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Markets - Survival is the key!

Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Trading Psychology
Forum Discription: Discuss the psychological aspects of trading such as fear, greed and discipline. Why stocks are bought like perfumes and not groceries.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=7
Printed Date: 29/Mar/2024 at 3:38pm


Topic: Markets - Survival is the key!
Posted By: basant
Subject: Markets - Survival is the key!
Date Posted: 16/Jul/2006 at 1:07am
Keynes once remarked " markets can be irrational far longer then you can be solvent". A classic proof to this philosophy was witnessed in the recent meltdown when people had to cut long over leveraged positions which they had taken when the going is good. Still public memory is short and once the dust settles down and the brokers paid off the public would get on the band wagon again. It makes sense to stay invested 100% all thebtime but the problem comes when we get invested for 200% or 300% - on leverage of course. What we forget to note is that in this market 90% of the people lose what the other 10% make. Do we have the grit and determination to be among the selected 10% or shall we remain with the crowd(90%)? People say that money is made in bull markets but I have never seen a 5 bagger in a bull market. My 5-10 baggers have come from stocks purchased in  bear markets only.SO a bull market is just a medium of enjoying what you bought in a bear market and if there is bear market now people would caution investors not to buy? The answers are not tough to decipher- that is the only way we can be with the crowd (90%)



Replies:
Posted By: vinay
Date Posted: 17/Jul/2006 at 9:21pm
if you look at very short periods of time,what you see is meaningless noise.one five year period would show small stocks performing well.The past can show us the way to the future as we all know that the market has tendency to revert back to its mean value over longer period of time.
vinay.


Posted By: Money Master
Date Posted: 17/Jul/2006 at 9:25pm
Great thoughts but the point is that to sustain the ups and downs over that period of 1800 days (5 years) takes some character and that can happen only if you are not looking at the markets regularly because if you look at the quotes regularly you are bound to get disillusioned and the panic will lead you to press the sell button.The inner strenght will come if you are determined not to track prices on day to day basis - And that is really difficult.


Posted By: basant
Date Posted: 24/Jul/2006 at 3:27pm
But the problem that investors (including me) face is that our networth is dependent upon the underlying asset price. If these prices fall so does our networth. I have seen so many thoughts and write ups of how people do not worry when home prices crash, or does any one worry because the car in which he is driving out from the garage has suddenly lost 30%. No we don't probably because there are no brokers standing outside to give us two way quotes. I think that problem starts and ends with the quotations that we see on TV each day. There is no easy way out of this misery except to stay ouucpied with other activities. This is so because if you have nothing else to do you would fail for the trap and go back to see prices but if you are engaged elsewhere there would be no time for you to  glance over the quotations.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: Vivek Sukhani
Date Posted: 24/Jul/2006 at 3:55pm
Although I am in consonance with whatever is being said , yet I will like to vent my views as well. I have little difference of opinion with Mr. Basant. I beleive, equites is a 100 per cent full time work, with due respect to part-timers. I dont know how can you manage equities on a part-time basis. As far as not looking at quotes is concerned, its a matter of inner discipline. I have found most losers to be belonging to the salaried class, to my surprise. Thats because, they have only tips to act on. Mr. Basant os bang on target when he says that you make money when you buy stocks during the bear market, but let me tell you it takes courage to purchase during those periods. Its a very risky game let me tell you this, which the smart people discover to theor amusement and the foolish jokers discover to their peril!!!!!


Posted By: basant
Date Posted: 24/Jul/2006 at 4:12pm

I am not sure of the full time thing as much as I am that salaried class people lose money. They lose money not because they do not look at quotations they lose money because they have bought the wrong companies to start with.Now if I have bought a good company and I plan to hold it for say 3 - 5 years then there is no need for me to be bothered by prices. Now occassionally I will have to check my portfolio as some one would cheack oil in his car, but if you start checking your portfolio like you check petrol then that is where the problem starts.

There is a very strong market theory that is is more often known as "Book  Profits" I have another name for that I call it "Keep Losses". All through out the salaried class lost money because they never booked losses but always kept losses. As a result you were capping your upside to 15 or 20% or what ever but the downside was always 100% so you had to lose. 
 
Now look at Wall Mart any investor who would have been fortunate and `foolish' enough to own the stock in 1970 and hold it till 1991 would have seen his money go up 1200 fold. That means an initial investment of Rs One lac would have fetched you RS 12 crores at the end of the stated period. I use the word foolish because investors have an allergy of holding stocks for such a long term and especially so when it performs well on the bourses. I have come across several investors holding dud stocks for years if they make losses but booking profits and gains on stocks that perform well. Perhaps the old adage Book profits would have been detrimental for the so-called sensible investors of Wall Mart in the early areas of growth.


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: basant
Date Posted: 24/Jul/2006 at 4:25pm

My reference to the "slaraied class " above should not be taken in the literal sense. Since this discussion started with that phrase I inadvertently kept using it. Salaried class should better be read as a naive ill informed investor. Apologies for that..

Regards,
 
Basant


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: Vivek Sukhani
Date Posted: 24/Jul/2006 at 4:27pm
I think I am being unable to put my point across.See, one needs to cultivate his or her portfolio. You must always be on the hunt to look for better and even better companies.I beleive to have a portfolio size opf less than 50 stocks is abolutely foolish and the list must be expanded at any cost. It will appear stupid to most of the people, but thats a good way of being disciplined. if you have many cos. to manage, you will never bother about one thing here and there.Ultimately, you should look at value per unit of money invested before committing your funds, and the markets are far too dynamic to let us settle idle.


Posted By: basant
Date Posted: 24/Jul/2006 at 4:38pm
There is nothing to be foolish about a a particular strategy.Doesn't too much diversification indicate that you are unsure of your ideas? If you are convinced about one company have one in your portfolio if you are convinced about 200 have 200 the question is of conviction rather then numbers. I am yet to meet people who made money by holding aparticular number of stocks. yes, you may hold as much as you want but why a number. Holding more then  20 stocks would not add to any of the risk diversification as you would not be able to eliminate market risk all you can do is reduce volatility. Studies have shown that holding
 
Two stocks eliminates 46% of market risk
 
Four stocks eliminates 72% of market risk
 
Eight stocks eliminate 81% of market risk
 
Sixteen stocks eliminate 93% of market risk
 
Thirty two stocks eliminate 96% of market risk
 
Five hundred stocks eliminate 99% of market risk.
 
So you see diversification helps but only to some extent.
 
 


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: equity analyst
Date Posted: 24/Jul/2006 at 4:45pm

Well i have been investing  and trading in stocks for last 6 years,and  what i have seen that both salaried class and full time expert on MKts( Brokers) have lost money in 2000 dot com crash and also in the recent mkt crash,so basically question is not  that salaried people r only lossing money many high network clients who often get tips(Inside report) and are indulged in full time trading also have lost  money whenever mkt crashes ,and after the mayhem we often tend to search out why did the mkt crashed and we have 100 of opinion for that, eg mkt was overvalued ,charts were overbought etc etc. After all this is human nature. I think if we keep  good fundamental stocks for long term sure the stock can perform well irrespective of bull or bear mkt.  

 

  

 



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"Markets are the places where two types of people meet up in the morning: those with experience and those with money. Towards the end of the day, they exchange their assets and go home."


Posted By: basant
Date Posted: 24/Jul/2006 at 4:50pm
You have really said what i wanted to that is the bottomline is to buy solid good companies and we will do well. Now evaluating these "solid" companies is  matter of art and not science. That is why you have so many people who know so about about every thing, they will call you up with ideas each morning, what to sell, what to buy, when to sell, when to buy but I have seen that the person who gives the maximum number of unsolicited advise has made the least amount of money.
 


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: Vivek Sukhani
Date Posted: 25/Jul/2006 at 8:51pm
I beleive the person who is patient, who doesnt panic and be greedy on temptation, generally makes a killing here. I think it is imperative to be a contented and self-assured individual before you enter into the markets. Beleive you me, this market doesnt pay an agressor.....


