“My husband does not lose money in equity markets – you know we doubled our money in the Maruti IPO’

vow I said…and as usually probed ….

she said “Oh my husband only applies in an IPO, so he says we cannot lose money”…vow!

There are 2 routes to the equity market. One is called PRIMARY and the other is SECONDARY – either way you can make or lose money. It is that simple.

When the husband surfaced, he was not happy at the topic…..ha ha!

His gushing wife wanted her husband to ‘share his portfolio’ with me….still waiting…and this whole conversation happened about 10 months ago.  Many, many people are under the impression that if you apply in an IPO you cannot lose money. It used to be true once upon a time, long long ago…about 4 decades ago. When pricing was done by the Government! There used to be a government body called ‘Controller of Capital Issues’ who could decide the premium at which your company could issue shares. So companies who did not ‘oblige’ the powers that be had to come at a ridiculously low price. And of course there were companies who could manage their way who could come with a HUGE premium.

Two companies which come to mind immediately on either side are – Advani Oerlikon Ltd. – which deserved a much, much higher premium than what they got (Rs. 2) and Garden Varelli which deserved a much, much lesser premium than what it got (Rs. 75 if my memory serves me right).

Of course, as usual the mis-pricing benefitted / cost the shareholder as usual.

There are no bulls or bears only pigs who do not understand how the market works. The dice is always loaded in favor of the gambling house.