Keeping pace with Equity Investing

Keeping pace with equity investments

Equities have found a new flavour in India ever since 2014 elections resulted in the BJP being crowned the party having won the majority of votes on its own and not having to reach out to other parties for forming a Govt. After Late Rajiv Gandhi and his INC , it took nearly 30 years for a party to win a single highest majority in India.

The world was also relishing on supply of money from Central Bankers of some big Economies, and the result was visible , money was trying to find its way into every possible nation and Equity markets reached new heights with every passing month.

We will not get in to the numbers and figures , etc as these has been widely discussed and published in various sites and news paper daily.

Equity as an investment has to be understood before we put our hard earned money, no matter you prefer direct investment or through Mutual Funds. The result depends on where your money is parked. Being ignorant about equities is not the way to be , rather we have to attempt to understand and try to make profits out of this product. Most of the small and retail investors do not even understand why they are buying equity, Eg. their source of funds doesn’t match the time horizon required to be invested, i.e they may invest money kept aside for some emergency expenses hoping to make quick gains and only to realise that the investment hasn’t turned profitable before the personal need arises and they end up selling in a loss. They may borrow to trade a particular stock for short frame of time and end up either losing money or to realise that the short term trade has become an investment which is not making any profits and they need to hold for longer period of time , which may not be comfortable for themselves.

The above situations will make a small and retail equity investor call himself as being cheated , or incapable to understand the business of equities. Actually he may not even realise his own mistakes and blame someone else or the entire system. He will never realise that he choose the wrong way of approach, like the above examples, or didn’t profit because of bad luck, etc. We will study some basic principles before investing in equity market.

  1. Understand the product called , Equity before investing
  2. Read about the company or check its credentials before you decide to invest.
  3. Check the share price movement of at least last 1 year.
  4. Market capitalisation ( market value of a company’s outstanding shares) should be sensible and not crazily high at the time of investment.
  5. The above point no 4 is only a basic parameter , as there are various parameters to decide an investment, which a common man may not understand.
  6. Keep a time horizon of about 3 years and above for your investment, as even a Govt backed deposits require a time frame of about the same period.
  7. Price fluctuation are part of this market, use them to your advantage to add a stock and do not panic to sell the stock without verification.
  8. Only buy stocks with your own or family money , where you have a say and not on borrowed money.
  9. Markets are not here to shutdown , it will remain forever, so will be the opportunities, buy a good stock at a right price and not a good company at a wrong price.
  10. Always read and discuss with your brokers before investing.
  11. Never buy on rumours and never ever on overheard talks.
  12. If you don’t have time to read about the markets or do not want to read, rethink if you still want to invest, because only you can gauge your risks and not someone else
  13. Definition of risks will change when reality hits upon the stock prices of your investments, so be prepared to buy more or sell if markets movements change.
  14. Don’t put blind faith in your broker, they are here to do business and offer consultation based on their knowledge , nothing is offered free , so don’t let your broker decide your risk and time horizon. Let them only do their business of helping you get Company information, buy and sale for you, please remember even they are humans at EOD.
  15. Small investment growing with time should be the mantra , and not going overboard in order to profit unnatural.
  16. Loose information are freely available in the market, never rely upon them , rather study about a company from reliable sources before investing.
  17. Don’t blindly follow portfolio managers , newspaper articles , and clone your investments. Everyone has different agenda behind the same stock, never imitate with half information or verification.
  18. A reliable source of information many not be always right or may not be available for the first time, don’t let sensitive data available freely on the Internet or national newspaper affect your decision, as this news may not be true or may have come late to your attention.

The above is some guidelines to follow in equity market , we will take note of other valuable information to note before investing in the part II of this series.

Karma of Business - conclusion

Amazon, Flipkart , whatsapp , Uber , Airbnb, were not created to be monster in size as they are today, rather they were created as innovative ideas by some intelligent persons who thought they can challenge the traditional way of doing business and create simple stuff for the consumers.

In fact it’s the way of doing business by these people that it’s what it’s today. It’s easy to blame Amazon or Flipkart for killing your friendly neighborhood shopkeepers, traditionally run grocery shops, brick and mortar shops, just imagine would these traditional shops offered you discounts, friendly schemes, pay less than MRP, etc about 10 years back from today, NO … consumers didn’t have much choice and they were bullied into buying everything at MRP and resellers were making huge profits. The new age disruptors have showed us the way you can buy your essential goods and luxury goods at affordable prices and pay even at convenience.

The landline phone , early telecom revolution of mobile phones were technology , offering services at high cost or even charging for smallest of services offered, nobody had heard of value added services ( VAS) about 15 years back, A whatsapp came and offered everything free to consumers and see what’s happened to the landline black phone or early telecom operators.

Hotels were a luxury with exorbitant rates , then came AIRBNB , and see where they are today. Yellow cabs in your city, auto rickshaw, etc were dictating and sometimes consumers were helpless, came OLA and UBER and every traditional service providers is at his knees.

