Posted at 3:39 PM , on June 23, 2015
If you thought that there are bulls and bears in the market, you are grossly mistaken. The market has always been about opportunities and always will be about opportunities. A bull will not keep buying even when they see a shorting opportunity and the same holds true for the bears. Remember the old adage in the market, “Bulls and bears may make money but pigs always get slaughtered”
Bullish and bearish are just states of mind…
Are you bearish or bullish on markets? Is this not the question you have heard umpteen times? Quite a tough question! What do you do in this kind of a market where the Nifty has moves up 80% from 5200 levels in August 2013 to 9100 levels in Mar 2015? And then, the market volatility intimidates and threatens to give it all up. Continue reading
Posted at 4:10 PM , on June 12, 2015
What does a trading rule book mean?
It is a set of rules and discipline points you will not transgress at any cost. You will not deplete more than 20% of your initial capital. As a 50-year old person you will not have more than 40% of your money in equities. You will make it a point to book profits if returns on a stock cross 30% in a quarter. And you will be out of equities at a market p/e of over 25. So on. Continue reading
Posted at 3:33 PM , on June 4, 2015
Penny stocks have a broad range of definitions. In the US, penny stocks are the ones quoting below $20. In India, stocks quoting below Rs.20 are normally classified as penny stocks. There are some amazing penny stock success stories in India. Eicher, Crompton Greaves, SAIL were all penny stocks before they became multi-baggers. But the key question is how to identify them and trade them?
Penny stocks can be a tricky game…
Back in 2001, at the peak of the 9/11 equity paranoia, I remember a couple of large steel traders aggressively accumulating SAIL at Rs.3/-. Although, I was never a great fan of penny stocks, I was quite intrigued by their sudden interest in SAIL. More so because, as steel traders, they understood steel much better than most others. Not surprisingly, they made a real killing! Continue reading
Posted at 12:39 PM , on May 31, 2015
We saw this happen umpteen times between 2008 and 2013. Frenetic rallies from an apparent bottom seemed to fizzle out with equal speed. In most cases, the index gave away most of its gains, while specific stocks touched new lows. The key challenge is how to differentiate between a false rally and a genuine pullback in the market? Easier said than done, but here are some pointers.
False pullbacks and true rallies
Between 1994, when the markets corrected after the US raised rates and 1999, when the tech boom began, there were at least 14 intermittent rallies that fizzled out. Similarly, between 2000, when tech crashed and 2003, when the long term rally started, there were again 7 substantial rallies that fizzled out. So how do you differentiate between a genuine rerating and a false rally? Continue reading
Posted at 7:06 PM , on May 22, 2015
Most traders and investors ignore this very important rule. They believe that identifying a good stock and managing the risk is good enough. For your information, trading details are not for clerks to worry about. When you buy a little higher and sell a little lower, your total cost of trading is adding up over a longer period of time. And you are missing the icing on the cake!
Why order execution is so critical
A delighted investor told me that his investment had earned an incredible return of 12% in a 3-month period between May 2014 and August 2014. I was hardly surprised, considering that the market was up 30% during this period. In such a raging bull market, a 12% return was nothing to write home about. But it set me thinking on a different trajectory altogether! Continue reading