How I got lost @ Dalal Street...

The interesting thing about "stocks" "shares" "equities" is that when we first come to hear of these terms, we are fairly excited by their potential. [Not literally the first time but more likely the first time we come to hear of them after we have some of our own funds to invest - which by-the-way is also the time when it makes sense to hear about them - at all other times, how did it matter!] I, for one, had quickly figured out that if you really want that retire-at-40 [as per my plan it was much earlier :D] kind of a life - then stocks is where the moolah is.

Fortunately, quite a few of us have that all important 'decision-check' person in our lives - Dad - who in his time would have gone through this "stocks market main bahut interest hain" phase.

One fine day, I began on this note and ambitiously started reading the hitherto-never-touched 'Finance' section in the newspapers. Not having the most impressive reading speed, I preferred the short precise summaries of stocks / markets / funds in general. Off-time between work went in reading moneycontrol.com articles and then going on to having these very-intelligent-discussions in the coffee area with anyone and everyone who was interested in listening as to why I thought the market would go up or collapse that week [the predictions were fairly true in the beginning but went really awry later on! must be beginner's luck!]

So after monitoring some scripts [which I called "my picks!"] for some weeks [by when your patience really starts running out], I decided to take the plunge. This was just before the gloomy crisis began! :) Things then were golden everywhere and any drop in the market was "a minor profit booking by foolish short term investors".

Fortunately I took baby steps [more out of the fact that I did not have big money or big heart to jump in]. Unfortunately though, the first script [lets call it chapraasi life sciences ltd.] that I invested in was a company that was not doing the best then. My logic behind this one was based on what a lot of big smart guys say - invest in a "good" company when it's *not* doing good! :) And well before I could do the Math for my loss [I used to put all the numbers together - the STT's, brokerage, tax, interest %, etc. - when calculating my profit or loss] and take the decision to exit - the loss went up exponentially! :|

The period after buying this first script to until some months back had these trends where I came to learn about the various axioms of equities and investments!

1. Seeing two different markets was a confusing factor in the beginning. However, later on I started seeing the occasional disparity in the price of the same stock on NSE and BSE. I then thought-out-of-the-box [in my personal opinion ONLY] of buying from one exchange and selling on the other and making a neat profit intra-day! Of course with my first such transaction, I quickly came to realize that Harshad Mehta and Ketan Parikh were way too intelligent than me!
2. This lesson was followed by a pair of new "terminologies". "Bonus" and "Split". The former sounded so simple in it's possible implication. However, since I had burnt my fingers with my previous creative-thinking, I decided to find more about how bonus/splits work. So I got in touch with some "informed" friends, who, well, misguided me. Since then I have gone back to basics and asked only my well-read and really-concerned-about-my-money Dad.
   
3. The previous two experiences were nothing as compared to this one! :) This of course was my grand grand decision of investing heavy in the market the night the bailout package was almost approved by US Congress - the next day the markets tanked - and Ramalinga Raju hadn't even hit the markets yet!!! I didn't realize the logic for days and kept arguing with people who explained it to me that it was because of the long drawn process of the bailout package, the uncertainties of how/where the money would be spent and that it was lesser than what our dear Bernanke bhai had asked for. Anyway, who cared about the reasons after the money was out, the stocks were in and my portfolio was RED.
   
4. I became very conservative after the above experience and came to realize the large-scale significance of US markets on global economy. During this phase, I came up with this scientific identification of the relation between US and Indian markets . This relation held true only till Diwali or so after which often the Indian markets would behave differently than the others!
5. As a result of all these bad experiences with stocks, there came a small period of time when I was absolutely convinced that Mutual funds are the ONLY way to go. I developed this active interest in all available and performing funds then. I sounded more like an ICICIDirect.com salesman making a pitch rather than discussing why we should plan our tax investments in advance - and all this was to an audience that didn't really care about either [my team members! :)]
6. I also had these sincere attempts at making plans to read/learn up on Futures, commodities and the works which resulted in my sincere failures at doing any of the same.
   

Gradually, in a lot of ways, I have come back to where I started
- having that list of "my picks" stocks [which is much refined and in general been good for me consistently]
- I ring up my father before any buy/sell
- I do all the math related to profit/loss
- but I more or less keep it simple, i.e. I buy for a period greater than a year and track once in few weeks

In between all these tragic and terrible experiences at the stock market, there were also a lot of moments of brilliance that helped me make some money :) Fortunately the book overall has been green and healthy!

So in this entire process, I have come to learn a lot - and not just about the markets - but about
- companies and enterprises [and their well-planned frauds]
- rich performing public sector that becomes poor and poor performing public sector that becomes lazier or non-existent
- the jazzy economic words and terms
- the mass-philosophy of buying/selling
- the importance of rumors and working principles that make rumors work!
- and I still have the chapraasi life sciences ltd. :(

I have also found folks who I can ring up / email anytime for advice and who I can be sure are the most well-read, well-calculated, well-planned and basically all well to help me out!

But after all this, if given a choice then it is still confusing as to what was better - pocket money with no concerns to invest/plan or salary and all the right-things-to-do that come with it!