“Nice to meet you. Just hold on for a second. I need to send an SMS to my husband.”

My cousin and I stood there waiting. The girl, a manager with a private sector bank, busily tapped out a text message on her new iPhone.

She was pretty slow with the typing, but we knew what was going on.

She was just showing off her new Rs 30,000 iPhone – hot stuff for Alwar, a small town in Rajasthan where I grew up and which has a relatively middle class population.

We had seen her arrive to the bank with her husband who drove a shiny black and modified SUV.

She and her husband were young… probably in their early thirties. As I came to know from her, he was a real estate broker in the town. Even though their income must be down in a weak housing and job market, their spending didn’t reflect the crisis.

“What’s going on here?” I asked my cousin who was a local.
[Read more…] about What’s the Point of Saving and Investing?

Here is how the Indian stock markets have behaved over the past four months.

I’ll skip the reasons for the same as you must have heard it somewhere (or everywhere).

To say the past few months have been dreadful for investors is an understatement.

But it is times like these that test your conviction in your stock picks or whether you want to sell it off and run for the hills.
[Read more…] about Now is the time to PANIC

One event that catches attention of the investor community every three months is the monetary policy that is announced by the Indian central bank, the RBI…

…like it did today when the RBI announced its quarterly review for the monetary policy for 2011-12.

Every move the RBI makes, even if it is irrelevant to the long term performance of the Indian economy or financial markets, is dissected and discussed threadbare.

Leave the RBI Governor aside, expert opinions flood the newswires from brokers, analysts, and fund managers. Even the Finance Minister shares the limelight in giving his opinion on the RBI’s policy.

Amidst all this, the RBI Governor is either made a hero or a villain, depending on how well he’s taken care of the market’s expectations.

Now the question is – why is monetary policy such a widely followed event in the investor community? What impact does it have on stock prices?

Let’s try to answer these questions.
[Read more…] about Does Monetary Policy Really Impact Stock Prices?

The reason that pain hurts is because it should.

Pain is nature’s way of telling us to get out of harm’s way. Like fever tells us that something’s not right inside of us and that we must take the necessary medication to avoid doing a greater harm to our body.

This is also true when it comes to investing in stock markets. When the market moves and I’m losing money, I know it hurts.

But more often than not, unlike in life, I would continue to bear that pain (keep holding my losing stocks) instead of taking the medication (cutting the losses) to avoid a greater harm in the future.

No one is right all the time and I don’t have to be.

But this wasn’t something I believed a few years back, till the time I took my first major loss in a leading textile stock.
[Read more…] about My First Stock Market Loss…and the Lesson I Learnt

The BSE-Sensex is down almost 1,000 points over the past 3 days alone. Newspapers have started shouting out – “India, tottering and sputtering”.

Some are calling this crash a “tragedy”, while there are others who are describing it as a “disaster” for investors.

And then, of course, there are many who are predicting that the future is going to get worse and that investors must stay on the sidelines till the dark clouds disperse.

Anyways, before we move further, here is a snapshot of the 4 major falls – the tragedies and disasters – the Sensex has seen over the past 15 years.

This first major drop came after the dot com boom bust in early 2000. The Sensex dropped 56% in a matter of 19 months. [Read more…] about Sometime You Can’t Help But Make Money from Stocks. Is That Time Now?

Here’s something light for you on a bright Saturday morning – 5 jokes that I read some years back and that have taught me some serious lessons on stock market investing. Enjoy!

• An analyst is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today! (I’ve been there, done that!) 🙂
  

• Q: Why did God create stock analysts?
  A: In order to make weather forecasters look good.

• There are primarily 3 different types of investors:
  1. Those who don’t know anything: approx. 10%
  2. Those who know a little: approx. 10%
  3. Those who don’t realize they don’t know anything: approx. 80%

• The market is weird. Every time one guy sells, another one buys, and they both think they’re smart.
  

• My broker and I are working on a retirement plan. Unfortunately, it’s his!

“You talked about the importance of taking small losses before they magnify into bigger losses,” a reader of The Safal Niveshak Post asked me yesterday. “But how do I know which stocks to sell to takes such losses? Is that so simple?”

“No, it isn’t,” I must say.

Knowing when to sell a stock or which stock to sell isn’t as easy a decision as knowing when to buy a stock.

In fact, most discussions on investing revolve only around when to buy a stock.

“Which stock should I buy?” is the first question that comes to your mind when you think about your investment.

But as we discussed yesterday, an equally important question is – “Which stock should I sell?”
[Read more…] about The Most Important Decision to Make After You Buy a Stock