Aug 28, 2013

Aug 25, 2013

Aug 23, 2013

How handful of people ate the cream of Indian Economic Growth! Ajim Premji, A Case Study: And Why You Are Responsible For Your Own Financial Good and Bad In This Age:

How handful of people ate the cream of Indian Economic Growth! Ajim Premji, A Case Study: And Why You Are Responsible For Your Own Financial Good and Bad In This Age:

If you are reading this than you must be aware that stock market/capital market is the barometer of the economy and it is the place where you trade the growth of the economy. But how many out of the entire population eligible to invest has invested in this growth of the country? Have you ever wondered that there are only 3-4% population of the country that is invested into stock markets right now (including mutual funds) and why so? The ratio of entire country’s population invested into stock markets run somewhere between 20-50% in China, USA and other such economy. The lower equity participation is also one of the reasons why India, after 20 years of liberalization has not been able to come on the fast track of sustained growth rate like China and other Asian peers.
The point we are discussing here is however distinct.




What we want to throw light is here that how handful of promoters have ate the cream of privatization and benefited from the liberalization of the economy.
We will take only one example or case study here. The IT sector is one of the major beneficiary of the liberalization process. Wipro has been among the top 5 IT companies among Infosys, TCS, Patni, Satyam, Tech Mahindra and a couple others.

Aug 22, 2013

Aug 21, 2013

13 Cognitive Biases to be aware of by traders and investors

Here are 12 Cognitive Biases that prevent human beings from behaving rationally.  As perception is reality in the financial markets, I thought it might be useful to address those issues through the lens of a trader.

1. Confirmation Bias

This is a fatal flaw of trading; we tend to surround ourselves with information that validates our own point of view and dismiss input that conflicts with our reasoning (also known as cognitive dissonance).  This is the primary reason why we always strive to see “both sides of every trade” as the residual grist between variant views is where education—and profitability—resides. 

2. In-Group Bias

This is a manifestation of confirmation bias, or the tendency to surround ourselves with those who share similar takes on the tape. This could pertain to our physical environment or a virtual experience, such as Twitter.  Not only does this provide a false sense of security in our individual viewpoints, it makes us suspicious—or angry—with outsiders who dare to question how we feel.

Aug 13, 2013

Daily Mental Conditioning For Becoming a Successful Trader

Daily Mental Conditioning For Becoming a Successful Trader

Deciding to be a profitable financial trader is the first step in becoming one. Trite you say? Not really. Missing this one step or doing it out of order xplains why 90% of brokerage accounts go to zero within the first year, many doing so in the first 4 months!
In addition to arbitrarily deciding to be a profitable financial trader, a more powerful and lasting way is to use psychological conditioning on yourself so that you CONSISTENTLY decide that you are a profitable trader Here’s my interpretation of the method for doing this that I learned from the famous success guru I alluded to in my comments two blogs back.

First, write out the sentence below on a piece of paper.
“FROM THIS MOMENT FORWARD, I AM A PROFITABLE TRADER”.
Second, consider the pain you have experienced before because you have not consistently thought of yourself as a profitable trader. Imagine experiencing that again in the present and future. Do this for 30 seconds. Notice how you feel as you do that.
Third, consider the pleasure you would experience in the present and the future if you did make this decision. Do this for 30 seconds or longer. Imagine yourself getting a string of winning trades in your brokerage account (stocks, options, emini market average futures, pork belly futures, orange juice futures… whatever). Notice how you feel as you do that.

Aug 9, 2013

Aug 3, 2013

SOME VALUABLE EXCERPTS FROM PARAG PARIKH'S BOOK VALUE INVESTING AND BEHAVIOURAL FINANCE.

SOME VALUABLE EXCERPTS FROM PARAG PARIKH'S BOOK VALUE INVESTING AND BEHAVIOURAL FINANCE.
·         …is it because of the inconsistent performance of business behind the stocks of is it because of the behavior of the market participants, who as a result of greed and fear get excessively optimistic and pessimistic about the future resulting in bull nd bear phase?
·         …a conclusive study done on Sensex which highlights that it is not the inconsistent performance of companies constituting Sensex but the follies of crowd behavior which make investing risky.
·         IPO investing is not for a value or a contrarian investor. Value found in bear market and IPOs are a product of bull market.
·         …we have created financial markets where such insanity works.
·         Research on the Indian indices high lights some important drawbacks of passive investing.
·         Failure is as predictable as success because it is the strength of characters which separates the winner from the loser.
·         Economists say that the inability to delay gratification is the primary reason for economic failure in life.
·         Ninety percent of what we do is dictated b habits.

Aug 1, 2013