It all started around 5 years back with my 1st salary and it was undoubtedly the 1st time, when I earned anything substantial in my life, so the urge to make more money from that amount was very much there. And what better, easier and a more convenient way to make money than the stock markets. But the truth of the fact remained that I had absolutely no knowledge about the dynamics of the stock markets. So I thought of a wise way of learning about it, I collected the newspaper of last 1 month and started picking stocks which are cheap to buy, which are far away from their 52 weeks high and much closer to their 52 weeks low, and the stocks whose name I have either heard or seen somewhere in my lifeJ. Now technically speaking this is the probably the worst way to pick a stock for investment, but at that point in my investment career I found it to be very prudent and felt proud of my 3 point approach. But unfortunately I can never pick a stock for investment based on these parameters, eventually I gave up. Then I shared my desire of investing in stock markets with some of my friends who were already in this dirt and they advised me that investing in stocks is not at all safe, so its always better to invest in Mutual Funds. And by investing in Mutual Funds you are eventually investing in stock markets with a minimum return of around 30-35% per annum, I immediately did some maths and found out that if I invest 10k it will become 13k in a year and similarly if I invest 1 lakh it will become 1.3 lakhs, a clear cut profit of 30k, and that sounds HUGE man and that too without much risk. I felt such a sense of accomplishment with that idea as if I have found out the 'Sanjeevani Booti' and at the same time I felt the biggest fool on earth are the guys who bloody invest in stock markets:D! So eventually I fell into this trap and invested a good chunk in 2 of the best performing Mutual Fund schemes of that time, anticipating a fat return as per my maths but much to my misery the markets crashed badly and so did the NAVs of my MFs and my portfolio literally got battered. But the assurance which I got from various quarters was to remain patient, as MFs always give good returns in a long term horizon, I waited for 6 months on this premise and eventually gave up by selling my funds at breakeven, with lots of frustration. My lesson from this investment being ‘ Never invest in MFs, as they lose the maximum from a bearish market but they gain the minimum from a bullish market’.
But that wasn’t the end of the road for me, I once again stood up strong and started researching about good stocks to invest in, this time around the idea was to stay invested for a long term. The plan this time was to invest, say Rs 40 thousand in very good stocks like Reliance, Tatas and NTPCs and forget them for ever, then may be look at them say after 10 years when there worth will be 15 lakhs, that’s again HUGE by any stretch of imagination, and after all this is what the likes of Warren Buffets and Rakesh Jhunjhunwalas do. So I made a very well diversified portfolio including all the good stocks and kept a very close watch on the portfolio, but after around 6 months I found the portfolio value is still the same way off my 15 lakhs dream figure, that again added to my frustration and I sold off my entire portfolio in mere disgust, marginally below my investment amount. Now the lesson this time being that ‘ Even a bank FD gives more returns than the stock market investments’.
Then soon after this debacle I came to know about another art of making quick money and that was Intraday trading, so no need to make a portfolio, no need to wait for long intervals, just pick a stock, invest everything in that for that day and its sure to show a swing of 2-3% in the day, just book the profit and come out. The idea was not to be greedy and earn just Rs 500 every day, as 500 everyday will mean 500*20=Rs10,000 for the month, that will increase my salary by 25% even without switching my present job;). Oh man that is the best way to make money, what a big fool I have been all this while. So I started being an intraday trader and it worked very well for me initially but after a while I consistently started to be on the wrong side and made huge losses in this quest. So my dreams of inflating my salary by Rs 10000 every month eventually ended up by denting it by as much as 50%. So the lesson learnt from this debacle was ‘ Whatever you do market will always traverse the opposite path’.
But even this setback was too small to deter my spirits of making big bucks from the market. The next mode which I chose was of investment in IPOs, the optimistic premise behind this investment was the lure of making big money on the listing day. I invested in 2-3 IPOs but got disappointed every single time as the no. of shares which got allotted were so less that it hardly matched upto the initial euphoria. But the biggest shock of all times came up with the Reliace Power IPO which was said to be the mother of all IPOs, the hoopla surrounding this IPO was so huge that people were opening multiple DEMAT accounts just to subscribe for this IPO, people were even breaking their FDs to invest in this opportunity of life time and I was no different and I fell in the same bracket too. But what happened eventually was the biggest letdown of the Indian IPO history and unfortunately I was a part of this tooL. So the lesson learnt this time was ‘ There is no point blocking such a huge amount of money in an IPO for about a month where the probability of making profits is far lesser than gaining ultimately nothing’.
But even this lesson failed to keep me away from the markets, as the biggest debacle was yet to happenJ. It was the time when I learnt about the derivatives instruments and these instruments are the ones which even the experts dread to trade in. But as always my risk appetite had no limits and I made up my mind to try my fortunes in this avenue too. Now whatever you call it, the boon or the bane with the derivative trading is the fact that you have to trade in lots, you can’t trade 1, 2 or say 5 units of any share, so suppose if you are trading a lot of IFCI share you have to buy a lot which has around 8000 shares, so even with a 1 Re movement you are sure to earn a profit of Rs 8000. So this was the time for me to make it big and make up for all the losses I have made in my life, expectedly I fell into the trap and started trading into Futures, with the optimistic belief that profits are unlimited in Futures but I never cared about the flip side that even the losses are unlimited and eventually my quest to make huge profits ended up into disastrous losses amounting to the sum which I have never lost till date. But I always knew if I can make huge losses I can also make huge gains too, I just need some luck and some right market moves can do it for me, so I opted for a wiser approach by trading in ‘OPTIONS’ where losses are limited but profits are unlimited. But even there I secured the distinction of making unprecedented losses and kept my red flag flying highL. So the lesson learnt with this devastation was ' No matter how big or small my margin of trade are, I will always be on the wrong side of the coin'.
But one thing which still remains after these string of failures is a HOPE to still make money from the marketsJ. There have been umpteen no. of cases where I have found myself on the wrong side of the tide, some of them are so weird that even my closest friends and experts of the market find it hard to believe. The latest one being my anticipation of a market crash post the loksabha election results, as every single creature on this planet was dead sure about a hung assembly post results and there will be a big tussle to form a government. And attributing this as a big enough reason for an instability, markets were sure to crash big time. Thinking on the same lines I went SHORT expecting huge gains from the crash post election results. But what happened post results is history now, I literally got butchered and I strongly believe that Dr Manmohan Singh should thank me for this turn around, because if not for my investment, markets would have never surged, and if markets would not have surged they would have crashed, and the reason for that crash would have been nothing else than a Hung Assembly thereby shattering Dr Singh’s dream of enjoying a 2nd term.
The diversified ways with which I have lost money in the markets are so many, that I can write a book on the DONTS of share market investments. However at this point, probably I know all the intricacies of the market mechanism, the various ways of trading in different instruments, how a particular policy impacts the market movement but 1 thing which I still don’t know is the ‘ art of making money from the market’. For me the biggest lesson all this while has been- “No loss is also profit J” and “ The best and the most successful days are the ones in which I can resist myself from doing a single tradeJ”.
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