Posted By: basant
Date Posted: 25/Jul/2006 at 8:58pm
No, it does not of  all the big bulls that came into the market all have perished Harshad Mehta, Ketan Pariekh, Rakesh Jhunjhunwala has survivied because he was an investor not  a trader. he trades but more then that he is known for his investment style. That is why we have him up there on the home page!!!
 
ALso what is more important is to remain invested in the better known companies. if you would have held Mangalam Timber for 10 years then you would have had it but on the other hand if you would have held ITC it would have made money for you. I am not talking of Infy because 10 years back Infy was undiscovered and it would have required special eyes to see it.


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: prashantmohta
Date Posted: 27/Jul/2006 at 8:09pm

IN SHORT RUN MARKET IS VOTING MACHINE BUT IN LONG RUN IT IS WEIGHING MACHINE.

PRASHANT


Posted By: basant
Date Posted: 27/Jul/2006 at 8:12pm
 Right and another interesting analogy that I can add to this is that there is more sound before and near a voting machine then it is at the weighing machine.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: Vivek Sukhani
Date Posted: 27/Jul/2006 at 8:32pm
This is one thing whuch I want to know... why dont we set ourselves 3 entry points when we buy a stock.I belive we must work out the ultimate bottom that ot can go, technically, fundamentally or sentimentally.And accordingly, set the entry points. This will help us to relieve us from the pain of making a wrong entry in a right company. there ought to be discipline in trading.


Posted By: Vivek Sukhani
Date Posted: 27/Jul/2006 at 8:36pm
I will give you an illustration. I bought 200 shares BASF at 275. I bought another 500 at 170.And I will buy another 800 @ 120, if and when it falls to those levels.I want an opinion on this strategy.We are all gullibles... we make wrong entries, but then I beleive if you are confident, then do you beleive averaging is a bad idea?


Posted By: basant
Date Posted: 27/Jul/2006 at 10:06pm
If you are convinced about a story that is the only way to make money. BASF is just one company. SOme body who buys today to sell it lower will ahve to be very lucky to make serious money.
 
All the  chartists follow the reverse pattern. Buy once it crosses 240 with high volumes and then if it breaks 220 Sell with a stoploss of 235 whioch is the 200 day moving average!!! .My goodness what is wrong with you  This is the best way to bankruptcy and you bet I have never met a rich technician. The best way chartists can amke money is by recovering subscription for their services which is by the way worthless.
 
You were talking about my obsession for Lynch see what Buffet had to say on this " If you are panic stricken before your stock loses 50% you should have no business being in stocks". 


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: Vivek Sukhani
Date Posted: 27/Jul/2006 at 10:14pm
Seriously, Mr Basant you must write a book... I have become a fan of yours... I have the same outlook on chartist, but nonetheless like technicals because it is mathematical.... specially statistics oriented....


Posted By: basant
Date Posted: 27/Jul/2006 at 10:31pm
Thank you Vivek, I feel honoured (flattered) Writing a book was on the cards but that would not have opened up a two way communication as we are doing now. See it is not important to make or lose money in stocks . I always feel that it is more important to stick with your reasons which should be put on a solid foundation of numbers and assumptions. Investors should recognize risk and once they do so the character of risk changes. If we lose money by going wrong with assumptions that were made in the backdrop of genuine number crunching  I do not think there is cause to worry because money can be made in some different ideas but if the strategy and idea itself are flawed then the investor needs to do some serious rethinking.
 
Most of the investors today are what we can call "khabri lal" and they leave their various businesses once in every 2  or 3 years to get into stocks. The market does not owe anything to anyone who does not understand it . Once these people are sent back away from the market the final cry is "Stocks are for gamblers only" remember the story of the fox who kept jumping for grapes in the jungle.


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: Vivek Sukhani
Date Posted: 27/Jul/2006 at 10:46pm
The market is for rare-breed.... its applied education at its best.... it teaches the best lessons to the most educated......you have to be as flamboyant as sehwag, as meticulous as dravid, as murderous as dhoni and as unusual as harbhajan, all-in-one.....formulas are made... formulas are washed...
 
rememeber, I once talked of shahids and one of the members took it negatively. but thats the truth...in many ways Mat 17, 2004 was the most beautiful day on earth.I may be labelled cruel in sayinf so, but then I have sheer contempt who treat trading terminal as online gambling terminal...


Posted By: basant
Date Posted: 27/Jul/2006 at 11:02pm
I COULD NOT AGREE MORE! 

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: Vivek Sukhani
Date Posted: 27/Jul/2006 at 11:10pm
you will see people losing sensitivity during market shocks....they talk incohesively, they get into depression...... byt then thats the price u need to pay for being undisciplined. Trading beleive you me, calls for the best of brains...and you will find them to be least available with the broking houses....


Posted By: basant
Date Posted: 27/Jul/2006 at 11:13pm

Read a book called Market Wizards to know the life of real traders. Also see this link!

http://www.theequitydesk.com/thirteen_commandments.asp - http://www.theequitydesk.com/thirteen_commandments.asp

This was one of the best trades of all times. His best quote that rings in my ears eventoday is "Markets are never wrong opinions are"



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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: omshivaya
Date Posted: 09/Sep/2006 at 10:19pm

Great info. you guys put in here. I also believe that the May 2006 meltdown was a blessing in disguise...for the people who had conviction. It was like Lord Shani who came to test the conviction of us all. And it is always Shani Deva's rule: He tests you for a particular time. But when the time period is over, he leaves something behind for you, which is in proportion to what you have done in that testing period. That "something" could either be a GIFT or a CURSE in disguise.



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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: basant
Date Posted: 09/Sep/2006 at 10:57pm
Amen! (Om Namah Shivaya).

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: omshivaya
Date Posted: 09/Sep/2006 at 11:08pm
Ah! Feels Bliss to even hear "Om Namah Shivaya". This mantra has some kind of vibration to it, that anyone who says it, will amazingly feel some kind of calmness, even for a moment. It has happened to me. Has it happend to anyone else too? Try it sometimes friends...only if you want to of course! ;-)

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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: reetesh
Date Posted: 09/Sep/2006 at 2:20am

This is one of the best discussion that we have, @ points that I always has has been told here that BEAR MARKET is good investor when market was falling even I didnt like it (the way it did) but I was happy that I will get good entry points into stocks that I wanted to buy and second one is there is no RICH technical guy, for them BULL market and BEAR MARKET is for 2 months not many believe what they see they believe in what they want to see I will not name them but will give you hints about two technical person one is regular on CNBC he from pune with due respect much like MR. Basant, when I listen to him man he is like a person without any mission just want to say without thinking for in every 2 days bull and bear market changes come on give him a break, another one who gives his daily prognosis on Val.Notes he asking people to on vacation for last 3 months saying that market is going to crash like hell I wonder when he wants his client back from holiday maybe on next HOLI-DAY..

I am in no way saying they cannot be right, but in english you have if`s and but`s use them to your advantage.

Regards,

Reetesh.



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When going gets tough, that’s when tough (people) gets going.


Posted By: basant
Date Posted: 09/Sep/2006 at 8:38am
Some day some where somehow someone should make these  http://www.theequitydesk.com/forum/forum_posts.asp?TID=213 - so called "experts"  accountable. I wonder what could you say when a Fundamental analyst talks about stop losses and a technician talks about interest rates. It is criminal!

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: Ajith
Date Posted: 09/Sep/2006 at 8:58am
An investor has to block out "noise" while watching business channels or visiting brokers.A person-an occasional investor- was  asked to just wait for a few days more when he went to buy stocks personally in May/June 2006.A  business channel kept on making gloomy forecasts-overdid it.

