[VindyWheels]

Classic case of a guy with a hammer who sees only nails. But cannot blame you as the system of brokers, insurance sellers and corporate bankers have ruined the financial system. What exists now is mistrust and total misunderstanding. No wonder India has one of the lowest retail penetration in equity investments.

The issue with the majority of the "product" sellers and brokers is that there is a big conflict of interest in their business model. Brokers make money only if clients keep buying and selling, so they encourage clients to keep buying and selling with short term targets. Product sellers like relationship managers of banks earn commission from selling insurance products and other investments. They have incentive to sell the products that earn them highest commission and not the product that is of highest benefit for their clients. Under immense pressure to meet sales targets most of them end up mastering the art of coning clients and very few will see the long term benefit of giving the right advice.

People who take stock market as some place for quick bucks will face the consequences.

Its a place for investors to identify good businesses and do investing seriously and professionally. If one does have respect for his hard earned money but do not understand investing, seek out professional help from someone you can trust.

Without the stock market many businesses would not have funds to grow and give jobs... think about it. A robust and functional secondary market is as essential for an economy as other facilitating mechanisms. In a growing economy there will be many many opportunities to find outstanding companies run by well-meaning, talented and passionate entrepreneurs. If you do not believe that businesses will never flourish how did all these big companies come into existence? We are all working for some company or have our own business.

There is a place for equity investments in one's investment portfolio along with debt, real estate, inflation hedge instruments and other alternate assets.

Originally Posted by mercedised

Sorry to say guys, but Stock market is the most bogus way of investment I have come across. I have never invested in stock markets but have seen 100% of people loosing money that they invested, credit goes to those agents\brokers who show dreams of heaven to investors and then the chain goes on and on and the investor keeps on loosing money. I would rather throw my money in trash then investing in stock markets. I don't understand stock markets and stock markets be DAMNED!

P.S.: I have hundreds of examples, one of my cousin break his FD on the advice of idiot piece of mind (broker) of 2.5Lakhs. Let me tell what happened next, the broker told him to invest 10,000 Rs and no rocket science my cousin gained some 5500 Rs in a month. The broker then asked him to invest 50,000 Rs.. Based on previous profit he invested 50,000 Rs; Although I warned against this investment of 50,000 Rs, bit he proceded anyway and again gained some 15,000 Rs quickly. The broker then asked him to invest more and this time the cousin of mine decided to invest 2.5L, inspite of me trying to explain him that the broker is only trying to get him into trap, he invested the amount. Not to say he was in such a loss that he lost the whole amount and his interest earned on the FD too. There are more cases that If I write here would compile into a book.

[alpha1]

Originally Posted by mercedised

one of my cousin break his FD on the advice of idiot piece of mind (broker) of 2.5Lakhs.

What makes you say that FD is a secure investment instrument and holding shares is not?

Have you considered the scenario that the bank where you have Fixed deposit declares itself insolvent?

Do you know that most of the banks in India (especially PSU / Govt connected) offer loans to large industrial houses of shady financial backbone? What if these industrial houses declare bankruptcy? (The current Bhushan Steel and previous Kingfisher Airlines fiasco are just tip of the iceberg)

The point is that you feel safe with FD only because you have not seen anyone losing his money till now.

With FD one effectively earns only 8-9%. With shares you may earn about 15% (using Nifty index as benchmark). Higher rewards do come with higher risk too.

But to be honest in the entire history of share markets in India, there have been only VERY FEW instances where someone would've actually lost money if he parked it in the Index fund (like NiftyBees).

What your friend got swindled into is: get rich overnight scheme.
For this stock market is not to be blamed. The person and his greed is.

[sgiitk]

@alpha1; Also FD is the sure way to lose money - return is almost invariably less than Inflation, esp after taxation.

[S_U_N]

@mercedised has echoed the sentiments of the 'play safe' class of people.


I don't know if there are any statistics around the % of people who have gained v/s lost in the market. But if there is, now is the time to look at data/ facts.

It is true that we always hear about the losers (perhaps the gainers are keeping mum to avoid getting unnecessary attention from the 'authorities'?)


For now, if you are investing in x, y or z, in the short term, you will surely gain, just because the market is going only in one direction.

I had money some spare cash to take risk; it took more than 4 months to find some interesting stocks and invest. And I still have not exhausted the kitty.

My strategy is to buy stocks which are less than Rs. 100 (or just above it). Hopefully when they reach Rs. 500 a share, I would have decent profit.


Right now, my 'notional' profit is 50% and I have had the investments for less than 6 months.
Stocks are less than 5% of my investment, so I don't care about too much research or P/E ratios. I don't have time to read a book by Mr. Buffet or someone else either.

