Want returns better than the markets?

One advantage or disadvantages of being connected with equity markets is you hear many stories. However if you have been in it for long, you may be part of many stories. For example a friend who wanted alpha (returns greater than the market returns), asked me what to do. Knowing his ability to trade I suggested trading in some specific shares, start writing options….etc.

Excited, he opened an E-broking account with a ‘reputed’ firm. He started getting calls and reminders from a Relationship Managers. Here is one of the Sms that he has received a few days ago:

“The market has next major resistance in the range of 5080 and 5090 (17100 amd 17170 – sensex). As the market enters congestion zone it will have to cross one more hurdle which is at 5130 / 17270 levels. On the dismissal of the same, the market will confirm its on going strength and in that case the level of 5330 / 5335 …however they are diverging negatively but will take time to convert in to a medium term weakness. Around 5350/18000 levels we will monitor the US markets closely..Even 17900/18000 is achievable with a hurdle at 5185/ 17493. the supporting factor will remain in the US markets that are still not in a down trend…On the downside we will concentrate on levels of 5010/ 16880 and 4960 / 16710 as major support as for the day and for that week. Failure to hold these levels will invite major weakness in the short term that may even push the index towards 4870 / 16420 levels without any interruption…”

He is a rich gujju…and he wanted me to translate this. I confessed complete ignorance of what this means….can anybody help?

In the year 2000 somebody asked me how many years experience I had in ‘equity’ markets. I thought over and said 7 years. My explanation was what I had learnt from the year 1979 to 1993 was skills like seeing how a client behaves, whether he will pay in a down turn, what is a good share – original or forged, etc. All this was no longer necessary for the organisations for whom I trained – they anyway took money in advance, brokerage rates were largely fixed as per slabs, risk management was through a ‘system’, grievance was handled by saying…’u know we are a corporate…’. I was completely out of the markets from the year 2000 – operationally and professionally. However I do trade / invest in equity markets – however now I think I do not know the equity markets at all.

It has changed – and for the better according to intellectuals. The number of people I see losing money, it is easy to make money buying shares of Hdfc bank, Kotak Bank, Indiainfoline, Icici bank – they all have e-broking subsidiaries. However a pure brokerage play is Indiainfoline – and the best proxy.

Note: Personally I/ portfolios I manage own some of the stocks that I write about.

And to think 80% of the Exchanges turnover is in nifty…God bless the clients….

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3 Responses to “Want returns better than the markets?”

  1. Even I do not understand the statement from very clearly , but i understand clearly that understanding or not understanding matters for not more than 5-10% of your success .

    Rest all is something else ,which people with experience (failed) will be able to understand . I am talking about trading here .. Not long term investing 😉


  2. Dr Mohammed Ali Khan on November 29th, 2009 at 12:46 pm

    I can translate it into plain English quite easily.. ” We do not know what is going to happen to the markets, nobody does, but we can say the same thing in fancy language, so please send us money “

  3. Subra,

    I just wanted to ask you one thing, Is india ever going to face a problem like Japan where Japan has not seen its half of the price even after 20 years, Is that equities really good if we keep it for long term without any hesitation in india? Please add your comments when comparing with Japan equities.

    You can even email me if you wish to share your opinion.

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