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Ajith


Posted By: Vivek Sukhani
Date Posted: 09/Sep/2006 at 9:44am
You know what, I think the principleof caveat Emptor applies to we the investors as well. Wemust not blame anybody for our mistakes... its our greed or our fear which makes us lose.Talking about prices, is foolish for a fyndamental analyst. they are value hunters and they should stick to it. Infact, thats the most difficult way of trading. You need to be a man with infinite patience.As far as chartists go, they are price mongers, and in case you are chasing price, you should never listen to a fundamental analysis.And yet, there are smart people who try to pick up common stocks, and get totally bambozzled. I see no commonality in their objectives.I dont blame chartists as I myself dont trade without looking at the charts. They simply give me my entry points, which to most of the people are stop losses.You might find a disconnect here between what I am applying to myself and what I am prophesizing. I find no commonality in objectives, but I see technicals to be a very good ally for refining your trade. I would once again reiterate, you cannot get heavens without dying first. Dying in our parlance is devoting time to personal research....


Posted By: reetesh
Date Posted: 10/Sep/2006 at 1:30pm
Correct, Technical should be only technical, and fundamental should not bother about what price is doing in relative term... But that hardly happen and these people are bothered about anything... Shamelessly they just repeat their stupidity...

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When going gets tough, that’s when tough (people) gets going.


Posted By: Ajith
Date Posted: 10/Sep/2006 at 2:00pm
Only a good contrarian makes long-term money-contrarian both at the micro and macro level because the prevailing bias is often misleading.


Posted By: omshivaya
Date Posted: 10/Sep/2006 at 2:32pm
Most often true...I think

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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: kulman
Date Posted: 10/Sep/2006 at 3:36pm
Reeteshjee
 
I am in full agreement with your views on these "so-called" experts/analysts.
 
The guy you are referring (from Pune) is from IIM/IIT background, still he makes those useless/meaningless comments about where markets are headed. Another one from Ahmedabad is the greatest of all!! His views change from channel to channel at differenet times of day!! He had said that June-06 crash is similar to HM/KP scam crash and that Indian economy has no fundamanetal strength!! And King of all is "positively structured man", the less said about him the better!!
 
I think these people change their opinions like a chameloeon and talk different contradicting views on various channels at different times of the day.
 
These guys must be made accountable. The best thing we can do is not to watch/listen to them at all. I am told that these guys pay from their pocket to come on TV.
 
Any more views on this?


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Life can only be understood backwards—but it must be lived forwards


Posted By: omshivaya
Date Posted: 10/Sep/2006 at 7:34pm
If a person says one thing on one channel and another thing on the other channel, he expects the channel on which his prediction came true, to invite him again and in fact MAY EVEN be expecting that chanel's viewers to subscribe to his monthly subscriptions...hehehe;-)
 
Of course he assumes that we are all fools and that we only watch either NDTV Profit OR CNBC not BOTH.
 
 


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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: basant
Date Posted: 10/Sep/2006 at 9:28pm

I never thought of that provide two conflicting opinions on two channels so that at least I live to fight another battle (suck another investor)

No they do not pay to be on TV. They are on TV because the TV guys want people to blast all day long. On the other hand a fuindamental analyst cannot give you two opinions a week. So that is it. If we stop watching then also it does not matter. Who cares whether 50 people are watching or not.
 
Sometimes later we can start a discussion on "what the "experts" like which we don't and then provide our opinion on that with reasoning ofcourse.That would help the investor in not choosing stocks which are total trash.


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: omshivaya
Date Posted: 10/Sep/2006 at 9:45pm
The only reason I watch CNBC or NDTV Profit is to get updates or news flow on companies that is it. Of course, when RJ or RD come on TV, only then do I give any serious consideration to what they say. That is all CNBC and NDTV Profit means to me.
 
It is very tempting to believe a broker/analyst when the bull market is running but trust me, make it a habit not to believe any c r a p they put out!
 
Analysts are very good at twisting the numbers and showing a pretty picture. All the numbers they would put out would more often than not be true, and that is why temptation is high to believe them. But don't. Do your own due dilgience. Visit forums such as this and moneycontrol.com to learn what the boards are saying. Read newspapers, do google searches and in fact the best way is I have found out is to start finding dirt on the company the analyst says is going to rise.
 
Such as if an analys says "Buy BSEL Infra" as it has large land bank, it would be good to go to the BSEL Infra. board on moneycontrol.com and do a search on google.com for :-> "bsel infra" "sell" OR "bsel infra" "bad". Try finding the dirt. If you go to the moneycontrol messageboard on bsel infra you will find many interesting revelations. You dont need to believe it to be true too but at least it gives you a conflicting response to the analyst's view.
 
 
This whole process above helps you taking a balanced view before you venture into the stock! And what's best, it hardly takes 1-5 hours tops!
 
 
Hope this helps everyone! "bose ki jai", "bhambwani ki jai" ,"positive structure ki jai".


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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: Ajith
Date Posted: 10/Sep/2006 at 10:55pm

 I agree. Most of our time should be spent  in reading, reasoning ,analyzing companies/cause effects,pursuing clues on google.Watching the channels should be for news and superficial info which ought to be kept at the minimum level .

All the confident technical forecasts are based on conditions which allow   reputations to remain more or less intact.Once these guys were challeneged-they were given a set of data relating to a period in the past and they had to forecast the prices.No one took up the challenge!!


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Ajith


Posted By: omshivaya
Date Posted: 10/Sep/2006 at 11:03pm
Hmm! didint know that Ajith. Thanks for sharing.

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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: Vivek Sukhani
Date Posted: 16/Sep/2006 at 11:53am
http://www.thehindubusinessline.com/iw/2006/09/17/stories/2006091702041300.htm - http://www.thehindubusinessline.com/iw/2006/09/17/stories/2006091702041300.htm
Kindly read this post, and it contains some valuable points about the sins we committ.....
 
Actually, the boundary line between stubborness and conviction is very thin. To be very candid, I have made money by being extremely arrogant like collecting GE Shipping when everybody were selling them, right now I am collecting BASFand ONGC and Ultramarine and Pigments, along with Porritts and Spencer Asia when no body will even touch them...And I have found that people who have no gurus, but develop their own style, come up with masterstrokes more often than not....


Posted By: Ajith
Date Posted: 17/Sep/2006 at 3:32pm
 I must admit that this is my natural style as well though I have drifted from this on occasions .Conventional growth-style investing and guru-following has its pitfalls.
  I have been trying to get some information on the BPO operations of Ultramarine but I was unsuccessful.Can you help me?Is it profitable?scaleable? Unable to access the website Lapiz Digital.


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Ajith


Posted By: PKB2000
Date Posted: 17/Sep/2006 at 4:25pm

We have understood the activities of Mungerilalas well.

I think really good articles and it seems the authors  are in the midst of experienced group of Mungerilals. but I have read  a beutiful article long ago about these Mungerilals as written by one Mr. Mark Kramer.
I wish to paste the whole here with the hope that the Mungerilals will get some way to come out from their situation especially from the last few paragraphs.
Well one unknown Mark Kramer (!) may be well accepted by all  unknown people of this Forum by the common people and will try to be reluctant of behaving like a Mungerilal. That may be good help to them who wants to come out. I think it is very difficult to say a new things in this world
 
Let me cut copy and paste

How to know one’s Tolerance for Investment Risk Before Designing an Investing Program


By Mark Kramer

What is risk tolerance and how does it influence your investment decisions? Understanding what you can and cannot emotionally tolerate losing will help you make better investment decisions and ultimately gain higher returns.

What is risk tolerance? It's your ability to deal with investment losses … usually in the short-run … to have the chance of earning higher long-term returns than you would get in a bank account.

 On the one hand it's about how much you can afford to lose.
 On the other hand, it's also about how much money you can emotionally tolerate losing.

It's extremely important to your success as a long-term investor to know your tolerance for risk. It's a key part of designing an investment program that is appropriate for you and for picking individual investments.

What You Can Afford to Lose: An examination of your individual circumstances is required to figure out how much of your nest egg you can afford to lose in the short-run on investments that promise to deliver attractive growth in the long-term. But there are some general guidelines:

 Generally speaking, the more years
Ř you have until retirement, the higher your risk tolerance should be.

Conversely, the more likely you are to tap into your nest egg early, the lower your risk tolerance should be.

