My entry into the world of equities was anything but sane.
Armed with knowledge obtained from a pocket-sized guide book on mutual funds I
thought I was all set to enter the stock market of all the things in this
world. All the hype around the Indian economy and stock market in 2007 made me
more crazy about stocks. I followed the guide closely which advised readers on
buying newly launched mutual funds (also known as New Fund Offers) as the Net
Asset Value (NAV) would be less. I then got caught by this infrastructure craze
that was going around the Indian markets then with news channels and stock
market pundits going gaga about the government’s massive plans of investing and
developing the much ignored infrastructure in India.
The first New Fund Offer that caught my attention was Birla
Sunlife International Equity Plan. As per the documents, this fund would invest
primarily in equities both in India and abroad. Without second thoughts I
invested money in it. Next I invested in Kotak Indo-World Infrastructure Fund,
TATA Indo-Global Infrastructure Fund and finally Sundaram Energy Opportunities
Fund. Well, now it must be very clear to you how much crazed I was about infrastructure
being the next big thing in our country.
It did not take long for me to take massive hits. Talks
about the sub-prime crisis started soon after and within six months my
investments in all funds were reduced to less than half. Of the above only
Birla Sunlife International Equity fund gave me some hope as its NAV was not as
bad as the others. The other three just melted faster than a vanilla ice cream
in your mouth. What did I do? I just waited and waited with a hope that things
would revive. Meanwhile, I started buying individual stocks on the advice of the
stock broker I signed up with. I made some profits and losses. For example,
stock values of Balrampur Chini and Deccan Chronicle plunged faster than a
shark diving in an ocean in search of its prey. While I just sold off my
holdings in Balrampur Chini for a massive loss, I continue to hold Deccan
Chronicle hoping for some miracle in distant future. I did comfort myself on
the losses I made on Balrampur Chini thinking that “Had I spent the same money
on some shirt or shoe or restaurant, it would have been nothing now”. Well the
reasoning is not that excellent but some solace nonetheless.
Coming back to my investments in mutual funds, the Indian
stock market showed signs of improvement around 2-3 years ago. Kotak merged
Kotak Indo-World Infrastructure Fund with a much better performing Kotak Select
Focus Fund and Sundaram merged Sundaram Energy Opportunities Fund with Sundaram
Infrastructure Advantage Fund. One fine day, I went to TATA mutual funds office
and asked the executives there to suggest a better performing fund. On the
advice of one executive, I switched over to TATA balanced fund. Today, nearly 7
years later, I see that I have about average returns on all the mutual funds.
If a total dummy like me can realize profits in the stock
market so can you. But I do have some advice based on my experience.
1.
Never ever expect quick and fantastic returns in
the stock market
2.
Patience is the key
3.
Word for dummies “Mutual Funds are better
options than trading on your own”
4.
If someone has made a killing in the stock
market don’t jump into the bandwagon. What works out for somebody will not in
all probability work out for you
Hope my article will help out someone somewhere….
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