-- My name is Tadu Gumbo, and I'm a full-time Forex and Stocks trader for over eight years now. I'm not a guru or trading advisor; I'm simply a trader who trades for living. I did Diploma in FOREX Operation Management from UK (through distance learning), a Certificate Course in MQL4 (Meta Quotes Language 4) and also did PG Diploma in Journalism & Mass Communication, worked in 'The Assam Tribune', worked as Staff Reporter in 'The Eastern Citizen', Sub-Editor, 'All India Radio', Itanagar, Editor, 'The Arunachal Epitome', Chief of Bureau, 'The North East Times', (Arunachal Edition), a Certificate Holder of "Securities Operations & Risk Management and Mutual Fund Distributors" issued by National Institute of Securities Market (NISM) under SEBI act, Authorised Person, ICICI Securities Ltd. and presently MD & CEO, www.TradeonGo.Mobi and MonetaryApp.
-- I started my career with a media publishing house, later I shifted my profession to online business/investor. The Author, who is ambitious to become an internet millionaire, had lost lakhs of rupees during long time trial and errors like: Google Adsense, Google Adwords, Affiliate Marketing, Website Creating, Survey Process and Data Entry Job, etc. and failed to find a single one to succeed for survival.
-- Placed in the position of "Succeed or to die trying until Success," After lot of errors and lost of money, I decided that there had to be another way since lot of internet millionaires are produced day by day; it was then that I entered into the Forex and Stocks trading. I worked crazy hours - like, 14-16 hours a day for 6-7 years discovering the exactly how to make the Forex and stocks markets worked for me?
-- Let's start with a question- how you can be a financial freedom by investing on stocks market and why most of the people (esp. Indian common men) think about stock market as gambling?
-- Ask your friends, neighbors or your relatives regarding stock market investing. Most of them will discourage you and mention that stocks market is another form of "gambling". Many individuals still believe that there is no "logic" behind the stock's price movement. Those who earn big money from the stocks market are just a "lucky".
-- On the contrary, the fact is that almost all billionaires in the world have created their wealth through the stocks market, either directly or indirectly.
-- "Directly" refers to the direct investing in stock and "Indirectly" refers to listing their companies on the stock market. One of the world's richest person, Warren Buffet created his wealth from direct investing in stocks while other well-known billionaires like Bill Gates (founder of Microsoft), Mark Zuckerberg (founder of Facebook), Sergey Brin & Larry Page (founder of Google) made their wealth by listing their companies on stock market. Even in India, you will find many billionaire investors (like: Rakesh Jhunjhunwala) who created their entire wealth from direct investing in stock and Mukesh Ambani, Dilip Shanghvi , Azim Premji, Ratan Tata etc. who created their wealth through listing their companies on stock market.
-- My question is if investing in stocks are another form of "gambling" then how these billionaires have created their wealth from the stocks market? You may earn one thousand or one million from "gambling" but it is not possible to become a "billionaire" or to become the world's richest man by "gambling". Can you say they were just lucky enough? Luck can favour once, twice or even thrice, but they are consistently earning from the stock market over several decades. A gambler can't make billions consistently, right!
-- On the other side, it is presumed that 80% retail investors lose their money on the stock market! "Retail Investors" refers to those who engaged in investing on stocks (or planning to invest) a portion of savings into the stock market. As per sources, the 80% retail investors suffer overall loss from investing on stocks market.
-- Now the most important question that arises is why maximum retail investors (small investors) lose their hard earned money in stocks market while a group of people are creating their wealth? I will explain you in detail why the majority people loss money in stock market and how to avoid it and what are the method to build a wealth from the stock market?
-- To avoid loss in the stock market, you need to know the reasons why people lose. First and foremost thing is you must forget about intraday; short term trading, Futures & Options trading. Remember, there is no shortcut to earn quick money. Every quick-money makings tricks are eventually money-losing tricks. Never ever try to go for short cut way to make money from stocks market, it never happened. One, two & three times you may succeed for little amount but later a single trade will wipe out all your profit made from earlier two, three trades.
-- The only way to earn regularly from the stock market is to invest in the great business (stocks) and hold it for the longer period say 6 months, 1 year, 2 years, three years or even 15 years period. Check the details of any billionaire stocks (equity) investor across the world. You will find one thing common to them. They simply choose high-quality stocks (company) and remained invested over the long run. Warren Buffett, the world's most successful investor, and once the world's richest person, created his wealth from 22% annualized return over more than 50 years from equity investing. He didn't jump into intraday or Futures and Options. Investing in high-quality stocks and holding them for the correct period is the only way to create wealth.
|Company||Reco. Date||Reco.||Reco. Price(Rs)||Target Price||Price as on 14th March,2017||Change(%)**||View as on 15th March,2017|
|SAVITA OIL TECH.||15-Jun-11||Buy||538||Under Review||901||67||Hold|
|KOLTE PATIL||15-Oct-13||Buy||76||Under Review||105||38||Hold|
-- Stock market is not risky at all but maximum investors prefer to keep their savings in the bank rather than investing in stock market. The only reason is "risk". Well, if I say keeping money in a bank account is riskier? I am sure many of you will be surprised with this statement. Now let me tell you about a silent killer of "inflation". Fixed deposit in banks will surely offer 7%-8% annual interest but do you ever consider this in conjunction with inflation?