The Emotional Aspect of Dealing with Risk: Studies of investor behavior show that emotions are a significant contributor to poor, long-term investment performance. Investors tend to get stuck on an emotional roller coaster that leads to poor investment decisions. Here is what the roller coaster ride often looks like:

 Investors get excited about investments that have already gone up and buy near the peak in value. When prices drop, investors find it emotionally difficult to accept and will rationalize holding on until prices improve. Then the bottom drops out and investors sell near the bottom, no longer able to cope with the anguish. Emotionally battered, they find it difficult to reinvest near the bottom and end up missing the next move up … only to reinvest later on after values have risen above where they had sold (buy high … sell low?) Then values peak once again, prices drop and the cycle continues.

Sound like anyone you know? This is why sticking with a disciplined investment plan is so important to successful investing. Overcoming your natural emotional reactions driven by fear and greed is the key. But that is hard to do.

 It becomes harder the more risk
Ř you accept in your investment plan.

What Percentage of Your Nest Egg Can You Lose? Before designing an investment plan, it is helpful to think about your risk tolerance in terms of a percentage. For example, you might say "I am willing to see my portfolio decline as much as 12% for a period of time if it gives me the opportunity to realize better growth over the long-term compared with leaving the money in a risk-free bank account or CD."

 Perhaps you
Ř could tolerate losing as much as 30% of your nest egg temporarily investing in something you thought could earn you a long-term growth rate as high as 10% to 15% per year.

Build a Disciplined Plan Around Your Risk Tolerance: No matter whether you're a big gambler or a scared chicken, knowing your risk tolerance expressed as a percentage should make it easier for you and/or a financial professional to design an investment program that isn't likely to push your emotional hot buttons.

 If the inevitable volatility of your
Ř investments remains within your emotional limits, you will be miles ahead in the long run simply from having been able to stick with a disciplined strategy.

You and/or a financial advisor can compare your percentage risk tolerance to the historical volatility (annual standard deviation) of different types of investments and design portfolio allocations that will more likely meet your long term investment objectives while staying within your risk limits.

Calibrate a Mechanical Investment Strategy to Your Risk Limits: With the use of computers and mathematically-based investment strategies, it is now possible to calibrate a mechanical investment strategy to your maximum risk tolerance.

How to know one’s Tolerance for Investment Risk Before Designing an Investing Program


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I am always doing that which I cannot do, in order that I may learn how to do it. ~Pablo Picasso


Posted By: kulman
Date Posted: 17/Sep/2006 at 4:27pm
Vivek jee
 
Very nice link...to the Seven Deadly Sins.
 
This truly reaffirms that "SHARE BAZAAR, BHAAV AUR BHAVANAON KAA KHEL HAIN!"
 
Thanks for the link again, I'm going to invest in such books.


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Life can only be understood backwards—but it must be lived forwards


Posted By: monu_duggad
Date Posted: 17/Sep/2006 at 6:24pm

Basantjee

I have a suggestion.Why dont you tell us a bit more about Harshad Mehta and Ketan Parikh scam.I dont know how many of the forum members are aware of "what exactly they did "...broadly we know they did something unethical and made loads of money.....
 
May be you can write a post on the scams,what they did,how they were caught etc etc...am sure with your special effects it will be interesting read...
Please do it whenever you are free/may be on weekend.
May be other knowledgable forum members (mr sukhani,bubble,kulman,reetesh) can pitch in as well...
 


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If you think you can,You Can


Posted By: basant
Date Posted: 17/Sep/2006 at 6:38pm
Good idea shall make a section scams where all members can pitch in with their views..

-------------
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: basant
Date Posted: 02/Nov/2006 at 10:15am
 It would be interesting to find out why Jesse Livermore committed suicide?
___________________________________________________________
 
There is a dividing line between what you preach and what you actually do.I like to see what he preached rather then what he did coz in that case Samir ARora was also rumoured to be chummy with operators and companies.


-------------
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: BubbleVision
Date Posted: 02/Nov/2006 at 11:16am
Sorry sandeep i am spoiling your portfolio page and BasantJi please transfer this to whereever this is relevent.
 
 
It would be interesting to find out why Jesse Livermore committed suicide?
-------------------------
 
Kulman... He knew it all expecpt one thing.. Risk Management. He went broke several times and he had to courage to fight back and make what he had lost earlier. He had the guts and the courage to do that, but he did not knew how to keep his earnings.
That is why it is said.. Reaching peak is the easy part. Mantaining at that level is the difficult act. Look at sachin...
It is said that the Roots of a tree are the main thing, but the top of the tree (weekest and new leaves) have to suffer from the strongest wind in order to survive.  
 
He committed suicide bcoz he went broke once more (7th time if i am correct) in 1940 after being the richest man in US between 1929-1932 at his peak.
 
Ed Seykota said a very very interesting thing on livermore, which i am not getting immidiately... I will post it as soon as i find that out. I have read it.


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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!


Posted By: basant
Date Posted: 02/Nov/2006 at 11:33am

So in a nutshell it is not Kaun banega karodpati but kaun rahega karodpati!



-------------
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: BubbleVision
Date Posted: 03/Nov/2006 at 12:01pm
Exactly BasantJi.... In the markets survival is the first thing.
 
I read somewhere that Livermore was worth more than $20Billion (today's dollars) at his peak. His son is still alive and lives in St Louis. They have changed their surname.


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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!


Posted By: basant
Date Posted: 03/Nov/2006 at 12:43pm
worth more than $20Billion (today's dollars)
_______________________________________
 
Buffet is about US $ 40 billion Imagine if some one tiold us that Buffet would be finished....This market CAN take you in some day.


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: manishdave
Date Posted: 05/Nov/2006 at 4:21am
Interesting incidence abt JL(as he was known).
When Their maid told JL's wife abt 1929 crash, she started to move furniture from their home into smaller one as she thought JL was finished one more time. When JL called, she started saying "Honey, I am very sorry, Thigs happen, I got news" etc. She didn't listen to JL for long time that they were ok.
 
One of the reasons for his losses and suicide is risk management. Other reason is he was suffering from depression buy it was not know desease at that time. He also had lot of personal problems.
 
His one son lives in NY and other son commited suicide as well.


Posted By: kulman
Date Posted: 05/Nov/2006 at 6:11am
One small observation:
 
Does L in those initials JL mean Leveragemore?
 
 
 


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Life can only be understood backwards—but it must be lived forwards


Posted By: nikhil090
Date Posted: 16/Dec/2006 at 7:49pm
hi,

I have observed that my behaviour regarding the stocks change with price movement. If something goes down by 10%, then I will become a little suspicious in most cases and use the fall to a limited extent. however if the price goes up then I will get into the stock and then see it decline ultimately. Wish to invite comments from fellow boarders on whether this is happens with them also and how to avoid this? Ex is Gitanjali gems for me - I bought some quantities at 190, however I wanted to buy more at 217 yesterday after it went up by 15%.Very difficult to control the urge, i would say.


Posted By: kulman
Date Posted: 16/Dec/2006 at 9:44pm
Nikhil jee
 
The experiences you mentioned are most common. There are normal human emotions. There could be a very few super-humans who feel otherwise.
 
Maybe I have posted this somewhere earlier, but these thoughts of Buffet during a lecture to MBA students are very very interesting and enlightening:
--------------------------------------------
 

I have no idea were the market is going to go. I prefer it going down. But my preferences have nothing to do with it. The market knows nothing about my feelings.That is one of the first things you have to learn about a stock.

 
You buy 100 shares of General Motors (GM). Now all of a sudden you have this feeling about GM. It goes down, you may be mad at it. You may say, "Well, if it just goes up for what I paid for it, my life will be wonderful again." Or if it goes up, you may say how smart you were and how you and GM have this love affair. You have got all these feelings. The stock doesn't know you own it.
 

The stock just sits there; it doesn't care what you paid or the fact that you own it. Any feeling I have about the market is not reciprocated. I mean it is the ultimate cold shoulder we are talking about here.

