. Keep watching both my blog and the market.
Wednesday, September 19, 2007
Stock Market!
[Disclaimer - I am not even close to novice regarding stock markets and I do not even have a Demat account yet. Yet, I want to talk about market as much as I know of.]
Stock Market seems to be the future for everyone. Everyone including government employees, house wifes, college students, software engineers, etc. are now in to it. It intrigued me and I learned some thing (which is very very less) about the market and it was intimidating to know how many have lost their life in this game. Game, yes, we can say Stock Market as a game, which is controlled by some one or some thing which in invisible and constantly watching us, for it is the case for almost everyone that, the moment anyone sells a company's stock, the price increases and the moment anyone buys the stock, the price decreases.
The thing which confuses me is that, I have seen lively, no one will be ready to buy stocks of a company, for say, at a particular time, for Rs. X and after some minutes they will be very much ready to buy it for Rs. X+10 (or 20 or 30) and it is the same case for selling also in the negative meaning. Meaning, no one knows the exact price of what they are buying or what they are selling, why they are buying and why they are selling, they simply do as many number of people all over the country do. Do they know that the stock which they buy for 100 or 200 or 500 or 1000 worths only Rs. 10 or even less? Less people will only actually know this and play in Stock Market, but all others just do without even knowing what they are doing.
Some experts say that you have to watch the market constantly to be a millionaire and that expert will not be rich or may even be poor, struggling to get money to invest in it. It is what I have learnt that, knowledge alone will do no good, for you will have to have a lot of money and luck. Luck is needed to help the price increase for the stocks you buy, as there is no way one can predict what the price will be in the market the next minute, otherwise, everyone will earn a lot of money. Money alone can make you earn more money and all other factors like knowledge about the company (whose stock you are going to buy), Predictability, Luck, etc. are secondary things only.
If you want to enter into the share market and if you have a little money, you will surely lose it and if you have money, you will still lose it and if you have more money, you could earn money and if you have a lot of money, you will surely make a lot from it. It is like, grabbing the money from those who have less and give it to those who have more. More over, a statistics says that, 95% of those who do intra-day share meets loss and those who wait (obviously having more money) could gain. Gain more knowledge about share markets before investing much. Much I have told now and you could think all I have said is an utter more bull-shit or some other shit, but these are the things I know with my little knowledge and I may be totally wrong. Wrong or right, I have told my view, and now is your time to share your views...
[P.S.: I have tried much to make every sentence's first word to be the previous sentence's last word. Word used might have given wrong meaning but I just wanted trying. Trying is not a bad thing isn't it?]
Stock Market seems to be the future for everyone. Everyone including government employees, house wifes, college students, software engineers, etc. are now in to it. It intrigued me and I learned some thing (which is very very less) about the market and it was intimidating to know how many have lost their life in this game. Game, yes, we can say Stock Market as a game, which is controlled by some one or some thing which in invisible and constantly watching us, for it is the case for almost everyone that, the moment anyone sells a company's stock, the price increases and the moment anyone buys the stock, the price decreases.
The thing which confuses me is that, I have seen lively, no one will be ready to buy stocks of a company, for say, at a particular time, for Rs. X and after some minutes they will be very much ready to buy it for Rs. X+10 (or 20 or 30) and it is the same case for selling also in the negative meaning. Meaning, no one knows the exact price of what they are buying or what they are selling, why they are buying and why they are selling, they simply do as many number of people all over the country do. Do they know that the stock which they buy for 100 or 200 or 500 or 1000 worths only Rs. 10 or even less? Less people will only actually know this and play in Stock Market, but all others just do without even knowing what they are doing.
Some experts say that you have to watch the market constantly to be a millionaire and that expert will not be rich or may even be poor, struggling to get money to invest in it. It is what I have learnt that, knowledge alone will do no good, for you will have to have a lot of money and luck. Luck is needed to help the price increase for the stocks you buy, as there is no way one can predict what the price will be in the market the next minute, otherwise, everyone will earn a lot of money. Money alone can make you earn more money and all other factors like knowledge about the company (whose stock you are going to buy), Predictability, Luck, etc. are secondary things only.
If you want to enter into the share market and if you have a little money, you will surely lose it and if you have money, you will still lose it and if you have more money, you could earn money and if you have a lot of money, you will surely make a lot from it. It is like, grabbing the money from those who have less and give it to those who have more. More over, a statistics says that, 95% of those who do intra-day share meets loss and those who wait (obviously having more money) could gain. Gain more knowledge about share markets before investing much. Much I have told now and you could think all I have said is an utter more bull-shit or some other shit, but these are the things I know with my little knowledge and I may be totally wrong. Wrong or right, I have told my view, and now is your time to share your views...
[P.S.: I have tried much to make every sentence's first word to be the previous sentence's last word. Word used might have given wrong meaning but I just wanted trying. Trying is not a bad thing isn't it?]
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