Many of my friends and colleagues ask me for the next hot tip about a stock. One of my friends even asked me if there was a stock which will help him double his investment of Rs. 10,000/- in 6 months. This was a question he asked me in 2013, way before the Indian stock markets saw a fantastic rally.
My response to him was that he was better off trying his hand at gambling than stock markets.
Many of my acquaintances enter the stock markets for 'quick returns' with 'one time investments' which will not hurt them if they lose the entire amount. A quite a few enter 'penny stocks' as they can buy more for the same corpus instead of buying a stock of a blue-chip company trading at Rs. 2,000/- a share.
Here are the few 'life experiences' of people who have 'gambled away' their money on the stock markets.
- "Buy many a penny".
If I buy 1,00,000 stocks each worth Re. 1, and if the stock increases by another Re. 1 (for a stock to move by Re. 1 is very easy afterall), then I can safely exit my investment.
- "I have not lost till I have exited at a loss"
My stock selection or the stock markets have caused my stock portfolio to fall by 75% in value. I will will not sell as what is left does not hurt me for holding the stock for another 10 years for it to come back to my cost price
- "I bought because I was told to buy"
My friend / broker / relative told me to buy a given stock and its the new 'hot pick' on Dalal Street and everyone of Business Channels have great expectations about the company.
- "I have not sold because I was not told when to sell"
I was making Rs. 1,000/- profit on the stock in a single week but I wanted to go up further. Now its 50% of my cost.
- "You handle my portfolio but give me assured returns"
I have invested in a Portfolio Management Scheme (PMS) of a large broking house and the 'capital is protected' and it will be give me returns in line with the benchmark (e.g. Nifty).
Does any of these stories sound familiar? More in my next part.
My response to him was that he was better off trying his hand at gambling than stock markets.
Many of my acquaintances enter the stock markets for 'quick returns' with 'one time investments' which will not hurt them if they lose the entire amount. A quite a few enter 'penny stocks' as they can buy more for the same corpus instead of buying a stock of a blue-chip company trading at Rs. 2,000/- a share.
Here are the few 'life experiences' of people who have 'gambled away' their money on the stock markets.
- "Buy many a penny".
If I buy 1,00,000 stocks each worth Re. 1, and if the stock increases by another Re. 1 (for a stock to move by Re. 1 is very easy afterall), then I can safely exit my investment.
- "I have not lost till I have exited at a loss"
My stock selection or the stock markets have caused my stock portfolio to fall by 75% in value. I will will not sell as what is left does not hurt me for holding the stock for another 10 years for it to come back to my cost price
- "I bought because I was told to buy"
My friend / broker / relative told me to buy a given stock and its the new 'hot pick' on Dalal Street and everyone of Business Channels have great expectations about the company.
- "I have not sold because I was not told when to sell"
I was making Rs. 1,000/- profit on the stock in a single week but I wanted to go up further. Now its 50% of my cost.
- "You handle my portfolio but give me assured returns"
I have invested in a Portfolio Management Scheme (PMS) of a large broking house and the 'capital is protected' and it will be give me returns in line with the benchmark (e.g. Nifty).
Does any of these stories sound familiar? More in my next part.
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