 
Practically anybody in this room is probably more likely to be a net buyer of stocks over the next ten years than they are a net seller, so everyone of you should prefer lower prices. If you are a net eater of hamburger over the next ten years, you want hamburger to go down unless you are a cattle producer. If you are going to be a

buyer of Coca-Cola and you don't own Coke stock, you hope the price of Coke goes down. You are looking for it to be on sale this weekend at your Supermarket. You want it to be down on the weekends not up on the weekends when you tend the Supermarket.

 
The NYSE is one big supermarket of companies. And you are going to be buying stocks,what you want to have happen? You want to have those stocks go down, way down; you will make better buys then. Later on twenty or thirty years from now when you are in a period when you are dis-saving, or when your heirs dis-save for you, then you may care about higher prices.
 
There is Chapter 8 in Graham's Intelligent Investor about the

attitude toward stock market fluctuations, that and Chapter 20 on the Margin of Safety are the two most important essays ever written on investing as far as I am concerned.

Because when I read Chapter 8 when I was 19, I figured out what I just said but it is obvious, but I didn't figure it out myself. It was explained to me. I probably would have gone another 100 years and still thought it was good when my stocks were going up. We want things to go down, but I have no idea what the stock market is going to do. I never do and I never will. It is not something I think about at all.

 
When it goes down, I look harder at what I might buy that day because I know there is more likely to be some merchandise there to use my money effectively in.---Warren Buffet


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Life can only be understood backwards—but it must be lived forwards


Posted By: basant
Date Posted: 16/Dec/2006 at 9:45pm
Nothing unusual here. It is a matter of being unsettled by what we call "price". The best part is you know what is right and what needs to be done. I think and am sure that this strategy would change very soon. WHen prices fall ask yourself one question WHat is the current PE of the stock and it would appear lower then what it is when prices go up. I generally keep asking this question and investing becomes easy because sooner we realise that at  alower PE some To, Dick and Harry would come in to buy on the other hand at higher price that PE becomes inflated and there is a lesser chance of someone buying.
 
So instead of focusing only on the price also keep track of the PE on each of the down days and things should be easier.
 
Earlier I also used to follow that strategy of buying with higher price - mommentum investing!!!


-------------
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: nikhil090
Date Posted: 16/Dec/2006 at 11:11pm
Thanks for your views. I also feel that when stocks start correcting, there is a tendency to time the decline. I earlier made a rule for myself that for every 5% fall in large cap or 10% fall in midcap, I will double my holding in that stock. But I was not able to follow that in current fall because I tried to time the market, anticipating more correction. this led to not sticking to my rule and missing out on opportunities..


Posted By: SORUB
Date Posted: 07/Feb/2007 at 11:55am
very nice info guys..."reaching the top is easy,remaining there is tough" is very nice...profit making is easy,retaining is tough...here is where rich dad poor dad comes into play...we have to plan what we want to do with the money which we generate, my management sir(in college) always says "one who fails to plan, plans to fail"

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K.I.S.S(keep it simple silly) is the most easy management formula i ever came across!!! but it is very hard to follow!!!


Posted By: BubbleVision
Date Posted: 08/Feb/2007 at 12:14pm
"one who fails to plan, plans to fail"
------
 
This is absolutely true Sorub


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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!


Posted By: tigershark
Date Posted: 08/Feb/2007 at 3:19pm
ask yourself a simple question why are yu buying this co and at what mkt cap did yu first buy it now if every thing else remains the same and the price declines then  the co that yu want to acquire just got cheaper go and buy more price is the least imp of factors while making an investment descion

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understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things


Posted By: BubbleVision
Date Posted: 08/Feb/2007 at 3:54pm
Hi TigerShark.....
I dont think that Prices are Irrelevent while "investing" or "trading". However the most important base is knowing the Reason for owning the stock.... For Someone like me ... Price action is the only reason for investing or "Trading"... I am trading in some stocks which i am holding for 8-9 months because the price action is keeping me in the "Trade".


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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!


Posted By: tigershark
Date Posted: 08/Feb/2007 at 8:39pm
i never trade but that does not mean poeple shouldnt trade as long as you make money why not.see the price infact is very important otherwise how do i calculate the mkt cap so higher the price higher the mkt cap so while investing will look at in this order credibility of mgmt, mkt cap return on equity,pricing power ,competition,pe ratio and finally price.

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understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things


Posted By: PrashantS
Date Posted: 09/Feb/2007 at 10:14pm
trading is the most risky thing ever ....unless one is an expert in it......i have success and failures recently...the Success builds greed to play for more as money can be made eaisly and the failure in trading gives you sleepless nights.......

Invest in the future is the mantra....which one can learn only from experience............

So frinds if one wantss to trade do it...with low cash.............it is toooooo dangerous...


Posted By: PKB2000
Date Posted: 11/Feb/2007 at 12:33pm
Originally posted by PrashantS

So frinds if one wantss to trade do it...with low cash.............it is toooooo dangerous...
 
I fully agree with Prashants and one additional point in it. We must limit our expectation and to shift from the concept of earning MMM (More and More Money) to  MM (More money). Secondly if really some one is in good stock just stick on it. Not to be frustrated. Above all we should not spend sleepless night for our deeds. Let us be besides the good only.I have traded as many as 350 stocks in my life. When I sit back and relax to anlyse them I find that If I could have hold my first 10 stocks since the time of purchase to till date, my portfolio should have been more than Triplets in three years. My total earning is much less than what it would have been with those stocks. Again we must agree with the wise men and let us try our best to behave as an investor rather thank trader. It is really a dangerous game to trade without limited expectation,with less experince and to think of earning millions, nay, billions in trading. Also no small investor should  trade with small hard earned money. Small investor with small money may be completely out from stock market, (if they adopt the practice of trading from begining) and like thousnads of people they will believe soon that the market is for gamblers and not for engineers!


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I am always doing that which I cannot do, in order that I may learn how to do it. ~Pablo Picasso


Posted By: PrashantS
Date Posted: 12/Feb/2007 at 5:32pm
i had a shrp cut in my portfolio i hope another May doesnt happen...i have prepared myself for that...it takes months to build some profits and the losses can be created in a few hours..........so damn unhappy...i wonder how u sleep basantji ....it si really shaking every one .....can there be  an asset bubble...god knows...........Om hari Om


Posted By: basant
Date Posted: 12/Feb/2007 at 5:39pm

I have been enjoying the whole day long looking at how shaky people have become. Stocks have gone up like crazy and could also fall like crazy. There is very little we can do about that because things without remedy should be without regard. Surely hurts to see the paper capital erode but as long as we do not sell it is should be OK.



-------------
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: India_Bull
Date Posted: 12/Feb/2007 at 5:58pm
 
I think Market is giving the opportunity to take part in the bull run for which we are talking about every now and then by means of corrections.
 
I bought TV18, Bharati , Pantaloon,Suzlon today (Looking to lock them for 3 yrs ). which I thought  were little overstreached ,though my friends in Mumbai are telling me there can be another fall of 300 points , I would buy some more if there is another fall.
 
I think Bharati is a value buy at the moment instead of locking your money for one month for Idea where no allotment is guaranteed.
 
Believe me or not , but I was expecting this fall (one of the resaon is (my observation) , whenever there is a big ipo opens for subscription market has to fall, we have seen this during Cairn and next we will see for DLF.
 


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India_Bull forever Bull !
www.kapilcomedynights.com


Posted By: kulman
Date Posted: 12/Feb/2007 at 6:18pm
Even at the cost of repetition, please go thru these tenets carefully:
 
 

The basic ideas of investing are to look at stocks as businesses, use market fluctuations to your advantage, and seek a margin of safety. That’s what Ben Graham taught us. A hundred years from now they will still be the cornerstones of investing.

----WARREN BUFFETT


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Life can only be understood backwards—but it must be lived forwards


Posted By: PrashantS
Date Posted: 12/Feb/2007 at 6:29pm
you know the problem is markets will bring down the good stocks too...so damn afraid right now........hopeit recovers....

my dad was telling me invest in infosys and forget about it...all of it.........please advice how to handle this situation.......profolio is bleeding or may be coz of the concentration it looks so terrible.......that it is so hard to see the 15% as a big fall...but in a day ....

