I recently got an offer on email. Somebody was offering me a news letter which promised to double my money every 2 years. Got me interested in the model.

Here all I had to do was to put just Rs. 10 million into this scheme. In about 20 years time I would have about Rs. 1 billion – and if I waited for 2 more years would have about Rs. 2 billion. Not bad considering that the last 3-4 generations of our family would not have even thought of such a nice round sum. Why not convert the whole thing to US $?

Then the reality hit me. I actually liked the business model of the offer – there was an entry fee for the introductory seminar, fee for the annual newsletter, then there was even a free e-mail newsletter, then a full workshop.

The accountant that I am started wondering if I can convert my own Rs. 10 million to Rs. 1 billion, why not leverage – get a couple of billion $ to start with and in 20 years have enough money to fund Obama and Osama? Why create newsletters and write blogs for fun?

Then I heard my daughter wake me up from my dream…..so I went to have dinner.

This is the problem with market timing. If you cannot do it right every time and with every share you think you are a failure. I have met some seriously rich people who have made the ‘000 crores in the Indian equity markets. One of them told me about 20 years ago “I have NEVER been able to buy any share at its bottom AND sell it at its top”. He had found many tops and many bottoms, but not in a single share had he found both.

Another very big Investor (and was a big broker till recently) told me “I think the market will close about 200 points lower today – on a particular day” . At the end of the day it closed 85 points HIGHER. He said see – I got neither the quantum NOR the direction right. However I have seen him hold 2 shares from Rs. 1 crore to Rs. 1000 crore in his family portfolio. This is not easy. He is not a promoter – so the logic of the holding was purely from an investment angle.

So when I see articles in the main stream media or in blogs saying ‘how timing is very important to get good returns in equity markets’ i feel amused and disappointed with irresponsible journalism. I have time the market in the past, and done it successfully many times, but it is NOT something that I would EVER recommend in a blog. I need to be seeing the person, making sure his greed, anger, expectations, understanding, …etc. are all at levels when timing is possible. And needless to say you can rarely time the market – you can perhaps time a particular scrip at best. Recently I bought Gillette at a foolishly high price or Rs. 1700 and sold it to a greater fool at Rs. 2700 – 2690 to be precise. Does it mean Gillette will not go up again? NO. It means this was a nice trading transaction. Period.

Too many purists stick to one style and think other styles are wrong. However I tread the market as a speculator, trader, position trader, investor, real long term investor – and I can assure you you can do all this in a portion of YOUR portfolio also….be careful of the time spent, transaction costs, greed,….that is all. If you have some of these shares you can look at today’s prices and gulp, but I do not have the guts to buy Nestle, Colgate, PnG, Glaxo – Pharma or Food, …at these prices. That is my problem, not yours….

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  1. Unfortunately many average investors or traders do following:
    1. Have NO idea of target price (gains) or exit price (loss)
    2. Have NO idea of risk management
    3. Fall in love with the stock/fund and NOT treat it as an investment
    4. When in loss goes into HOPE stage which later becomes HOPE-less stage
    5. Have NO idea of building wealth what-so-ever (penny wise pound foolish)

    VERY rarely an average investor does following:
    1. Portfolio RISK management per position
    2. Understands market internals or company financials
    3. Treat every position in their investment portfolio as an investment and NOT family jewellery/antique piece
    4. Invest time in understanding their investment goals
    5. Have lot of patience

    Moral of the story:
    Invest some time in understanding where to put your money to work for you rather than search for the holy grail cause it does not exist…..

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