-- In simple language, inflation is the increase in price you pay for goods. Today if your monthly expenditure bill stands at Rs. 5,000 then certainly over the next one year it will increase. You can also refer it to a decline in the purchasing power of your money. Like if 1kg of mustard oil costs Rs. 100 today then after one year you can't purchase the same quantity at Rs. 100. So, today's 100 rupees is no more worth the same after one year. As per Government data, the average inflation rate in India is hovering around 7% annually.
-- I think in reality if we consider our day-to-day expenses then inflation will be around 10%. It means that if today Rs. 100 is required to cover up all your monthly expenses then after one year the same will take Rs. 110. Calculate your last year's monthly expenses and compare the same expenses as of now. Most of you will get the figure of around 10 %.( It can be even more). So, 100 rupees investment in bank fixed deposit returns at around 107-108 after one year but for it costs 110 rupees to cover-up the same day to day expenses. Isn't the bank's fixed deposit yielding negative return of Rs.-2%-3%?
-- Investing in stocks market is similar to that of driving a car. From the beginning, nobody is an expert in driving. You need to learn driving. If you skip the learning portion and take steering on the very first day, what will be the consequences? Accident is almost certain. Similarly, without any knowledge you are bound to lose money in stock market. To earn consistently, you must have in-depth knowledge. To avoid any accident, an experienced driver also needs to drive carefully. Similarly, experienced investors should also remain cautious about his investment decisions to avoid loss. Chances of accident can be minimized if you follow certain driving rules, similarly by following certain disciplines you can easily minimize the chances of losing money in stock market.
-- Driving doesn't require any formal educational degree. It is not like that only mechanical engineers, or those who have in-depth knowledge of motor mechanics can only learn driving. Irrespective of the degree, anyone can learn driving. Similarly, an MBA in finance or similar degree can't ensure success in stocks investing. Rather, I think without an MBA one can become a better investor. Irrespective of educational background and specialization, anyone can learn the tactics of successful investing. It's simple but not easy. "Simple" in the sense that it doesn't require highly qualified degree holder. "Not easy" because it requires years of practice, discipline, dedication and willingness to learn. NOTE: Avoiding equity investment means you are most likely unable to beat inflation increase. Banks and post office deposit offer negative or flat return (inflation adjusted).
"Avoiding investment in equities is risky; very risky" The only way for wealth creation historically, it is proved that only stock market and real estate investment can offer above-inflation return over the long run. Real estate requires big-budget investment. Thus the market is not accessible for small investors like us. For salaried individuals and other professionals, the stock market is the only way for wealth creation. Avoiding equity investment means your retirement life is at risk.
-- From both; real estate and stock market, the latter should be the preferred choice for every individual due to the following reasons-
1. You can start investment on stocks with as low as Rs. 5,000. However in real-estate you can't go with such small amount. For any retail (small) investor equity investment is much more convenient.
2. The stock market is highly regulated. Thus, price discovery is much more transparent. The stocks market regulated by Securities and Exchange Board of India (SEBI) has taken almost all steps to safeguard the interest of small investors. However in real estate, price discovery itself is not so transparent. You will be duped by fraud dealers easily.
3. Equity investing offers high liquidity. You can purchase stocks anytime and also sell that after few moments of purchase. There is no obligation. You can sell it after 1 minute or 1 month or 1 year or 10 years whenever you want. However in real estate, you can't purchase a land to sell it on the very next day.
4. You can buy and sell stocks from anywhere in the world. With the advent of online trading, physical presence is not necessary. Buying and selling can be done with just a click of a mouse or press of your mobile key pad. However in real estate, investment is not that simple. Because of many such advantages and above-inflation return, equities must be a part of everyone's portfolio. The irony is that retail participation is the lowest in Indian stock market compared to other developed nations.
-- Over a period of 5-15 years if your average annualized return remains within 20%-30% then you can easily achieve financial freedom. Always remember world's most successful billionaire investor and also once world's richest person, Warren Buffett made his wealth by just 22% annualized return.
-- To my irony is that, many Indian new investors expected 30%-50% MONTHLY return and jump in the stock market INTRA DAY trading; end-up with loss and finally blame the stock market! Sometimes they also restrict others from investing in stocks! "Investors gladly accept 7%-8% annual return from bank's fixed deposit but the same person can't accept 25% annualized return from stock market!"
-- Friends, time are the most valuable asset. If one can utilize it properly, it can create wonder. Don't waste the precious asset called time. Just start investing NOW, don't wait for favorable circumstances to come. "Every expert was once a beginner. Don't wait for the perfect timing. Start right now".
-- Dare to dream big, take small steps, anything is achievable for anyone. "The first step for any achievement is to dream big and step in." Don't follow the crowd -I did Journalism & Mass Communication as my profession. But today I can work at my own time. I am doing what I love to do. I am getting much better return on the financial front also.
-- Albert Einstein's word- "The value of a college education is not the learning of many facts but the training of the mind to think." Yes, education trained my mind to think differently.
-- Don't blame others. I accepted my failure. I realize that my initial failure built the strong foundation. Failure is always painful but it teaches you some life-changing lessons. If I had blamed others for my failures, then it would have been hard to move ahead. Don't blame others under any circumstances. Try to find out where you were wrong. Blaming others simply increase the chances of repeating the same mistake.
-- This is my sincere attempt to eliminate the word "loss" and "risky" from the mind of retail investors when comes to equity (Stocks) investing. I always encourage diversifying your total budget for investing, means don't put all your eggs in one basket.
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