Help someone...help........well i think i am overreacting ...but still...this is blood bath




Posted By: India_Bull
Date Posted: 12/Feb/2007 at 6:52pm
Hi Prashant,
 
Keep your calm.Its difficult to control our emotions when the portfolio gets reduced by say 15 % in a day.
 
There is a proverb in Marathi - Sukya barobar ole pan Jalate ...,When there is a fire it doesnt look anywhere (I mean quality of the stock !!!)
 
There are going to be ups and downs in the market. I can only advise (though I am not the authority on this ) is , if you have money, buy the stocks for whcih you have conviction, if you cant average, dont look at your portfolio, dont read any newspapers and watch television....
 
I am sure in 2 weeks time you would recover your losses if you hold good quality stocks.(Unless and untill you sell its a notional and paper loss!!)


-------------
India_Bull forever Bull !
www.kapilcomedynights.com


Posted By: deepinsight
Date Posted: 12/Feb/2007 at 7:07pm
Prashantji: Keep Calm take a deep breadth. Go for a walk. See a movie. Take a shower. Dont let the markets disturb your purpose.
 
Testing times define one's conviction and tests our analysis.
 
If you were speculating - you may consider some actions - only if you need the money or are not convinced of your trades.
 
If you were investing for the long term- the operations of the company have not changed in the last few hours.
 
As some of our gurus have explained the correlation between the companies earnings and its share price is close to 100%. The price of the stock is gauranteed to move up or down - historically - they have come back for the fundamentally sound companies.
 
As Basantji and many forum members have discussed on this site. Do your research. Build your conviction. Buy at reasonable prices and hold for good returns.
 
The correction may last for a few days - so dont let it panic you into bad decisions.
 
Good luck


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"Investing is simple, but not easy." - Warren Buffet


Posted By: vip1
Date Posted: 12/Feb/2007 at 7:26pm

Prashant remember one Golden rule " NO PAIN NO GAIN" .

or Gains follow pains (my quote)


Posted By: omshivaya
Date Posted: 12/Feb/2007 at 7:57pm
Prashant ji - I won't tell you "It shall come back up soon, so relax". Who knows, it may be this way for more time than we can imagine.
 
The point is: where the returns are more, the risks are even more or more suitably the downsides are even more.
 
We are lucky to an extent that the corrections are coming so soon after we have bought the recent ones.
 
Whenever you are buying a midcap/smallcap stock, it would be worthwhile to calculate the amount you have invested in them and multiply it with 0.80. That way the amount invested in it(notionally) would be 80% of the actual amount invested.
 
So, do all your calculations with midcaps/smallcaps this way, for the future.
 
 
And finally, take it easy. Will being nervous bring the stock price up. NO! So, why fret?
 
Take a break and the decision to win is finally upto YOU! Take this correction as an exercise to build your temperament.
 
 
Good luck and Take care.


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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: bullzi
Date Posted: 12/Feb/2007 at 8:05pm
Guys,

Look at this as a good buying opportunity. Thanks to TED we know where we should be putting our hard earned money.

I accumulated more of tv18, and took exposure in zeenews (wanted to enter this one). Bought more of centurion bank of punjab.
And the buy limit order for Suzlon missed by 5 bucks.

Only time will tell whether I did was right or wrong. But i guess the thinking is in the right direction. Ermm


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It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong - George Soros


Posted By: omshivaya
Date Posted: 12/Feb/2007 at 8:06pm
Originally posted by basant

I have been enjoying the whole day long looking at how shaky people have become. Stocks have gone up like crazy and could also fall like crazy. There is very little we can do about that because things without remedy should be without regard. Surely hurts to see the paper capital erode but as long as we do not sell it is should be OK.

 
AMEN, well said Basant jee.


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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: omshivaya
Date Posted: 12/Feb/2007 at 8:07pm
Originally posted by kulman

use market fluctuations to your advantage, and seek a margin of safety. That’s what Ben Graham taught us.
 
 
 
Ben ji taught the right stuff...very true and so very depth in his words.


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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: Mohan
Date Posted: 12/Feb/2007 at 8:13pm
Aha... This brings back soo many memories...( very scary ones )
 
The only difference this time is I am an Investor and not a trader.
I have investments thru Mutual funds.
 
Surprisingly not tracking markets regularly is making me money.
 
I bought them last year in March around 10,000 + Index levels.
Luckily for me I tuned out the during the rollercoaster to 7000 and back to 14000. I am sure I would have sold at the bottom had I been watching the market constantly.
 
 Should I wait some more or buy now ?
 
 
 
 


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Be fearful when others are greedy and be greedy when others are fearful.


Posted By: Mohan
Date Posted: 12/Feb/2007 at 8:22pm
Anyone Heard of Mr Market by Warren Buffet.
 
I guess one should take advantage of Mr Markets emotions


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Be fearful when others are greedy and be greedy when others are fearful.


Posted By: monu_duggad
Date Posted: 13/Feb/2007 at 7:53pm
Hey prashant
 
Common..you surely are over-reacting....just relax...am sure u r an investor and not speculator...so why bother about 500-1000 points correction...unless u have bought dirt stocks...which i know u havent...
 
Life will be pain if you get worried with such fluctuations....and unless and untill you sell that stock...its still a notional loss...
 
There are friends of mine who lost 2-3 lakhs in F&O (one of them had gone long on Hindalco at 182 Rs with 3 lots and dint cover up the position hoping for a recovery)...on his capital of 10 lakhs....so its 20 % erosion of there capital in one single day....and its not a paper loss like its for most of us investors...thing which i liked about them is...they are planning for there next move...as to how to recover these 2 lakhs
 
Its not even a correction....we have gone up from 9000 to 14000 without any severe downfall (markets havent corrected even for a week on trot)....i am not an experienced investor...neither a market beast,but still,please prepare for the worst and hope for the best........make urself stronger to see even 3000 points correction......brace urself for 11000 on sensex and decide what will u do if sensex shows 11000 somewhere in march or april or may....or say...Bear markets were to begin from tomorrow morning 9:55 a.m....
 
Like buffett said...we shud be happy when markets fall as it gives an oppurtnity of discount sale..(ivrcl at 342..(3 days back it was 430)....bharti at 719 (was at 795 last tuesday).....vsnl(stock which is dicusses in TED has corrected 20 % from 510)...hindalco(only bluechip stock trading below book)...relcomm (18 % down in 4 days)...)
 
Relax...look at ur portfolio for once...see the quality of stocks...if its good...shut down ur comp...go for a movie....go for a drive...have nice dinner...then some hot coffee....and sleep well !!


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If you think you can,You Can


Posted By: kulman
Date Posted: 13/Feb/2007 at 8:12pm
Nice comforting words there Monu jee! Good one.
 
And as usual you've mentioned your favourite subject...."go for a drive...have nice dinner...then some hot coffee".....
 
I can't help but offer u a role in remix video...."Khaata rahe mera dil "!!!Wink


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Life can only be understood backwards—but it must be lived forwards


Posted By: PrashantS
Date Posted: 13/Feb/2007 at 8:20pm
haha....thnx for the support guys..........actually these reports rally give you sleepless nights...well the worled could end that way....i always had the habit of being in the green.......just was nervous....btu that also gave a chance to add to my position.....phew ..for a moment i thought it will go down like crazy....seen some carnage at higher levels..but thnx for your suggestions teddies


Posted By: monu_duggad
Date Posted: 13/Feb/2007 at 8:27pm
Hey prashant...
 
tomorrow also markets may show some blood....Mr Reddy has hiked crr rate...hahaha..hope tomorrow banks dont fall by 5-6 % like in december when crr hike was unexpected ....


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If you think you can,You Can


Posted By: kulman
Date Posted: 13/Feb/2007 at 8:36pm
Yahan Dr YV Reddy ka CRR hain; toh kal shaam aur parso Shri Ben Bernanke saahab ki testimony hain!
 