I would argue this is Karma at play,a Japanese proverb says “ Customer is like a God “ , treat him well with respect , it’s he who is going to make you what you want to be and will help you to raise in business. Monopoly business and traditional businesses were not as customer friendly as they are today, consumers were either paying high prices or not getting value for money or good services for the amount being paid, Karma doesn’t spare anyone who doesn’t respect others or who cheats in his profession, etc.

New age businesses just changed the perception of doing business and treats customers like kings by offering discounts, friendly schemes, etc in order to grab business from competitors and eventually are also offering good services with a smile and respect, so automatically Good Karma comes into play and you are getting what you wanted to do with your business. There was a time when a yellow cab or auto rickshaw in your city would refuse to ply customer if he was not comfortable with the journey destination or would overcharge to provide services, poor customers had no choice, bad karma getting deposited in the business owner and today a  OLA or UBER registered cab doesn’t even know his destination, till the customers has actually boarded his cab. Affordable rates, doorstep services with a smile, no more arguments over fares , etc… Good Karma prevailed.

Yes , we do have our share of problems with this new age business, but nothing can be created without trial and error, so let’s give some time and definitely there is improvement around the corner, but let’s not forget that it’s Good Karma which will prevail and not some monopoly dictatorship like business. So there is a strong relationship between Karma and business, which needs to be understood for a good businessman and only truth and sincerity will prosper, others will just come along and go away without any trace.

Here are few problems that a bad Karma business will face

  1. Abuse your customers and they will ditch you as soon as an alternative comes along
  2. Abuse your competition and they will strike back harder at you next time
  3. Abuse your employees and you’ll lose the most talented prospects , leaving you with the people who can’t get work anywhere else
  4. Abuse the law and you will get caught sooner or later
  5. Abuse the environment and eventually the resources you need will be gone

In the digital world, giving is receiving

Traditional business models could make it seem like there was no benefit in giving to others, but in digital marketing, it’s very clear that giving is the best way to receive

Blackberry phones were one of the most sought after creation about 10 years back, but they had a problem, they wanted to have control over their BBM messaging services and Apps being registered, etc. whatsapp just borrowed the BBM idea and made it free for everyone… a service oriented business worth USD 19 billion when Facebook acquired in 2014 , BBM is out of business… think about it, does it resemble good Karma vs bad Karma ??

We conclude this part of Karma of Business and will share more valuable information everyday.

Karma of business - Begining

Law of karma catches up for everyone in life. Since the ancient age, it’s been widely said and accepted that karma will find you and you will be rewarded or punished as per your deeds in your next rebirth. A person is born with karma and this golden truth cannot be challenged or denied irrespective of your faith and beliefs. I would like to take this truth of Karma a step ahead and explain why a person not only is born with previous  karma , but he has to face the karma of his deeds even of this lifetime. Your actions will be rewarded or punished, but can your actions of goodness and harm done only to mankind be rewarded or punished, NO…. if you do injustice to your own self or to a public property or against Government offices, viz… not paying your due taxes, misusing public system, fraud a bank, etc , you will face karma before death.

Let’s see how Karma plays it’s role in business 

A business idea is like you and your wife planning to have a baby. You plan yourself outlining a business idea , raise capital, find office space, hire staff and you begin your journey same like how you and your wife will save some capital, buy or lease a apartment, hire some domestic help before the birth of the child. You begin the journey of taking care of the business, generate good progress, will seek bank loan, equity dilution, VC funding to expand. A expansion is possible if you have taken good care of your business and have not exploited it for your personal gains. You take good care of the finances, administration, staff , etc and they reward you back with positive results. A good financial and administration management will ensure that growth is visible and you will have others wanting to pour money in your business like a Investment Banker, VC , or IPO- Merchant Banker , etc. staff personnel who are treated well , will want to stand by you and seek participation in the growth of your business. Let’s say you don’t follow your rules and exploit the business for its money , administration is not governed , staff are ignored and harassed, and you will pay the price by not able to grow further and poised to fall apart one fine day. As a family if the wife , child, parents and working staff at home are respected and loved and taken care by you, you are bound to be happy and healthy and progress is visible, if you do not follow any of the above, you are faced with vice versa in life. If a person simply follows the role of righteousness in his business , he progresses, if he follows path of dishonesty , he will not succeed. Any success achieved will be temporary and short lived. Karma will catch up and he will not be able to sustain in the long run.

Running a successful business is no rocket science, according to me , same like how you need money , a good family, clean and nice home, blessings of the elders and divine forces to progress in life , the same are required to run a successful business, some capital, good staff , administration, cooperation from clients ( this is  equal to blessings of elders in the family) can only be gained if you give good and reliable services or sell good products , like how you gain blessings by being good to the elders and of course prayers play a important role in both the places. You seek loan to buy a house, fund your child’s education, etc. the same principle comes in to play when you seek to expand your business and sometimes you need a overdraft to settle some bills like who you need a credit card if you don’t have sufficient cash to carry into the mid month at your house.

A good businessman has to understand that running his business is same like running his own house , he has to keep it simple and not complicate matters for himself or others who are part of his business.

we will further learn karma of business in the next part of this blog.