Saturday, 18 October, 2008

My experiments with the sensex!

An eventful day today! – I thought as I switched on the TV in the afternoon. Most news channels were buzzing about the two big records made today. Oops… forgot to mention, I was watching the Business news channels. Not the humorous, entertaining likes of India TV or aajtak. Because two records are too little for the entertainment news channels… they broadcast hundreds of records broken by bhutiya’s, baba’s or reality show celebrities everyday!

Back to the topic, one of the records was broken by… guess who?? Come on... there is just one guy busy breaking all records. It’s none other than the master blaster, Sachin Tendulkar. Huh… can’t remember when he last blasted some useful runs for team India. Anyway, the reality is that he finally surpassed Brian Lara’s 11,953 runs to become the highest run getter in the tests.

The second record was broken by the ever unexpected, uncertain, volatile (more adjectives to be added) Indian stock market. The sensex crashed below the psychological 10k mark to settle at 9975.35 for the first time since July 2006. That reminded me of my adventures with the stock market and I went into flashback…

October 2006, Chennai
Baj (my dear friend) – Jaadu, did u hear about ICICI bank offering free DMAT accounts for corporate employees?
Me – Is it?? It is used to sell and buy shares right?
Baj (with an expression saying “you dumbo”) – Yeah! Lets get our own DMAT account.. Its free, you just have to give them a 1 rupee cheque.
Me – Yaar, All I know about shares is that they have a share in the economy but I don’t know how. I also know that they rise and fall like a bouncing cricket ball. By the way, has ICICI gone nuts? Why the hell are they charging a rupee? Processing that cheque would cost them more!
Baj (again with the same expression) – I donno, there must be some rule that asks them to charge for a DMAT account… and you can learn trading in a couple of days buddy… It’s all about money, honey! And it’s very exiting.
Me – Yeah Yeah… (and we moved to the ICICI bank)

May 2007, Chennai (this was the recession/bench time at my workplace… no projects, no work!)
Mrao (another dear friend pings on messenger) – Hi, Just wanted to inform you that Murali (my boss) is ready to teach us the basics of online trading. Come to his cubicle.
Me (replied to his message) – Oh great! So you finally managed to get something useful out of him!
Me (multiple pings to everyone, copy pasting Mrao’s message) – Hi, Just.. ..cubicle.
Wow! Soon people poured into the cubicle with contented looks. Finally we got some work and a way to earn a bonus for not working, they must have thought. I have never seen so many people pouring in even for a meeting.

Jan 2008, Pune
One fine morning I got a mail from ICICI securities. It was a Rs. 500 bill for DMAT services. I quickly forwarded this to Baj… and added a line “Dhokebaj baj, you told me that it’s free :(”. He replied that it was free for the first year and the charges were for the second year. He also advised me to start investing as he had made good profits.

Well I must start investing now, at least to make a profit of Rs 500, I said to myself. I was on my favorite bench (no work period) again and I thought it was the best time to research and invest. But what about the money? I had hardly saved anything in the past 2 years and my parents always groaned for not having saved anything. I decided to take a loan to invest in the market.

I googled day in and day out and decided to start with the over hyped reliance power IPO. It was the second last day for buying the IPO, so I tried to log on to ICICIdirect. Damn, I had forgotten my password. I had logged on more than 6 months back and there was no way I could remember my password. I requested for a password and got a reply that it would be sent to me in 2 weeks. Thus, my first IPO hopes went for a toss. But when the IPO opened at a very low price, I really thanked myself for forgetting the password.

March 2008, Pune
I was all set to trade. The markets were trading exceptionally low. I was inspired by the stock market guru, Warren Buffett’s Quote, "Try to be fearful when others are greedy and greedy only when others are fearful". Its time to be greedy, I said to myself. I checked out the loan options that my company offered. A 50k loan with a 4% interest and 20k loan without any interest… I decided to be more greedy and take both the loans… after all I wanted to be the next Warren Buffet! I checked out the market gainers and invested in a Reliance stock. I had observed that reliance stocks are highly volatile and thus give good returns in a short period. I never realized that they could be also volatile, the other way - downwards! I booked a profit of 3k on the first day itself. I was excited. Why I need to do this boring job if I can earn 3k everyday, I thought.

Today (October 17, 2008)
The markets kept on falling and the 3k profit was the only profit I have made so far. All my investment is in red and I am still repaying the loans. In short, my journey with the market was like marriage...The first day was honeymoon and the remaining days have been a nightmare! I have decided not to look at stocks for another year or two… or at least till I get professional education in trading. I am still better off than most of my friends as I invested when markets were not at their peak. And I realize that trading is not for everyone…

Some of the lines that my friends said when I asked them about their share in the shares:
Baj(dejected expression) : Arre yaar, kuch aur baat karte hai… (Let’s talk about something else)
MRao(starts crying) : Whenever I invest yaar, the markets go down…
AAdi (Yet another friend): Once upon a time, I was making a profit of 50k, now it’s a loss of 75k.. I am just waiting for a no-profit no-loss situation to come. I will withdraw all my money and never trade again!

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