If one is a long-term investor, it is best to ignore short-term movements/economic forecasts.


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Life can only be understood backwards—but it must be lived forwards


Posted By: basant
Date Posted: 13/Feb/2007 at 8:55pm
Originally posted by monu_duggad

Hey prashant...
 
tomorrow also markets may show some blood....Mr Reddy has hiked crr rate...hahaha..hope tomorrow banks dont fall by 5-6 % like in december when crr hike was unexpected ....
 
By June 2007 we would all forget this. It is the media which blows these pieces of information out of context. If someone is invested in longer term growth stories he need not be worried though I do think the bottom end of the business channel shall create some solid panic tomorrow!
 
 


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: catcall
Date Posted: 13/Feb/2007 at 8:56pm
Yes, the markets would see a weak opening, but i suspect there was some amount of factoring in of this news beforehand for the last two days.... anyway, it would throw up some good opportunities in the not-so-glamorous sectors, which have not seen a great rise in prices in the last run... for example India Cement is looking like a value buy at these levels, both technically and fundamentally... with the settlement next week, if it can withstand the initial onslaught tommorrow, it would be a good entry point....

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There are two times in a man's life when he should not speculate-when he can't afford it and when he can-Happy investing!


Posted By: BubbleVision
Date Posted: 13/Feb/2007 at 9:28pm
Kulman - you certainly know whats up on the US Economic Calender Radar...After that is the US TICS, PPI, and then the BOJ on 21st .Wink

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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!


Posted By: PrashantS
Date Posted: 13/Feb/2007 at 9:52pm
dont enter india cement ...........lene ke dene pad sakte hein


Posted By: PrashantS
Date Posted: 13/Feb/2007 at 10:01pm
and cement will get the hammer...left and right....catcall ji ..it has a build up in F&O also...some how i hate cement stocks now coz they made me bleed properly...


Posted By: kulman
Date Posted: 13/Feb/2007 at 10:17pm
Prashant jee.....
 
I think you're taking markets & analysis too seriouly. Take a decent break, man. If you've leveraged open positions, take help of someone for advise on unwinding with minimal losses. Do not panic. Do not try to time the market.


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Life can only be understood backwards—but it must be lived forwards


Posted By: deveshkayal
Date Posted: 13/Feb/2007 at 10:27pm
I agree with Kulmanji. Visit Lounge - Great place to sit,relax,refresh and enjoy! for a break.

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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett


Posted By: omshivaya
Date Posted: 13/Feb/2007 at 1:49am
Interesting read of what "experts" said after the May'06 fall?
 
Was just searching on the net and found it randomly. Fun to read it now.
 
Firm interest rates, inflationary pressures to keep bourses volatile
 
MUMBAI, JUNE 25,2006:  The possibility of a further hardening of interest rates globally and the mounting of the inflationary pressure is expected to have an adverse impact on the securities market. Both the leading bourses may continue to be volatile due to these two developments, market players opined. The US Federal Reserve would meet on June 29-30 to discuss a further rate hike. The financial market experts are expecting a Fed rate hike of another 25 basis points, from 5% to 5.25%.

The earlier Fed rate hike of 25 basis points, from 4.75% to 5% on May 11 had witnessed a bloodbath in the Indian market. The Bombay Stock Exchange (BSE) Sensex has dipped by 22% or 2,811 points since then at 9,810 points between May 10 and June 9. However, it has recovered a bit from the low levels over the last two weeks, to gain 6% or 591 points to close at 10,401 points on Friday last.

 
 
Dhirendra Kumar, CEO, Value Research, said that a further hardening of interest rates would not only hurt market sentiments but would also have a negative impact on the equity market.

The interest rate hike may lead to a liquidity strain in the market. Apart from the interest rate, the price rise (inflationary pressure) due to the oil price spike is another matter of concern, he said. It may be mentioned here that the government announced higher inflationary figures. Inflation has gone up from 4.72% to 5.24% for the week ended June 10. This is expected to harden the interest rate and put pressure on the corporate earnings.

The hardening interest overseas may suck away foreign funds from the domestic bourses, which will again have its adverse impact on the bourses. FIIs have pulled out more than $2 billion from the domestic market since the May 11 Fed rate hike.

Striking a different note from this, Sandeep Shenoy, strategist and head of research, Pioneer Investment, said that the interest rate hike by the Federal Reserve in May has already been factored into the market movement. A majority of the stocks are now fairly valued. "So, I do not think that in case of another Fed rate hike, we will see another big sell-off by FIIs".

On the same note, Dinesh Thakkar, CMD, Angel Broking said, "The markets have once again crossed the crucial 10,000-mark. Liquidity, which was flowing out of the system because of excess valuations, is returning, albeit slowly.

For long-term investors like FIIs, 9,500 points are compelling levels. In the short term, markets could consolidate in the range of 9,500-10,500 points. Over a one-year time frame, at about 13.5 times the current year earnings, the Indian markets may rise in line with the rise in the corporate profits at around 18% up from the current levels., in 12 months".

“The India story is on, still kicking and going to be very much alive for a long while. And hence according a PE multiple of 13.5x-15x is by no means a unjustified one. With this kind of valuation and future growth prospects, nobody. including FIIs, can ignore our markets," he added.

 
Source: http://www.financialexpress.com - www.financialexpress.com
 


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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: kulman
Date Posted: 13/Feb/2007 at 8:05am
Visit Lounge - Great place to sit,relax,refresh and enjoy! for a break.
 
-----------------------------------------------------------
 
I've heard so much abt it but haven't been there. Devesh jee, which listed player(s) benefits?


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Life can only be understood backwards—but it must be lived forwards


Posted By: basant
Date Posted: 13/Feb/2007 at 9:23am
That was a great post. I love reading things from the realm of history. Can someone post what the greatest expert of them all Shri Shri Mangalwaar sahib say? Kulmanji I can see you smile as you read through this.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: BubbleVision
Date Posted: 13/Feb/2007 at 9:53am
Good Reminder Om ....
 
I would like to quote Bhaiya here once ...."win the war despite losing many a battle"


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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!


Posted By: omshivaya
Date Posted: 14/Feb/2007 at 12:10pm

Ok, got in one more. With due respect to all the expert(s) and demand by Basant jee:

 
Markets entering a bear phase, says Damani

Member of the BSE, Ramesh Damani says that the markets are entering a bear market phase. He said this after a recent trip to Europe where he met foreign fund managers.

Excerpts from CNBC - TV18’s exclusive interview with Ramesh Damani:

Q: How was your trip to Europe?

A: We began our quest to know what foreigners thought about India and to quote Rudyard Kipling, "What does one know about England, who only England knows?"

So we wanted to go out of India and see what foreign fund managers were speaking about our country and the way they were viewing India. So we went to the center of the world, which is London to think about the new world; the BRICs economy as it has been commonly called. It was an astonishing series to go and meet a lot of famous and well-known people.

Markets were clearly at a transition point. At that time, the sense was that a dip is a great buying opportunity. I am not so sure if I could get that kind of feedback if I went back and talked to them today. The world has changed in a month since we met them and recorded those interviews.Q: Did you sense optimism about India when you spoke to them or did you get a sense that they were happy about India because it was a market, which was performing?

A: Valuations were very stretched and they were very cautious about that, but the uniform beat at that time was that if the markets go down 10-15%, it represents a great buying opportunity and here we are down 28%. I think they probably will have second thoughts because emerging markets clearly are not the place to be in, as they were saying a month ago.Q: How big were the concerns about the larger canvas because we have been talking about reports of a global recession. When you spoke to these experts, did you see any warning signs of that?

A: I did, but somehow at that time atleast India was placed on a pedestal and we were considered as one of the fastest growing economies and the way to capture growth. Much was said and written about India. For example, Goldman Sachs was pushing the BRICs theory very strongly, which said India will overtake England in per capita income, overtake Germany and challenge America and China for global leadership in per capita income.

