Risk management in equities
Some of these things I tell my clients, and they are not too happy listening to this stuff…so let me enumerate them:
1. Managing your own money is very easy: No nobody believes this. Most people believe that managing money is a very complicated process and is a great amount of mumbo jumbo. If you want index returns, invest in an index fund, it works!
2. It is possible to invest in direct equities, but it requires effort.
3. You should be willing to learn BASIC accounting, and be willing to read, and learn. There is no escape from reading and learning. Without these two things, well equity investing is difficult.
4. You cannot do direct investing in equities without having a lot of STRESS FREE TIME, inclination, willingness and ability to lose money, and the grit to take losses.
5. You need to maintain an investment diary to see what is happening in the market AND HOW YOU ARE REACTING to those changes.
6. Market is normally rational. The investor’s reaction is irrational and many a times stupid.
7. Trading is not investing. Trading and Investing require different skills.
8. Finding a good broker today is IMPOSSIBLE. You find young graduates / MBAs who have revenue targets at the other end of the phone. Many of them do not know the difference between a Gold fund and Goldman Sachs Nifty bees.
9. Leveraging and Investing is only for the very rich who understand safe borrowing, surely not for the retail investor.
10. Couple of unscientifically done trades resulting in good profits DOES NOT MEAN you have become a good trader or a good investor . In most cases it is just luck.
11. To invest in an index fund you can ignore all the points from 2 to 10. Mail me and I will tell you how.
Krish
Subra,
Mail ID please
S.K
//Finding a good broker today is IMPOSSIBLE. You find young graduates / MBAs who have revenue targets at the other end of the phone. Many of them do not know the difference between a Gold fund and Goldman Sachs Nifty bees.//
Very true!
These know-it-alls peddle meaningless inanities sans any specifics. But the irony is that even normally well-informed people fall prey to their glib talk.
S.K
Deepak K
Subra Sir, Mail id pls
Abhijit
Well I can’t agree with Point # 8. I found one….
1. He never calls me pressurizing to trade constantly.
2. Never sends me any tips, calls or whatever.
3. Very low brokerage.
4. Stable and long running.
5. Ready to help anytime in case of any doubt.
6. Ease of trade using NSE mobile as he is registered on it.
All in all, a very good experience till now.
PS: I have been through 5 brokers till now.
Francis
@ Abhijit,
Pls share yr experience with these 5 brokers and it may be useful for other readers.
** HAPPY DIWALI **
Anshuk Jain
@Abhijit, which one is it?
Abhijit
@Francis, Ankush Jain
My experiences with the brokers in brief.
HDFC Sec: My first broker. No cheating, no calls,tips but expensive.
Ventura: A good broker but little bit expensive in terms of charges. Also, they don’t have mobile trading app for small investors. You need to buy at least 10k plan for that (which means you need to generate a brokerage of 10k in that year else balance amount is gone).
ICICI: They approached me for cheap FNO trading. I was trading 50 rupees per options lot and was looking for cheaper brokerage. The guy from ICICI who called me said he will give the rate of 35 rupees per lot. When I did my first Options transaction, then I realized that 35 is some extra charge apart from Rs. 100/- per lot for options trading taking my per lot total to 135. Also, for cash segment the charges are high. Immediately closed the account.
Angel: I used to receive 7-8 calls daily from my account dealer insisting me to trade aggressively in options (mostly Nifty). I lost some 20k in the due course out of which 8k was paid in brokerage. When I was out of funds, they started pushing me for trading in cash segment which I denied.
Nirmal Bang: Same as Angel but didn’t lose money as I rejected many calls which were suspicious. I stopped trading in FNO and withdraw all the money. There moto too was like Angel’s – keep the client busy in trading and generate maximum brokerage.
VNS Finance: This is the one which I mentioned in my previous comment. Happy till now.
Note: I am not into trading anymore (be it FNO or cash). After reading blogs like this one and many others on value investing, I am studying the same and started investing (not trading) for super long term (30 yrs and more if my Son is interested too 🙂 ). I plan to build a portfolio which should take care of my financial life after retirement. Ideally, dividends should be sufficient for this by then is what I am planning.
It’s been over 1 year that I have kept the temptation of trading in FNO out of my mind and will continue doing that.
Tons of thanks to Subra Sir.
subra
subramoney.rich@gmail.com
Krish
Thanks Subra. Mailed
S.K
My broker is IndBank Merchant Banking Services. Their charges are reasonable and provide courteous and prompt service. NOW software is available for online trading.
I am very happy with them.
S.K