Sunday, 6 May 2012

Confession – First Timer

Way back in 2005 had somebody asked me to spell “Finance”, there was good amount of chances of me doing it wrong. My Journey started off trying to understand Mutual funds then. Trust me it was confusing but there was something that kept my zeal to learn about Mutual Funds. The time I spent did pay off well. Not sure if was Luck or the Knowledge I had gathered, I did end up investing money in some good ELSS Mutual Funds and few Non ELSS. All the funds I held gave me decent returns.

When everything is going so smooth what is that could have gone wrong. I must admit, it was nothing but my Greed and Over Confidence that played the spoil sport.

Here we go: I thought, If Fund Manager can make Money Why Can’t I? If I can make money via Mutual Funds I probably can make more money by investing in stocks. I decided to sell off my mutual funds and invest directly in stocks. To fuel this thought process I use to read articles and Facts like began embedding in my brain.

Facts Like:
  • 10000 invested in Infy in 1985 would have grown to 40 Crore+ Today.
  • 10000 invested in Wipro in 1980 would be now 100 Crore + 
  • 10000 Invested in our Multi bagger recommendation has grown to 40 Lakh.
  • 5 of our Multi Bagger Recommended have given more than 12000%+ returns.
  • SMS – Try our stock recommendations – 99.9% accurate
These facts did drive and tempt me to go for Demat Account. I was eagerly waiting for activation of account. 2 week time for activation was appearing like 20 years. In these two weeks I had almost mugged up all the stock names that appear in Economic Times, including their High and Low.

I had made up my mind that I am not going to settle for anything less than 5 Bagger or 500% Profit. I had read in several places that Penny Stocks have the potential to give you multi bagger returns. Further a friend suggested to Take Tips from Tip Provider who are good in recommending Penny stocks that give instant profits.

I was all waiting to pump in 2 Lakh Rupees in stock market. Finally my account was activated; it was like getting my first Job or Like My First Salary J

I called up the broker and asked him to buy 1000 Stocks of "Kaashyap Technology" (It was trading at around 4 rupees then). Couple of days later it started hitting upper circuit. Knowing this I cursed my stupidity for not trusting the broker’s Tip. I decided to increase my holding and invest another 25K. For next 4 to 5 days I made attempts to buy the stocks but by the time I could the broker, the stock would hit the upper circuit.  Finally one fine day I was able to get into this stock @ 5.40 Paisa. It was like getting treasure of Gold. It was party Time for me. Next day I realized the stock had Closed at 5.10 Paisa or So…  I consoled myself that this stock will give me good returns in future. After couple of weeks I decided to get out of this stock as it was going down almost daily. Frustrated I decided to get out of this stock; I called up the broker and asked him to sell the stocks for me. He mentioned that he would not be able to do that as it is in lower circuit. I was kind what do you mean by lower circuit, I want to sell it. He politely mentioned there are no buyers. Today the Stock is trading at 20 Paisa.

Same was the case with quite few other Penny stocks who I thought were Multi Bagger made me Multi Beggar. Trust me in no time 2 Lakh shrunk to 60K.

Food For Thought: My assumption that its Penny stocks that would make me rich was so wrong. Assuming that stock Market is place for making quick Money. My Greed To beat returns of Fund Manager…
Selling the Mutual Funds that were giving me decent return.It was like killing the hen that laid golden Egg

This little bitter experience did teach me good lesson. Lots have changed from then, most important is the change in thought process. Today I look for value investing rather than hunting for penny stocks. I prefer to invest into Stocks Via Mutual Funds instead me juggling with individual Stocks.

I sign off: The guy who fumbled to spell word “Finance” has written close to 50 Finance Articles. I am still a learner but to some extent I do understand what “Black” is and what is “White”.

Additional Reading : why Invest in MF?

How has been your first time experience?


Anonymous said...

I went through the same process and lost my hard earned money in Stocks and was so much of greed to earn more and more money and started in Futures initially and lost, then again a good amount of money was brought in to make quick money and invested in Options lost again there... and that money I lost is close to 4-5 lakh Rupees.... :((

WealthUCreate said...

Thats bad to hear. Options are the most riskiest. Are you still trading/investing in stock market? What are other assets you have choosen for your investments?

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