I think there was clearly a lot of froth in emerging markets at that time. While they were concerned about global factors like the dollar or oil prices, at that time India had a very special place and almost universally they were very bullish on India over the long-term. My sense is that we are a bit subdued now given what has happened in the last month.Q: Were some of them surprised by the way liquidity turned tide so fast?

A; We were not really there when the liquidity started tightening out. But there has been a huge setback for all emerging markets. Bank of Japan's announcement today that they will keep interest rates at zero will help a lot.Q: Do you get any concerns from them on what was happening with interest rates globally?

A: At that point, I asked a lot of them why all asset classes and real estate were going up. They were just concerned that there is a global savings glut going on and people were pouring money out there. It is hard to over-emphasize what has happened in the last one month and it is change in the way we are looking at the investment world for the last 3 years. Probably, they were worried but at that time we were almost at the highs of the Sensex. The feeling was still good that India was a great long-term story and the worries are now settling in.

 

Q: Did you sense any complacence then, because these are investors who had been in the markets for many decades? Among the big investors, did you sense any complacence about financial markets?

A: If the markets were 15% lower, it would be great as we would just step in and buy. I am sure some have because they have an extremely sterling track record in terms of the investment process and in buying good quality companies. I am sure they are stepping in and buying. They did not seem to be the cowboy investors; they are all old hands in India and had put in money from 1993-1994 onwards.

We interviewed Mr Pathak who made the first big entry into Bharti. It is a fascinating story of how he got it and how he celebrated the Bharti investment. He made USD 1 billion out of that. So there are a lot of old hands and a number of seasonal players who are not going to be frightened by a fall in the market.

The world has changed and emerging markets may not be as attractive as they were three months ago. It may give them time to recalculate, to go a bit underweight or go overweight on the index, as they see it. While we were there, we are almost at the peak of the market.Q: Did anything else strike you as different compared to the experts that you spoke to in the series?

A: We made our first trip to Asia and it was amazing. It was an informal atmosphere, you go and talk to them about the world and there are a lot of people sitting in Asia and watching. Here, you go to the center of the whole world, London. There is low trade, there has been the finance stock market for almost three centuries out there.

There is a lot of cultural differences and how they view the market. Asians are generally more relaxed and open to new ideas than I would probably find the British. There is a huge cultural difference between England and the rest of Asia like Hong Kong or Thailand.Q: What did all of them in London feel about world equities as an asset class?

A: My sense is that no one has been able to point out that there is a problem here. Marc Faber has been telling for a while that equities may not give the best returns over the next few years. The view I got from London is that India is a big growth story and there is tremendous potential. One of the ultimate compliments that we received was that IBM is no longer called International Business Machine but it is called Indian Business Machine because of its great and strong capex plans in India.

So while the markets will go up and down, Indian economy continues to deliver superior numbers like 9% of GDP growth and increasing corporate profits. There have been a lot of good things happening in India with huge capex plans coming up from people like IBM. So I think they are all bullish on the Indian economy. As long as Indian economy continues to deliver and people are willing to invest in FDI or FII terms in India, I think the economy will keep rolling on. Q: Have you started buying yet or are your hands still off?

A: Increasingly I think, it looks like we are entering a bear market. The technical evidence seems to suggest that we are 30% down from the peak levels. The odds that we will make new highs seem really remote to me. Liquidity is going to be a big issue in the market. Now we may make a well-established trading range, maybe at the lows of 8000-10,500 level. But for the markets to make new highs, seems more and more unlikely as each day passes by and technical evidence stacks up against it. Q: How do you define a market? Is it a market, which does not go back to its old highs?

A: The classic definition of a bear market is 20% fall from its peak and the failure to recover from that point. In May 2004, we had a sharp fall of more than 20% but we almost had a V-shaped recovery. Now, there have been so many excesses that it is almost impossible for the market to make that V-shaped recovery. I have pointed out that if the markets had continued at the pace they were, in the Forbes 20 list, eight would have been Indians. We contribute 2% to GDP, we are not going to have 40% of wealthiest individuals in the world. It can only happen when asset classes are widely inflated as they happened in the last few months.

My sense is that the back of this bull market has been broken and we have to address the market differently depending on whether one thinks it is a bull market or whether it is just a re-spike. If it were a re-spike, then one would want to buy leaders in the market because they will bounce back and make new highs. But it is hard for me to sit here and imagine that whether they are the realty stocks or the capital good stocks making new highs.

I think it is a serious mistake if one goes out and buys them because they have fallen out in value. We need to start looking ahead and whenever this new bull market starts, one needs to see what would be the themes that investors would address. So a fall of 20%, capitualisation in cash shares and liquidity evaporating from the market seems to suggest it all. Q: For how long do you reckon this to continue?

A: Bull markets last three years. Bear markets typically last one third to one half of the time. So maybe it will last for a year and 18 months.

 
This interview was given in June 2006.
 
However, in Diwali show in CNBC-TV18...he also said that he was wrong and that he should have bought more of his stocks aggressively when they fell down.
 
Just mentioning this since I wanted the post to be "unbiased and factual".
 
 
 
 
 
 
Source: http://markets.moneycontrol.com/india/news/marketoutlook/null/marketsenteringbearphasesaysdamani/market/stocks/article/220502/1 - http://markets.moneycontrol.com/india/news/marketoutlook/null/marketsenteringbearphasesaysdamani/market/stocks/article/220502/1


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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: omshivaya
Date Posted: 14/Feb/2007 at 12:19pm
Here is a link wherein all experts' comments are put down:
 
http://vichaarah.blogspot.com/2006_08_01_vichaarah_archive.html - http://vichaarah.blogspot.com/2006_08_01_vichaarah_archive.html
 
Search for the text "Expert opinions on markets" on this page.
 


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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it


Posted By: basant
Date Posted: 14/Feb/2007 at 1:35pm
You know reading these interviews tell us that what we see on the Tv is actually smoke. Kulmaji explains that quite well but without malice and with 100% modesty we are too ashamed to say that we do not know what the markets would do but are always interested to take that big call because there are no penalties for going wrong. Over a period of time we have understood that all such prophecies go down the dust and there is no one person who is consistently right all the time but I can tell you of plenty who have been consistently wrong all the time.
 
Let us assume that the markets fall by another 2000 points then we would hear all these gloooms and dooms, the mangalwars and the guruwars taking that same  story line. I think we need to ask ourselves questions with regard to the reasons:
 
Q) WHy is the market expected to go down
 
A) Probably interest rates because when interest rates rise.............
 
Q) OK SO what happens to my telecom stocks, the media ones, the retailing stocks, education, software companies etc. What happens to my Banking stocks.
 
A) In the short term everything will be painted with the same (red) brush but when the results start pouring in the wheat would be seperated from the chaff. In other words the analysts would be able to understand that higher interest rates does not oin any way affect the way Nucleus sells its products or set top boxes are distributed. Higher interest rates would not also stop Educomp from catering to more schools or stop people from buying groceries from the malls.So if analyst can take that call after the results are out let us front run them and do some brain storming; let us take that call before they do; let us see http://www.theequitydesk.com/forum/forum_posts.asp?TID=162 - what companies Buffet bought or the http://www.theequitydesk.com/forum/forum_posts.asp?TID=104 - kind of companies Buffet and Lynch would have bought in India   because they was never interested in interest rates and he was never interested in interest rates because he never bought any interest rate sensitive company.


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in


Posted By: BubbleVision
Date Posted: 14/Feb/2007 at 1:55pm
Excellent explanation of the situation.
 
Additionally ... (from my experience) Analysts are compelled to conduct a "crime" which they would NOT commit in their own books.


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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!


Posted By: kulman
Date Posted: 14/Feb/2007 at 3:01pm
This is absolutely 100% right, bulls eye!

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Life can only be understood backwards—but it must be lived forwards


Posted By: omshivaya
Date Posted: 14/Feb/2007 at 4:59pm
Amen! No more truer words were spoken Basant ji. We need to take the "first mover" advantage.
 
 


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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it



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