Suresh Natarajan decided he was out of his depth. Either this stock market business was too complicated, or he was doing something horribly wrong. He did the obligatory social media status update ("The stock market is a gambling den!") and got 60 friends saying they agreed, and one - Atul Balaram Kasbekar, or Abacus - saying, "Call me, SN."
Why not, he thought. He dialed the number.
"Abacus, it's me, SN. How are you? Tell me what stocks to buy - the last five tips I got were utterly useless."
Abacus replied, "Great, SN. But before I start, why don't you tell me what you've done?"
"I started thinking last year that I have some surplus cash lying around, and I should invest it in the stock market. My insurance advisor suggested a person who had excellent inside knowledge of the market, for just five hundred rupees a month, and gave me a list of calls that had done very well. So I bought in.
"The first month it seemed very good - I got 30 tips and about 5 of them did really well. I broke even or lost some money on the remaining, and I followed the service diligently. When I checked my account at the end of the month, I realized that net of brokerage costs I had lost money. They advertised only their good trades!
"So I moved on to some tips provided by my broker, and the problems were similar; and they wanted me to trade 10 times a day, which I don't have time for. Research reports always tell you when to buy, but hardly ever tell you how much to buy, when to sell, or how their own performance has been. Plus, I can never seem to get in at their purchase prices.
"I looked at a few internet sites, but they all talk about complicated concepts like revenue growth, EPS and head-and-shoulders patterns and all that. I don't have the time to go through all of that for the 1000 companies that trade every day!"
Abacus said, "True. It might not seem easy to pick stocks. There is no 'formula' for investing - if it existed, everyone would be using it. Using stock tips or research reports is useful as an initial filter, since you don't have the time to run through all the market stocks. How about using your knowledge and the internet to further gain confidence about a stock?"
Suresh found this interesting, but then what use was his knowledge here? "Abacus, how do you pick stocks? I might find it easier if I learnt from you, instead of asking you what to buy."
Abacus paused. No doubt SN was aware of the generic gyan that littered the world of investment advice. He had to qualify what he said.
"SN, you might find that I do things differently from others, so work with your level of comfort. What I usually do is first identify a trigger. A trigger is when a stock comes to my notice. It could be that a friend mentions it, or that I read about it in a paper, or simply that I bought some of their products, liked them and found out they are listed.
Dhoni has signed a Rs 200 crore deal with a talent management company, surpassing Tendulkar in the corporate contract sweepstakes.
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