Friday, January 25, 2013

Trading lessons for dummies!!

Well, I am myself quite a newbie in Trading arena but here I would like to jot down few lessons that would come handy for every "greenhorn" who is just getting started with Trading. I would just limit this post to stocks. I wouldn't describe the techniques of stock picking as these can easily be found in any of Trading books/related websites. I would focus on the behavioural aspects, most of which I have experienced in last few months of Trading.


  • First and for-most don't get emotionally attached to your stocks. It's important to book profits at the right time. Blindly obeying the fundamental theorists and believing in the adage that in long term, stocks would provide the highest returns might leave you disenchanted!
  • Never go for impulse purchase in case of any stocks. Impulse purchase is no less than Gambling.
  • One strategy I have found quite useful is to have your own benchmark for returns. For e.g: Expecting a 15-20% return before you book profits. This is a very good strategy for short term traders. Being too greedy and delaying your profit booking might be at the cost of short term liquidity of your stocks.
  • Buy low, Sell high is still the best strategy. Complicating stuff with intrinsic value and current market value comparison might expose you to the vagaries of artificial demand-supply dynamics.Advanced mathematics in fundamental analysis looks good in excel and makes you feel satisfied that you have utilised your MBA knowledge but these involve mutiple assumptions which might be flawed. Basic analysis like company fundamentals, whether the stock is underpriced or not, projects in pipeline etc is good enough to start with. For e.g. Most of the auto stocks have zoomed inspite of most of them reporting losses in last few quarters. Most of the analyst opine that there is a huge mismatch between the intrinsic value and current market of the auto stocks which is led by irrational exuberance.
  • Don't put all your eggs in the same basket. Easy profit might lure you into putting all your money into stocks but remember losses are equally likely as profits in the markets and hence, its important to diversify with other asset classes.
  • Invest in the industry which you understand or atleast track closely. This would help you to take an informative call and read between the lines of any news in the media.
  • Lastly, to get started with Trading, it's important to start with your own money. No matter how many articles or best practices you read or get hands on numerous virtual stock trading games, without experiencing the ground realities of Trading, one can't learn and grow to be a seasoned trader over time!
Happy Trading :)

Life Post MBA



After almost 10 months of completing my MBA, I have finally taken the pain of scribbling in my blog. 

MBA was an amazing experience and life post that is infact more amazing as well as amusing!! After 2 years of grinding, MBA grads enter job market with great fan-fare but very soon feel MBA wasn't worth it because what they are made to do post MBA is sheer crap as compared to what they did prior to MBA.
Inspite of all the disillusionment associated with MBA, I feel MBA is worth every penny. MBA makes you versatile and gives the confidence and knowledge for every damn job that's on offer!

It's not that what average pay-packets MBA from good B-schools get can't be matched without MBA degree as many smart engineering folks end up earning more but the fact of the matter is doing what you are good at and what you enjoy doing is what makes one successful.
Life's post MBA is more comfortable as well as intellectually gratifying. It's not fair to seek intellectual gratification from just routine job. One has to be really lucky to land up in a job which challenges your wits every day but there is life beyond your office hours. Tracking the market, beating the analysts forecast, analysing the fundamentals of a stock , putting your hard earned money into market(however small!) and see it fetch returns makes you realise all that you have read isn't waste!! Even habits like reading a business newspaper every morning and staying abreast of latest happening is something which is by-product of MBA. We put up many small little habits which has the potential for big changes in the way we see and approach every day problems in life.

It's not that MBA produces people with only "fire in the belly" :)
It also produces people who realise that it is equally important to enjoy your life, take care of health, give time for family, do what you like doing, sleep like a corpse, work hard....instead of being single mindedly be career oriented, realising when you grow old that you haven't enjoyed your own wealth and success!!