However, FD's are a thing of the past. Invest via mutual funds instead, after getting your PPF accounts topped up in April each year.

[BaCkSeAtDrIVeR]

Can somebody help me in understanding why some gold ETFs are more pricey than others? Also what is the weight and purity of one unit?

Any one used egold? Was this NSEL specific?

[nowwhat?]

Originally Posted by BaCkSeAtDrIVeR

Can somebody help me in understanding why some gold ETFs are more pricey than others? Also what is the weight and purity of one unit?

Any one used egold? Was this NSEL specific?

There is no connection between egold/NSEL which came under Forward Markets Commission and Gold ETFs which come under SEBI.

Prices are different firstly because the underlying measure is different, some have 1/2 gram gold, others have 1 gram gold. Moreover the custodial charges and management charges are also different.

[nowwhat?]

Originally Posted by S_U_N

However, FD's are a thing of the past. Invest via mutual funds instead, after getting your PPF accounts topped up in April each year.

FD preferably with sweep-in is still a must to park 3-6 months expenses just in case of any mishap. Other than that, I agree with you.

[sukhoi]

Hello all,

Some very interesting reading on this thread. I have also been investing in the stock market for a couple of years now and it has been a mixed bag with some stocks doing well and others not-so-well. Am still learning and some of the discussions on this thread are very helpful.

Sine the very first post on this thread was about which sites people read/follow, I am listing some of the sites which I read and would ask others also to share:

1) http://capitalmind.in/
2) http://www.safalniveshak.com/
3) http://wealth.economictimes.com
4) http://www.moneycontrol.com/
5) http://www.onemint.com/

Originally Posted by nowwhat?

Investing 10K and investing your entire life savings on stocks are two completely different things and the instinct in both cases can be diametrically opposite. One big difference between the two is fear.

Many casual investors in the stock market look only at the returns their top-performers give and fail to look at the annualized return of their combined portfolio.

Totally agree. The scale of investment changes things and when you are putting everything on the line, you are more cautious and do more research about it.

One question, how do we calculate annualized returns of a portfolio? For that matter, if I have purchased a stock at various points in time, can I still calculate CAGR for that stock as a whole? I know how to work our CAGR for each individual purchase but for the whole how do we do it? Please guide.

Originally Posted by VindyWheels

There is a place for equity investments in one's investment portfolio along with debt, real estate, inflation hedge instruments and other alternate assets.

Hello VindyWheels, I have been a silent reader of your very well written posts for quite some time now and look forward to them.
Could you please elaborate on inflation hedge instruments, what are they? And what would you mean by alternate assets, is it previous metals like gold / silver or are you including art in this bucket or is it something totally different?

Originally Posted by sgiitk

@alpha1; Also FD is the sure way to lose money - return is almost invariably less than Inflation, esp after taxation.

+1 to that. Post taxation and taking inflation into account, FD does not give a very good return always. Many people say that they are investing when they create FDs but to my mind FD is more of saving and not investing. Investing would be wherein your money would beat inflation post tax.

Originally Posted by nowwhat?

FD preferably with sweep-in is still a must to park 3-6 months expenses just in case of any mishap. Other than that, I agree with you.

+1 to that as well, 4-6 months of expenses can be parked in an FD but recently I came to know of another instrument called short term debt funds. Do not understand them that well yet and need to read more about it but seems that they are a good alternative to FD to park the emergency corpus.

Best!

[nowwhat?]

Originally Posted by sukhoi

One question, how do we calculate annualized returns of a portfolio? For that matter, if I have purchased a stock at various points in time, can I still calculate CAGR for that stock as a whole? I know how to work our CAGR for each individual purchase but for the whole how do we do it? Please guide.

Yes, the whole idea is to enter stocks, MFs, debt bought/sold at different points in time and get a complete and accurate picture of how your portfolio is doing. Many investors focus only on their top performers or top underperformers and miss out on the big picture.

I simply enter everything into Value Research and let it calculate CAGR for me. Another advantage of Value Research is that you can also analyze whether your combined portfolio is heavily weighted towards one stock, towards growth or value scrips, towards one industry, etc.

I hear Moneycontrol is also good.

Originally Posted by sukhoi

I came to know of another instrument called short term debt funds. Do not understand them that well yet and need to read more about it but seems that they are a good alternative to FD to park the emergency corpus.

