My tryst with stock market - V 1.1

Before I start writing this post on “My tryst with stock market”, here is the Link to my previous and only post on the same and this post is continuation of that post. In last post I simply tried to explain just 1 minor part of investing in stock market and what are the benefits of that with an example of TCS scrip. Now let me explain some more things pertaining to those points and go through the basic logic of investing in stock market. As many of you have heard through many people that that one guy became bankrupt because of stock market or one guy had to sell his property because of loss in stock market, why these things happen and why these negative things dominate the positive side of investing in stock market? The reason is simple and that is because many people who benefit from stock market in long run don’t glorify it much as compare to people who crib about negativity of stock market. So negativity dominates positivity when it comes to stock market’s perception.

Now let me explain some well documented, well explained and well researched facts about Stock market and also let me clarify before you judge me that I am not that expert in stock market but I have been reading it for last few years and also investing for last one year.

Who loses or will lose money in stock market? People who are either too pessimistic or too fearful.

Who doesn’t or won’t make money in stock market? People who are either too ambitious or too greedy.

So, who makes money in stock market? People who are able to balance all 4 adjectives mentioned above that is being “Ambitious”, “Greedy”, “pessimistic” and “fearful”. All these points come either together or alone in different ways can make or break your future in stock market.

• If you are too ambitious, you might want to hold a scrip for uselessly long time and wait for its price to go rocket high at a time when it has already reached at stretched valuation, so you need to balance “Being ambitious”.
• If you are too greedy, you might sell a scrip after getting mere 10-12% profit despite knowing that it still can get higher valuation. So you need to balance it.
• If you are less pessimistic, you might not believe in some scrip which will go up in valuation, hence you won’t buy those scrips and won’t make any money either, so you need to balance it.
• If you are too fearful, you might book loss by selling a scrip as soon as it goes down 10-12% after some knee jerk reaction due to some bad news or relatively less performance in a quarter without doing much research on company’s balance sheet and overall performance , so you need to balance it.

I hope I was able to pen down some more basic set of information about investing in stock market and how to approach it. You will not lose all your capital in stock market (as negative people spread perception about stock market) if you are careful enough and you are able to balance the 4 aforementioned things.

Next detailed information with one more aspect of investing in stock market will be followed in upcoming stock market posts. 

Link to previous post on same topic : http://verdictbyme.blogspot.in/2015/07/my-tryst-with-stock-market-v-10.html/ 

My tryst with stock market - V 1.0

Stock market or share market, words that give nightmares to many people and at same time lighten eyes and face of many others. Many people who have never been even close to anything related with Stock market have formed such a negative opinion about it that the same negativity has perpetuated among most of the Indians. I can’t question or justify such massive wrong perception but can surely put forward my point of view in coming posts along with this one and can share my fairly long learning experience and also little working experience in stock market.

There is a saying that “one bad fish spoils whole pond” and to be honest we have many such bad fish in stock market. If you discuss share market and its goodness with anyone who is not part of it, they will cite example of Satyam scam and Harshad Mehta. Yes Satyam scandal was massive jolt to Indian stock market in 2009 but we have moved on a long way from that. The regulations, the watch list, the checkpoints we have now are much tougher than those days. We have BSE, NSE, SEBI and Government agencies to monitor that everything is fine and all laws are being followed. There has been no big controversy with stock market since 2009 and we are growing stronger and bigger. India is one of the fastest growing economy and so is Indian stock market. If you believe in India growth story then you must believe in Indian stock market story.

For me simple funda of stock market is “If you can’t buy a company, buy few % of that company through shares”, yes that % will look really minuscule but that % will grow with same speed as the company. Imagine you buying .00000000000005% of a good worthy company with 10,000 Rs and after 15 years company grows 20 times, your percentage will still be same but value of that percentage share will grow by almost 20 times, means your 10,000 will become almost 200,000. These calculation can vary here and there but the basic growth logic will be the same, faster the company grows, faster your share value will grow. It is as simple as that, where is the risk here that might give you nightmare?  Now the question comes how to believe in company and how to identify such companies. Here comes the role of research and understanding the business module of a company. If you believe in a company that it will grow, it might not, but if lakhs of people believe in a company that it will grow, it will never fail.  If you don’t believe in private companies, go for government companies you believe in.

Before I stop here to write remaining in next post, here is an example of how investing in a good company for long time can give more value to your money than any other investment

TCS : Tata Consultancy Services

Year	Share Price in INR  (On average)	Comments
2002	300
2005	1500
2008	670	Stock split in 2006 2:1
2010	1067
2014	2643
2015	2560

So if you had 10 shares of TCS in 2002, you would have invested 3,000 Rs , now you would own 20 shares of TCS and that money would have become 51,200 in lump sum and it would be totally tax free. This is just a basic detail, apart from this, good companies keep giving dividends to shareholders based on company’s performance every year and TCS has given 150 Rs dividend per share till now.

Share market is not bad, some companies are, So Don’t avoid share market, avoid bad companies.

Contd.............