Bulls and Bears

There was a time when I found a new interest. I have been following news and facts about this new interest for more than a year and I was really into it. This interest grew exponentially as I learn more about its tricks and techniques and the main driving force was the hope of making some extra bucks. The first thing I did was to order a book online from Dalal Street Investment Journal which I thought would help me to understand more about Capital Markets and Trading. The book “The Stock market” was delivered within two days and I was given a concession of Rs 40 for ordering the book online. Well this book has a simple language and easy to understand examples about the whole Stock Market thing. For beginners who have developed this interests and wants to understand more about the Stock market operations and Trading. I'll say its a good book.

Sparing my time everyday to read each and every chapter in this book, my interest grew beyond bounds. I remember I used to actually sit down with calculator to work on a Balance Sheet of Tata Steel and it helps. Operating margin , Profit Before Tax (PBT), Profit Before Interest and Tax (PBIT) etc was the terms I encountered and yes I kind of liked it. It makes sense to me that I learn every possible thing about a stock market before I dive in. Futures and Options was the topic that was difficult to understand. The underlying value of a commodity.. blah..blah..blah.. Hedging Funds etc ; the concept was nice to know.

The next step was to open a trading and DEMAT account to be able to trade on the Stock Market. In simple language, DEMAT account (Dematerialized account) basically is a repository where Shares are held in electronic format rather than in a physical form. It is analogous to your banking account but the only difference here is that you are holding your shares instead of Money. Eventually a Sharekhan salesperson visited my office to collect necessary documents and photographs and took my signature on different page of a lengthy blank form which he said he will be filling it up. I signed like 30 times on different pages of the form. This is where I dive into the Stock Market. Practically, the market phases of my life starts here and I became a part of the Bulls and Bears.

Wondering what is bulls and bears.. right?? Well it is a term used in a stock market which is something like “being optimist means bull” and “being pessimist means bears”. These two words “bulls and bears” has something to do with the behavior of these two animals. Another meaning relating to bulls and bears are, Bull market means upward movement and Bear market means downward movement of Indexes.

Once I got my password and login id from Sharekhan I become a trader. Login in everyday and checking the tickers every second, I could actually measure my time with the movement of the SENSEX and NIFTY graphs. Once while having a discussion with a friend (regular stock market guy) about an incident that happened the previous day, we needed to know a time this incident happened. I could recollect that the incident happened sometime around the NIFTY Index falls down to 5300. We checked the previous day’s NIFTY graphs and could find out the actual time the incident happened. We laughed our way out here about our addiction to trading. Believe it or not, trading is addictive!

Initially I made  some good money. With just Rs. 5000 as an investment, I was able to make Rs 1000 – 2000  every alternate day for the first one-two weeks. This was the point where I said to myself  “Dude, you know how to trade.. huh.. Well done!!”. The thoughts of owning my own brokerage firm, teaching people to trade and making money in future didn't come to me from nowhere. It was a direct outcome of some bucks I made in the first week. During this time I did research on the requirements needed to be a sub-broker. In fact I had a discussion with different brokerage like Sharekhan , ICICI Securites, Karvy  etc about sub-brokership and Investments. All I get was not more than a little more of knowledge about Sub-brokership. If asked I would gladly give a free advice particularly on this. :)

Being a regulare trader now, I found a lot of my colleagues who has been partially trading and who loves to discuss about stocks and possible market directions. We love it. The sutta-break was filled with discussion about a new IPO or the RBI’s possible hike in Cash Reserve Ratio.  Even some friend who have no interest in the stock market joins the discussion and trust me, every one has got its analysis on the market movement and everyone has a way to measure market index as per their own parameters. This market thing is vast, from monsoon to terrorist attack or from a single defect product from a single company to Government Policy or Politics.. Everything gets reflected directly to the market movements.

TIPS was another thing. Everyone was ready to give tips on which stocks to purchase and which stocks not to. And some colleague will message at night requesting us to research on some particular stock and share the result the next day at office. It was fun in some way. I remember one collegue who always advises me to buy Suzlon Shares even though he never made money from it. He bough Suzlon shares for 50 bucks, the share rises to 90 bucks and he never sold it. Basically he made money on paper which never comes his way because by the time he decided to sell, the shares always falls below his buying price. It happened with this guy everytime.

Knowing that greed is the worst enemy the moment we enter the stock market, it was still difficult to take this greed out. ” Bought 50 Shares of  Jindal Steel, got 30% profit in one day” said one friend.  The next day another friend bought  the same company’s stock and now the stock falls. Bad luck!! Apart from all stock market knowledge, timing is equally important. During this time I was actively trading in Option market, I put in around 10 grands  that day the budget speech was made and me and one of my colleague bunked office to watch the budget speech on TV , on the same time logged in to a trading terminal through Internet, watching the ticks going red and green every seconds also keeping updating those unfortunate colleague who didn’t get a chance to bunk office. At one time the market looks very bullish and I earned like Rs 5000 within just an hour.  That’s where greed pitch in, Along with the profit I put in more cash and my total investment that day was 15 grands from my pocket plus  5 grand s(the profit made earlier).  Five seconds after  I clicked “Buy” , the trading terminal shows me everything in  red. I couldn’t believe it. I though it might be due to some technical glitch or  browser cookies etc. My Option which was Rs 145  just 5 seconds earlier  was down to Rs 20. I had three lots ( one lot = 50 shares of NIFTY ) of NIFTY Call Options which was 115 * 150 = Rs  21750 now the value was Rs 20 * 150 = Rs 3000. Huge loss here. The colleague who had bunked office along with me had already lost Rs 25000.

We switched to CNBC News ASAP and Udyan Mukherjkee (CNBC reporter) was giving a report about the budget analysis live. Pranab Mukherjee didn’t mention anything about what the investors and what FII’s were expecting hence Market falls. The overall sentiments look bearish at this point and I and my colleague switched off the TV. Tthe culprit here was Pranab Mukherjee who never said anything... My collegue after a loss of  25000 vowed never to vote for Congress again.

By 4pm my NIFTY CALL 4800 was Rs 10 per share. The NIFTY falls like 250 points that day and my shares was like Rs 1500 from the total investment amount of  Rs 15000.  Somehow I managed to recover Rs. 8000 within two weeks. The rest is the loss I am still carrying over my head. I stopped trading in Options and started purchasing Deliveries. I put in like Rs 10000 two years back and the value of which is Rs 6000 at this date.  Still in loss.

Carrying loss over my head was difficult and my activity in the stock market takes a backseat. In fact, I don’t want to look at the SENSEX or NIFTY Index anymore. It reminds me of the loss I had to live with. Having done all the research, study, calculations the Stock market is still difficult nut to crack. There is no way one can predict the movement of any market but when you do your analysis after everything happens you can join all the dots together.  There are lots of practical example where lots of  pretty good broker couldn’t save their bankruptcy.  I learned the hard way here again. Stock Market may be a good platform to Invest for a long term but do remember what Rakesh Jhunjhunwala( a renowned trader) once said  “99 % of traders lost money in stock market ". I was one of the 99% trader.