Friday, September 2, 2016

Why My Friends Lost or Earned Only Meger Returns from Investments in Both Stocks and Mutual Funds?

Dear Friend!
You have raised a very pertinent question that has the potential of addressing a similar doubt in the minds of many. Thank you.
I really do not know the background facts, still the a few reasons for poor results is quite evident and they can be listed as follows:
  1. Investment Timeframe: For what time were had they remained invested? Share markets can remain depressed for a few years at a stretch and for the last few years they have not progressed very much. What do you think is the right timeframe for meaningful long term wealth creation? It is a bare minimum 20 years and ideally 40 to 50 years. Why such a lengthy spell? Only over such long periods, the ‘Miracle of Compounding’ discovered and propounded by Albert Einstein will get an opportunity to work for the investor.
  2. What is the Actual definition of ReturnsMost of have been conditioned to believe, in the context of investments at least, that return means increase in the market price of the investment. Of course capital appreciation is a vital ingredient ofreturns but it is in addition to regular and recurring returns: dividends, special dividends and bonus shares. Over 40–50 year interval if you aggregate the regular returns with the capital appreciation at the end, we will be pleasantly shocked at where we stand.
  3. The quality and purchase price of stocks: Stocks, I am not talking about mutual funds here, need to be purchased of good companies at a ‘Fair Price’. If one buys a stock that has an intrinsic value of Rs.100 is bought at Rs.200, what upside can we expect from the investment, that too over a short period of time?

Friend, ‘Value Investing’ is a time tested and sure path to long term wealth creation. There is no room for doubt or argument about it. Please buy a copy of ‘The Intelligent Investor’ by Benjamin Graham, TODAY, your life will change!
Thank you,
With Best Regards

Is it a Good Idea to Learn Intraday Trading or Margin Trading?

Dear Friend!

Thank you very much for raising this question. You are doing a great service not only to yourself but for many more aspirants like you. You are already well off not knowing intraday trading. Please do not learn and never indulge. It is dangerous enough if you are playing with your own money but if you are betting on borrowed money or Margin Trading, it is a sure path to catastrophe.
Friend, do not think I am standing on a tall alter and delivering sermons. I was once like you, and I say these words out of my own bitter experience as well as from the wise counsel of inveting luminaries like Benjamin Graham and Warren Buffett.
I had been a day-trader/ speculator myself, many years ago, with a goal of making Rs.2500 a day out of stock trading. I presumed, stupidly though, that being a charted accountant, I had the perfect credentials to hit gold on the stock market. Alas, besides many small daily losses one fateful day, in early 2000s, my entire savings, running into several lakhs of rupees, were wiped out, in less than a second, when the market crashed about 400 points. That day I vowed never ever to dabble in stocks.
For a long time I totally avoided stocks. One day my eyes fell on the book ‘The Intelligent Investor’ by Benjamin Graham, lying on the pavement. I refused to touch it, leave alone browsing it, lest I may be dragged back to the vice again. Some irresistible force pushed me into buying and reading it, which I reluctantly did. That book changed my life for ever.
By Benjamin Graham

Since then I am safe and cheerful value investor, happily following in the footsteps of Benjamin Graham and WarrenBuffett.
We all have the same goal of making money from the share market don’t we? When there is a sure and safe approach to make plenty of money through long-term investments in the share market through ‘Value Investing’, why travel the disastrous path of intraday trading, which will surely lead to imminent ruin?
Buy your copy of The Intelligent Investor right now! Commence the happy journey of truly rewarding value investing.
Thank you,
With Best Regards,