Engineer's Finance

I have been investing in the Indian Markets for quite a while, approximately 2 years. I have not been so very successful in my attempt to make money from the stock market. I have realized the story of market to certain extent. It is just random and there are no rules that govern the market. This is my “Lesson Learnt” from the market activity. Let me elaborate on this.

Being individual investor and not taking any professional help from the financial institutions, it was not easy for me to decide on the “hot companies”. I was reading all possible news related to companies and market in general to know what to do in the market. But that did not help me go anywhere. I did not know how to choose the portfolio. Which companies are good for long term and short term? When to book profits was other problem once I chose the company? Totally I was confused.

One of my friends suggested me that I should buy shares of the companies whose products I use in my daily life. This seemed like a good advice for a guy who is lost in the world of market. I did not know which one to start with; I made a note of all the products that I use and the companies that produce these products.

I started gathering information about all these products. But I had not decided as to which sector to concentrate. There are various sectors like manufacturing, IT and BPO, Oil and others. I was interested in more in products that I used in my day today life namely soaps, food items, clothes I used to wear, computer, television and things on those lines. I chose a food item i.e. sugar. I started finding the sugar mills and found that to my budget couple of the mills traded made sense for me to buy.

After about 2 weeks of analysis I zeroed in one of the mills and I bought the shares at 52-weeks high. This was just the start. I had done enough analysis and I thought this is a good bet. But markets had better things to offer me, i.e. experience. The moment I bought the shares, the share’s value started to decrease. I was not so very happy about it. I thought the share’s value will increase in about a week. I started praying instead of selling the shares. I waited patiently for the price of the shares to increase but it did not happen for more than a year. By then, I had learnt some rules of the game. I thought it is better to even out rather than keep waiting and praying.

Initially I had some 100 shares and then again I bought about 100 shares when it hit bottom. I was very lucky. I did not do any research this time. I just bought it with some luck that is it. When the prices were damn low, I bought and it helped me to even out a bit. I did not make a loss but a meager profit of couple of hundreds. The lesson was learnt. Don’t pray when you buy shares. Instead play with it.

I want to end this topic with Henry Ford quote: “Failure is only the opportunity to begin again more intelligently.”