Monday, October 30, 2006

Profits from stock market

I must claim my place as a successful stock investor since I have made huge profits. How? By not investing a single penny, and investing with my instincts!!

Well, this (technical) analysis stems from the fact that my elder brother who is an IIT(D)/IIM(A) product has invested a lot and has lost a lot. Since I didn't have any money to invest, naturally I profited with the absense of loss. This part of the story happened when the markets were down in the dumps.

Now cut to a later date when I had some money and I invested them into the first stocks that came to my mind without troubling anybody with any analysis. Luckily the stocks happened to be HDFC, Satyam and LICHFL. And the rest they say is history.

Hey, I'm not asking you to follow my style. You may not be that lucky after all. But here's what I think on the issue:
1. Empirical studies have shown time and time again how market timing and analysts’ forecasting abilities have failed countless times. You can not improve your forecasting ability because there are just too many countless variables to account for.
2. For people who do not want to do research, index investing is a good solution.
3. Go for Mutual Funds which have consistently performed over a period of say, 3-5 years. Take the SIP route.

Though direct stocks have the ability to give the best returns, please see the time and effort required to be able to get the best out of it. It's fine if you have a portfolio worth more than 10 lacs, I guess. But if it's less than that, the returns may not be justified for the efforts required.
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