Tuesday, April 3, 2007

Me and the stock market

The first rule of the stock market is “There is no stock price so low that you cant buy some more before it gets even lower” - yeah, you can quote me on this.

This has been my mantra for stock market investments and it has not failed me ever. Today, I can claim to have discovered the fastest way to turn 100 bucks to 30 and it’s tax free !!!. Even a ring tailed lemur can invest better than I can.

I shall share some tips of investing that you can follow to automatically qualify for membership to my ‘Ring tailed lemurs may be smarter than us but at least we watch CNBC’ club.

But before investing in the stock market, you need to understand some basics of how the market works. Basically, the market is a vast right wing conspiracy that works exclusively to spite you. Secondly, the market does not care how intelligent you are but if you are consistently loosing money, then in all probability, you are a moron.

Now that we have our basics out of the way, let’s get to the actual investment strategies. The idea is that you narrow down on some select stocks that you would want to invest in and then finally choose one. There are a couple of approaches to do this.

The first approach is to discuss stocks with your friends. Keep track of how many jargons your friends use and the one who uses the most should be considered the wisest and his or her advice should be followed without question. I have listed some useful jargons and how to interpret them, for your convenience

‘PE Ratio’ – ‘Huh ?’
‘Book Value’ – ‘Huh ?’
‘Sensex’ – ‘Who the hell is sen and why do I care about his personal life ? ’

Another approach is to listen to a set of people known as ‘investment advisers’. Investment advisers combine years of experience with naturally occurring stupidity and come up with advice that ring tailed lemurs are extremely wary of.

Having chosen either of these approaches, by now you should have narrowed down on a set of stocks. To pick one, there are various scientific methods to go by. You could use complicated chart analysis techniques or thorough reading of the company’s balance sheets. But the most successful method involves a coin.

Once you pick the stock (you should use the coin multiple times to verify that your choice is indeed correct), invest as much money as you can afford. However it is strongly advised that you keep some money aside for purposes that will become clear as you read on.

After you have put in the money comes the most important part of investing which really is a test of your character. Markets always reward patience. So you patiently wait and wait and wait till....the next market crash. And then rush like mad and sell everything you have bought.

It is natural that you will be pretty depressed about all the money you lost but remember we, wisely, did set some money aside earlier to handle this very situation. Now, you take that money and head to the nearest bar.

That’s about all there is to the stock market. In short, it’s the most expensive way to get sloshed….

So liked my advice? Welcome to the club...hey, it is happy hours at the pub down the street…

1 comment:

Anonymous said...

I am not a management/economics wizard but have been incredibly successful having invested small amounts of money for more than 100% gain.

a) Invest when everyone thinks that the stock is dead duck. That doesn't mean losers but companies which have great talent but temporarily languishing because people lost sight of what made them good. eg) Oracle/Sun Microsystems. Can't think of an indian equivalent. No point waiting for prices to bottom out.

b)Once you buy the stock, just forget it and don't keep checking prices every day. When you feel you need cash, check the price! ;-)

c) buy the stock with a pre-determined selling price in mind. Don't wait a day longer before selling!