I think these Short Term and Ultra Short Term funds are also called Liquid funds. Yes, they are also a good choice and probably better in terms of tax and interest as you get a little more interest, but FD with sweep-in provides instant funds from an ATM in case of an emergency. This may not be relevant to you as it depends entirely on family situation, e.g. medical emergency of an uninsured person in extended family, death, etc. Not entirely sure, but I have heard of Reliance Mutual providing an ATM-like card for instant cash withdrawals also. Either one is fine.

[drsingh]

Originally Posted by alpha1

What makes you say that FD is a secure investment instrument and holding shares is not?

Have you considered the scenario that the bank where you have Fixed deposit declares itself insolvent?

Do you know that most of the banks in India (especially PSU / Govt connected) offer loans to large industrial houses of shady financial backbone? What if these industrial houses declare bankruptcy? (The current Bhushan Steel and previous Kingfisher Airlines fiasco are just tip of the iceberg)

The point is that you feel safe with FD only because you have not seen anyone losing his money till now.

.

The government of India guarantees 1 lakh of your money in a bank in case the bank collapses. You could safely put 5 lakhs in 5 different banks without risk. But that said FD is a bad investment. It gets taxed automatically if your filing taxes online. It would be better to but the stock of a leading bank instead

[nowwhat?]

Originally Posted by sukhoi

Sine the very first post on this thread was about which sites people read/follow, I am listing some of the sites which I read and would ask others also to share:

I find Sanjay Matai's blog invaluable. Simple common-sense advice with no hidden agenda even though he is a financial adviser. Don't forget to go through the archives where there are hundreds of previous posts.

[BaCkSeAtDrIVeR]

Since the issue of calculating performance of your portfolio has come up, here is what I do. A simple spread sheet, with a separate sheet for each scrip. On each sheet, I enter absolute cost of a day's purchase. Another cell calculates opportunity cost at a defined rate. For example, if I purchased 20k worth Orkay(!!!) on 1st, and another 25k worth on 10th, I will get 45k displayed in one cell, and a slightly larger figure in another cell. If I open the spreadsheet a year later, opportunity cost will be recalculated

[faustus77]

Originally Posted by BaCkSeAtDrIVeR

Since the issue of calculating performance of your portfolio has come up, here is what I do. A simple spread sheet, with a separate sheet for each scrip. On each sheet, I enter absolute cost of a day's purchase. Another cell calculates opportunity cost at a defined rate. For example, if I purchased 20k worth Orkay(!!!) on 1st, and another 25k worth on 10th, I will get 45k displayed in one cell, and a slightly larger figure in another cell. If I open the spreadsheet a year later, opportunity cost will be recalculated

Hi
Of all the scrips you had to give an example of Orkay
It was touted as the next Reliance.
As I wasnt too sure of the bosses I short sold and had to square up with a small loss. Whereas my CA averaged it 2/3 times and squared up at near peak level thereby suffering a big loss.
My stand has been vindicated and the company has closed down years back
Regards

[VindyWheels]

Hi Sukhoi, glad you like my posts..thank you

Alternate assets as per our scheme of things are real estate, gold, other commodities and international equity.

There are inflation index bonds which give protections against inflation.

For real estate, there are funds that invest in multiple properties (residential, land, commercial, different geographies) with the pool of funds - you can diversify this way and also there is no head-ache of buying, selling, black money and legal scrutiny.

Originally Posted by sukhoi

Hello VindyWheels, I have been a silent reader of your very well written posts for quite some time now and look forward to them.
Could you please elaborate on inflation hedge instruments, what are they? And what would you mean by alternate assets, is it previous metals like gold / silver or are you including art in this bucket or is it something totally different?+

Liked this excerpt from "100 to 1 in the stock market" by Thomas Phelps

“Earlier, I said there were two approaches to investing, one, the psychological one and, two, the statistical. Actually there are three. And in the long run the third is the most important. It is what might be called the ethical or even spiritual approach… Ask yourself whether the company in which you contemplate investing is contributing to making this a better world. If the answer is no, avoid it like the plague.”
and
“Bet on men and organizations fired by zeal to meet human wants and needs, imbued with enthusiasm over solving mankind’s problems.”

[PatienceWins]

Stock market is a very costly place to learn more about a person. Sadly, the incentives for the seller is not in line with the best interests of the buyer in the stock market.

Recently, I got a call from a stock broker (SB). The conversation went like this:

SB: I am from xx, do you hold a trading account with us?
Me: Yes
SB: We find that you are not very active. Are you interested in getting some stock tips? The market has gone up and it is going to go up to very high levels (Bias: Anchoring Bias, Social Proof).
Me: No
SB: Why? Have you subscribed to any other stock tips service?
Me: No, I do my own research. I do not invest based on the so-called tips.