Survive and Compete. Don’t be negative.

Market is taking one step forward and two steps backward. It just doesn’t want to go up. We are back at 7800, the same level market closed a month ago on 24 August 2015.

You can either choose to be negative or take this as an opportunity to keep buying on dips. Contrary to what you might like to believe, people have made lot of money last 4 weeks by playing the market wisely and with conviction.

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Black Monday 24 August 2015

Why Indian Markets fell on 24 August and continued to fall further till 1st week of September?

Reasons Given:

1. Chinese markets is in disarray as China is not able to sustain the growth rate it has achieved consistently over last 3 decades.

What this has to do with India. As far as I see, China is our main competitor. Low labour cost is our biggest arbitrage. Plain common sense says that disorder in your competitor house means good business for you.

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How to make money in the bearish market

Most people think that only way they can make money is to buy low and sell high. They think that there is money to be made if the market is rising.

For starters, there is as much money in rising market as in the falling market. In the bearish scenario play the game in reverse. Sell high to buy low.

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Some Rules of Trading that I follow

Take the winning off your tables. Sell your stock when you have made solid gains. A gain of over 10% is solid in my book.

For every stock in your portfolio there should be a price you’re willing to pay and a price you’re willing to sell. The markets take stocks up and down for all sorts of irrational reasons. When you have solid gains, take them. Sell everything, cash out completely and wait for the next dip.

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Catch your own fish

Many people believe that you can only make money when stock prices go up. Market has tools like shorting futures, buying put options that makes it possible to profit from the downside as much as from the upside.

It is the time of the year where you can pick up most stocks at broken prices. Remember you have to pick up stocks of good companies with broken prices. There are lots of bad companies with bad stocks. There are also lots of good companies with bad stocks. An investor’s job is to figure out the difference, so they can identify a bargain.

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Hedging is the key…

On this teacher’s day, I salute the stock market, the greatest teacher. They say the best lessons are learnt when you lose money. So far the stock market has taught me so many lessons fortunately not at the cost of losing.

I pay my respect to 2  of my other teachers, Varun Malhotra & Promod Chawla. Varun who says invest for the long term, be a value investor. Promod who says, “It is a dog market. Sab Kutte Hein. Play like a gambler.”

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