Monthly Archives: August 2008

14/08/2008
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Personal Finance

Many Silent Visitors – From different Countries

Hello Friends,

My intension of writing articles in this blog is not very specific to only Indians. I wish to share what I have learnt from investing, saving in short playing around with my hard earned money. The concepts which I share in this blog should be more or less helpful to people from different countries. But since I know nothing about other countries other than India, I can hardly comment or say something specific about it. (Sorry for it :(.. ) I will try to write more articles which is not country specific in the topics related to investment, stock market and others.

I would appreciate if you drop a word or two about my blog. It gives me immense pleasure to know that people from different parts of world actually read my blog and I hope some day or the other I will bring about a change in their financial thinking. I am sure I will achieve it.

Once again, Thanks for all my readers who read it regularly and encourage me with their kind words. You guys rock. Keep Visiting. Feel free to ask questions or suggest topics which you want to hear from me. I will do my best.

Saravanan.

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13/08/2008
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Stock Market

Long term Investor or Loser?

This is a honest confession from a Long term Investor or better you can call me Loser.

When I invested for the first time without any experience and without investigating and analyzing about that particular stock it was certain that I will be a loser eventually. But I did not realize this till I lost my money. I will tell you what did I do to call myself a Long term investor.

I bought a particular stock say XYZ for 5k. The moment I bought the stock, the stock price of XYZ appreciated by 2%. I was so happy. I did not monitor the share prices of XYZ for couple of days as I was busy with my work. After two days the price had fallen by 10%. I was worried. I thought of selling the shares immediately but I did not want to lose my money so I thought let me wait for a while once it appreciates I shall sell it. I waited for two weeks only to realize the stock prices were going south, the unrealized loss was close to 25%. I thought let me buy few more shares of XYZ so that the effective cost price of the share decreases and once I get a decent margin I shall sell it. This time I bought the shares for another 5k. As expected by me, the price of the stock went up more than my effective cost price. But I did not sell the share, the only reason I can give is my greed and nothing else. I told myself the prices will increase and I will make more money. I kept telling this to myself only to ensure I lose my money. After a couple of days, the stock prices went down drastically. The unrealized profits were close to -45%. It was a disaster. I was in +15% profit and suddenly after a couple of days its -45%. This was partly because of my carelessness and greed. I did not check my stock prices daily and my greed not to sell the stock when it appreciated for 15% is the main reason for my losses.

After all this, I again bought some more shares of XYZ for 5k and waited for 4 months to sell the stock at 15% loss. This way I became a Long term investor rather a loser. I am not against Real Long Term Investor. I don’t want you guys also to become a Long term Investor like me because of stupidity and greed. I could have made money from this super flop deal. But my greed was way too controlling. This clearly shows that a person with emotions is not a suitable candidate for Investing in Stock Market. A guy like computer who does mechanically stuff and understands numbers will make crores.

More to come on similar topics. Keep Visiting.

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12/08/2008
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Personal Finance

Financial Planning

Failing to Plan is Planning to Fail.

I always believe that it is very important to plan and execute our activities. It is always a good thing to do. Likewise our plan for the financial future is also very important. If we start early then we can reach our financial goals pretty easily, the delay that we gonna do to start or plan our financial future will cost us dearly. Now we are all undergoing what Inflation is. My dad used to earn 5k per month 10 years back and from then on till few years back there was no issues with his earnings. We had a great life and our future looked bright as well. Now I earn more than that but still the future looks dull, it is uncertain as to how it is gonna be. This is all because of not proper planning.

Honestly, planning solves most of the dreadful situations that we might face. I think these should be in your mind while planning your financial future.

1. Set a goal as to how much wealth you want to accumulate and have a definite period.

2. Have medical insurance cover.

3. Get precise information of how your money comes and where it goes.

4. Decide when you plan to retire. ( I don’t expect others to decide that for me)

5. Start investing or saving for your retirement.

6. Investment : What kind of investment? when you plan to do it and how you plan to do it?

7. What are your other important personal goals that can affect your financial planning ( higher studies, marriage and others)

These are some of things that come to my mind immediately when I think of my financial planning. Why I insist for a plan is, once we decide to do say investing 10k in stocks, we will do it no matter what. But we don’t decide or plan and hence spend money unnecessarily. This is my personal experience. I am sure most of you guys will be just like me or similar to me. I think once we overcome this stupid habit we can make great progress with our financial future. All that we want is Financial Freedom and I guess we should achieve it as soon as possible so that we can do better things in life rather than chasing money and surviving.

Make an early start. Plan your Financial Future.

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11/08/2008
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Random Thoughts

Self Confidence

Self Confidence and Over Confidence are very subtle. “I can do it” is self confidence and “Only I can do it” is over confidence.

You have to believe in yourself cause the rest of your life you have to live by proving it to others.

I always keep thinking about the above quote. it is so very true. If you yourself don’t believe in you then how can you expect someone else to believe you? Whatever we do and whatever we think has to happen in our life will surely happen. Being a kid we think that we can do whatever we want to achieve in life. This is Self Confidence, I have not come across one kid who says he can’t do something. It is always possible, nothing is impossible for kids. If they decide to do something, then they do it without any hindrance since their heart and soul will be in the same direction of getting it done. But this confidence decreases as the kid becomes adult and this is partly because of the society that we live in and the rest is because of oneself, we start realizing that we can’t do certain things. Truth is We can do anytime what we want in life.

Life provides you all the opportunities to do things that you love to do. It gives you all the strength but it is you who has to decide and move on. I have come across many people who say that they have not studied properly. Whose fault is it? Many attribute it to millions of reasons. But the truth is it is themselves who are responsible and not anyone else. This is because they believed that they can’t do it and that happened.

When I was a kid, I decided to become an engineer. I was fascinated by the computer and the games that I played on it (Prince of Persia was my favorite then). Today I am an engineer. This is because I wanted to become something and my heart and soul was towards it. I worked really hard to become one. There were many obstacles but still I was not disheartened and I really moved on with my goal. I believed that I can do it and I did it.

I am sure everyone can do what they decide to do. If they think they can do it they will surely do it. It is just your self confidence that matters. It is upto “YOU” to decide what you want and when you want and how you want things in life. You will be given that you wish for in your life.

A man is what he thinks and believes he is.

Be Confident in life. All the best.

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09/08/2008
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Stock Market

Sensex – Scrip Selection Criteria

In my previous post, I had mentioned that there are 30 companies that constitute the Sensex. You must be wondering how these companies are selected and on what criteria they are selected. Here are the criteria with which the companies are selected for BSE-Sensex.

The general guidelines for selection of constituents in SENSEX are as follows:

Listed History:The scrip should have a listing history of at least 3 months at BSE. Exception may be considered if full market capitalization of a newly listed company ranks among top 10 in the list of BSE universe. In case, a company is listed on account of merger/ demerger/ amalgamation, minimum listing history would not be required.

Trading Frequency:The scrip should have been traded on each and every trading day in the last three months at BSE. Exceptions can be made for extreme reasons like scrip suspension etc.

Final Rank:The scrip should figure in the top 100 companies listed by final rank. The final rank is arrived at by assigning 75% weightage to the rank on the basis of three-month average full market capitalization and 25% weightage to the liquidity rank based on three-month average daily turnover & three-month average impact cost.

Market Capitalization Weightage:The weightage of each scrip in SENSEX based on three-month average free-float market capitalization should be at least 0.5% of the Index.

Industry/Sector Representation:Scrip selection would generally take into account a balanced representation of the listed companies in the universe of BSE.

Track Record:In the opinion of the BSE Index Committee, the company should have an acceptable track record.

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