26th November
I am richer. And believe it or not, money does grow on trees. Who would have thought that a run-down family-owned farm in the boondocks would sell for a cool Rs 5 lakh? Well, someone wanted it bad enough and my family decided to distribute the money among the children. My share is a handsome Rs 2 lakh. It was a heaven-sent; I finally cleared that monstrous credit card bill and am left with Rs 1.5 lakh. Now for the big news. I have decided to invest it in stocks. It was either that or a gorgeous pair of Jimmy Choos...tough decision, but the stocks won simply because experts say that I can earn fantastic returns. As a 24-year-old, this is supposed to be the best time for me to take risk. It doesn't matter that I can't differentiate between value and momentum investing or PE and EPS. Filled with excitement, I had surfed the Net for information and picked up these terms. It felt like the calculus classes in school; too much information, too little understood. So my first job will be to identify sources with easy-to-understand inputs.
27th November
Is it an omen? I woke up all set to introduce myself to the stocks on the Sensex and the news of the Dubai debt debacle flashed on every Website. Of course, I had to read up on the $59 billion default and I was late for office again. There too, the conversation veered around Dubai: is it a reminder that the world economy is not out of the rut? What will it mean for the Indian economy? And the typical journalist's take: is there a story for us? The Sensex tumbled 223 points (after dropping by around 600 points during the day) and answered most of our questions. Back home, I picked up some relevant points from various blogs on the subject: banking, realty, metal and capital goods stocks were the biggest losers, which meant they were available for less money. Hey, maybe the debacle was not a bad omen after all.
1st December
My question to all friends who calculate PE ratios for fun: where do I start my hunt? Professor Calculus advised I stick to the BSE Sensex. I cosied up for more spoon-feeding... exactly which stocks are hot now? He thought his answer was a big help: "Check the second quarter corporate results and choose stocks with high YoY EPS and high net revenues." Of course, I couldn't decode the Latin, but I was not worried. The appalling fact is that though I read up on Dubai, I missed the corporate results totally.
3rd December
The Dubai debacle resulted in a sharp drop in the prices of banking, realty, metals and capital goods stocks.
Why do I skip the obvious? A friend asked about my demat account and I had a late bingo moment. The account will come with a relationship manager (RM), who will suggest the stocks I can buy. Lunch time saw me at a broker's, and a cheque of Rs 900 and a zillion signatures later, I was informed that my account would be operational after about a week. As my RM escorted me out, I couldn't help asking—when would I get to know about the firms I would invest in? It was only then that he asked how much I wanted to invest. I gave the figure grandly. He wasn't impressed; a client on the phone was checking up on his Rs 1 crore portfolio. I slunk out.
5th December
Everyone seems to find investing nirvana on the Net. So I read up research reports online. The result: though I am still clueless about the technicals, I have a list of five stocks to track: Mphasis, for its earning potential; HDFC Bank, because of the expected high growth in credit; Suzlon, because prices have dropped sharply, making it temptingly cheaper; Tata Steel (do I need a reason?), and SAIL, which has brought down employee costs for 2010 by 21 per cent. Will the RM's suggestions have anything in common? Meanwhile, I am plagued by some existential questions—how many stocks do I buy? Should I invest the entire sum now?
8th December
The RM wanted to know how much margin money I was ready to pay. Not wanting to sound like a tyke, I was about to say Rs 1.5 lakh, when a colleague interrupted the conversation with the definition of margin money. If an investor does not have the money to buy as many stocks as he wants, he can pay a minimum amount, which is called margin money. It is the equivalent of borrowing from the brokerage for the balance amount. So if I pay 20 per cent as margin money, I could buy stocks worth Rs 7.5 lakh without even realising it, that is, until I see my account statement. You don't need an expert to tell you that it is scary.
11th December
I finally caught up with the RM while he was navigating the Delhi metro rush. Amidst screeching kids and announcers apologising for the delay, he gave me a list:
Punj Lloyd: Because it has a full order book and is fundamentally sound.
GMR Infrastructure and Reliance Infrastructure: Because no infrastructure stock performed well in the recent market rally. So, apparently it's their turn now.
Hotel Leela: Because the Commonwealth Games mean big business for them.
Sesa Goa: Because it is currently priced at around Rs 900, but was trading at about Rs 5,000 before the slowdown (there was a 1:1 bonus).
No common choice, but this was expected. After 15 days I am getting somewhere. Target for the next fortnight: to actually invest some money, somewhere.
