What Market Promises:-

“In trading, the vast market consists of amateurs who are looking for magical answers to make lots of money quickly and with little risk. They want specific ideas. They want to be told exactly what to do. Those looking for such things will not find them. They will not be successful as long as they continue to favor the easy over the truth.” ~~Curtis Faith ~~

Let us see what is the TRUTH…….

Market Promises:-

1. It promises a playing field, not the game.

2. It promises to reward risk, not proportionately.

3. It promises opportunity, it does not promise profits.

4. It promises a lesson, not learning.

5. It promises that the quality of indicators and analysis is proportionate to quantity of participants, not quality.

This is not going to endure me to my readers but I think it is important that we all are reminded what the market promises us.

What You Should Do?

1. Know The Game:- Investing is the most difficult of games: nowhere else does one begin a career by opposing the world’s most accomplished professionals. So, you need to master the rules of investing.



2. Understand The Risk:- RISK is the possibility of loss. That is, if we own some stock, and there is a possibility of a price decline, we are at risk. The stock is not the risk, nor is the loss the risk. The possibility of loss is the risk. As long as we own the stock, we are at risk. The only way to control the risk is to buy or sell stock. In the matter of owning stocks, and aiming for profit, risk is fundamentally unavoidable and the best we can do is to manage the risk

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3. Explore the Opportunity:- Success is the point at which talent and skill meet opportunity. So, explore all the opportunity. Realize that not to invest is also an investment decision.



4. Make Learning A Habit:- Analyze your trades past 3 to 5 years, it will give you base for your learning. Ask yourself, Why did you do particular trade? Was it based on logic, facts or tips? If you continue to do what you have done in past 5 years, where will you be in next 5 years?





5. Follow the indicators:- The market tells the truth, but often there is a lie buried in the human interpretations. Surrender to the truth and not to your opinions.



How To Deal With Greed And Fear?

Once again I take help from Lord Krishna. Do your best and leave rest to the Market. Market is the only authority to give you results for your work. So follow the truth, reward will come automatically.



Happy Investing,

some sensex milestones

Jan 1, 1986 (549): BSE Sensex launched
Apr 26, 1992 (2,550): Harshad Mehta scam uncovered
Jan 1, 1993(2,652): FIIs enter India
Jan 3, 2000 (5,642): Dotcom boom goes bust
Mar 30, 2001(3,604): Ketan Parekh arrested
Jan 1, 2002 (3,246): Rolling settlement for all stocks
May 17, 2004 (4,505): UPA-I comes to power
Sep 14, 2008 (13,531): Lehman Brothers collapses
May 18, 2009 (14,284):Congress returns to power
Sep 21, 2010 (20,001)

Indices :SENSEX
Period : ( Year 1991 to Year 2010 ) Click here to download.

Year Open High Low Close Price/Earnings Price/Bookvalue Dividend Yield
1991 1,027.38 1,955.29 947.14 1,908.85 22.30 3.58 1.24
1992 1,957.33 4,546.58 1,945.48 2,615.37 36.19 6.35 0.80
1993 2,617.78 3,459.07 1,980.06 3,346.06 31.78 4.81 0.98
1994 3,436.87 4,643.31 3,405.88 3,926.90 45.45 6.07 0.68
1995 3,910.16 3,943.66 2,891.45 3,110.49 23.63 3.81 1.13
1996 3,114.08 4,131.22 2,713.12 3,085.20 16.07 3.02 1.50
1997 3,096.65 4,605.41 3,096.65 3,658.98 14.45 2.80 1.53
1998 3,658.34 4,322.00 2,741.22 3,055.41 13.00 2.25 1.80
1999 3,064.95 5,150.99 3,042.25 5,005.82 17.35 3.07 1.38
2000 5,209.54 6,150.69 3,491.55 3,972.12 24.48 3.81 1.14
2001 3,990.65 4,462.11 2,594.87 3,262.33 17.60 2.51 1.83
2002 3,262.01 3,758.27 2,828.48 3,377.28 15.22 2.30 2.14
2003 3,383.85 5,920.76 2,904.44 5,838.96 15.02 2.49 2.14
2004 5,872.48 6,617.15 4,227.50 6,602.69 17.26 3.28 2.01
2005 6,626.49 9,442.98 6,069.33 9,397.93 16.21 3.94 1.58
2006 9,422.49 14,035.30 8,799.01 13,786.91 20.18 4.75 1.35
2007 13,827.77 20,498.11 12,316.10 20,286.99 22.25 5.32 1.10
2008 20,325.27 21,206.77 7,697.39 9,647.31 18.22 4.20 1.29
2009 9,720.55 17,530.94 8,047.17 17,464.81 18.08 3.42 1.43
2010 17,473.45 20,105.54 15,651.99 20,045.18 21.12 3.64 1.14 (till sep 27)

Real Estate - Australia and India

- australia is a conundrum. their real estate correction can not precede a chinese downturn in my view. bhp billiton and other miners who mainly export to china/asia have recorded multi billion dollar profit. bhp is buying out canadian co potash for c. USD40 billion. aussie economy is based on mining. i think we are far from a correction. aussie mouse is riding the chinese dragon..dangerous at some stage. many experts have started questioning the chinese growth...let's see..timing is key.

- kalpataru/ashok tower at parel now quoting rs 30,000 a foot or slightly below. my friend's 2,000 sft flat leased out at rs 17 lakh (140k pm) pa ie a yield of 3%, similar to sydney! earlier mumbai yields were 5% for residential. everything is booming. it took me 15 minutes to walk out of andheri station after getting off the train at  platfrom no 7 or 8 or 9(!). walked in a sea of humanity - thousands of people walking in and out of station with tiredness, patience  and enthusiasm at 7pm. the potential human energy is unbelivable - in my view much larger than the heat of all the oil in saudi arabia. just imagine if these people's energy is channelised properly, they could overturn an empire! i won't be surprised with a 10% GDP next 10 years. also spent 2 hours with ceo and directors at a leading investment bank. they are doing great business and are upbeat. couldn't see a person who is complaining about money - whether beggars, housemaids, executives.  now in that case why should real estate be any cheaper in mumbai?

Gold rates

i have a very simplistic view about gold.
its price reflects purchasing power of USD (actually a combination of major currencies). when their purchasing power reduces, gold goes up.

i think the major world power would like their currencies to be supreme so they tried to downplay gold as a benchmark. and succeeded to a great extent in late eighties when gold was down to 250$ an ounce. All the Major powers sold their gold reserve (except china , i think) during those period which was major cause of those low levels. however in the near future all major powers are going to be too busy to defend their currencies and may not be in position to sell their gold reserve again.
in which case a crash inthe Gold prices like the late eighties may be quite unlikely in near future.

once we can rule out such crash, investing in gold (and other commodities) may be a good hedge against inflation.

i feel 10 to 15% investment in precious metals should be there. especially when we expect high inflation.
while real estate is good (or better since it can yield rent) it is quite illiquid and hence gold needs to be part of portfolio .