Investing Behaviour

I have a lot to say from my recent interaction with a financial advisor whose company had advised a friend’s father into making a lot of bad mutual fund investment decisions.

The last two posts (here and here) covered this topic and the next two will also do this.

One of the points of discussion I had with the financial advisor was that the bad investment decisions that my friend’s father made was of his own doing. This is what the advisor accused him of.

“Who knows who advised him such funds? Probably he himself might have chosen them,” he told me.

“Why, weren’t you his financial advisor?” I asked.
[Read more…] about What Investors ‘Really’ Want

India’s leading software company, Infosys announced its September quarter result yesterday. The company reported an 8% growth in sales during the quarter, as compared to the previous quarter ended July 2011. Its profit growth stood at 11%.

The stock clocked gains of around 7% after these result was announced. Now, if you think the good performance from the company was the reason for the stock to have performed so well yesterday, you are missing the point.

The key reason the stock rose so sharply was not Infosys’s September quarter performance, but the fact that the management raised its ‘forward guidance’ or its ‘earnings expectations’ for the coming quarters.
[Read more…] about Infosys and the Funny Stock Market Pastime Called ‘Expectations’

“Learn from the mistakes of others. You can’t live long enough to make them all yourself.” – Eleanor Roosevelt (US diplomat & reformer)

Some bumps and bruises in stock market investing can be avoided if you heed the lessons others have picked up along the way.

Mistakes sometimes happen when you try something new, when you take a risk, when you attempt to do things differently from others.

Nearly every investor can point to mistakes he made – and the lessons he learned from them.

It’s cheaper to learn from someone else’s mistakes. Your job as an investor is not to reinvent the wheel. You don’t know every answer, but you can usually find the people who do.

Safal Niveshak understands this. And this is the reason I have created this platform of ‘Your Story’ where you can share your investing story – the investing mistakes you’ve made in the past, as also the stories about how your chose your winning stocks.
[Read more…] about Share Your Investing Story, Inspire Others

The question is – Who doesn’t want to become one?

You save and invest your hard-earned money, all with the aim of living a comfortable life when the salary cheque stops coming.

With your financial goals in mind, you make resolutions and sometimes also show your willpower to achieve them.

But then, is this enough to become wealthy over the long term?

The answer is – No!
[Read more…] about So, You Want to Become a Wealthy Investor?

“You know how bad I feel seeing my stocks these days?” asked my friend Ravi in a moment of anxiety.

“How bad?” I asked.

“It feels lousy! Every time I log in to my online trading account and see those red numbers, and then compare them with where they were a few months back, I feel really-really horrible.

“And you know what,” Ravi continued, “Wherever I look these days, whether it’s a newspaper or a business channel, or even within my office, I find a lot of voices screaming loudly in my direction and telling me to sell everything.”

“Wow!”

“What wow? You’re happy to see me suffer?”
[Read more…] about Survive a Stock Market Panic…And Make It Work for You

“Half of life is luck; the other half is discipline – and that’s the important half, for without discipline you wouldn’t know what to do with luck.” – Carl Zuckmayer

Warren Buffett once said that the most important quality for an investor is temperament – how he behaves under different situations – not intellect.

In simple words, if you are an investor, your attitude will play a major role in your investing success than your aptitude.

It has been proven time and again that the worst enemy an investor can have is his emotions.

So, during bull markets, your worst enemies are greed and envy.

During bear markets, they are fear and panic.
[Read more…] about Investing and the Art of Discipline

“We are all a little weird and life’s a little weird, and when we find someone whose weirdness is compatible with ours, we join up with them and fall in mutual weirdness and call it love.”

These words from the famous American writer, poet, and cartoonist Dr. Seuss rings a bell in my mind every time I hear someone complaining about how the stock market is like a casino that has robbed him of his wealth.

“Stock market is a weird place to be in. I’m better betting on race horses,” said my neighbour as I asked the reason for his sadness during our early morning walk.

“Seemingly he has lost some money as Indian markets have crashed this week,” I thought to myself.

What I thought was right, as he said, “You know what? The Sensex was down 700 points on Thursday and another 200 on Friday! Isn’t this madness?”

I am a good neighbour, so I wanted him to pour out his heart before I could have spoken anything in defense of the market.
[Read more…] about We Are All Weird

The Sensex was down 700 points yesterday. It’s down 250 points as I write this today.

Whenever we get days like this — like when the Sensex is down 500 points or more — my phone begins ringing with inquiries from friends and relatives.

They always ask the same question: “What should I be doing now?”

Even my wife has this question every time she sees the markets fall like this.

“What are you doing now?” she asks me.

You see, this is ‘not’ the right question to ask in such times.
[Read more…] about Stocks Crash! What Should Investors Do NOW?

My eyes were caught by a headline in a business paper yesterday. It said, “Steady rise in shady deals, price rigging”.

At first I thought this was an article on the real estate sector in India. But then as I read it further, things really started to look ‘shady’.

The article talked about how data from the stock market regulator SEBI suggests that the cases of market manipulation and price rigging in stock markets have steadily increased over the past few years.

In fact, such cases now account for almost 50% of the cases taken up for investigation by the SEBI.

What this data simply means is that a growing number of people in the Indian stock markets are following the mantra ‘Greed is Good’ as was said by the character of Gordon Gekko in the Hollywood classic Wall Street.
[Read more…] about Is Stock Market a Casino?