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Somewhere in 2003, fed up of perennially running out of cash at the end of every month and just before the salary for the next month was to come in, i realised i had to do something drastic. Also the thought of not wanting to work till 55 or 60 years old (like everyone else) was always in the back of my mind.

I decided to not only save a small part of my salary but also start investing. Real estate was out of question as it required a bigger monetary commitment and i was loathe investing in land that could some day be encroached and i would need to run around the authorities and people in power to get them evicted.

The next best option was the stock market.  It didn’t require a huge upfront money and also because of Systematic Investment Plan (SIP), i could invest a small amount every month in the mutual funds.  Also because of demat, it was easy for me to buy small number of shares of the companies that i liked.  Since my knowledge of economics, finance and the stock market in general was a big zero, i had to educate myself.  I attended a few seminars, but at the end realised that they were nothing but big money making scams.

This is when i truly realized the power of the internet.  With some great help from Google uncle, i jumped headlong into an intense 12 month study of the stock markets. I searched for information like crazy on equities and mutual funds. By then i had more or less realised that i was going to concentrate primarily in the Indian stock markets.  A developing economy which
was consistently clocking above 7% growth every year and a huge market, i realised that if i could get in early, i could probably ride a 20-30 year long boom.

India was then just starting off.  The BSE Sensex was then around 4500 (it has since climbed to 21,000, then fell to 9000 odd and is now back to 19000). I remember reading an Indian business magazine that pointed to a target 8000 for BSE Sensex in a few months time.  I chuckled to myself at the audacity of that heading.  But still deep down in my heart somewhere I had the belief that we were looking at something spectacular that was about to happen.

Imagine a country of a billion people and with the economy clocking 7-8% annual growth in GDP, it was sure to hit a trillion dollars soon and if the rate of growth could be kept up, then the next trillion could come in 8-9 years.  Yes, there were and are lots of things that could derail the growth. Terrorism emanating from Pakistan being just one such issue. Poverty, rampant corruption (that has become a norm these days), a closed economy, religious and regional violence…many issues could be an impediment to India’s growth and thus hit my investments in the market.

But honestly, when you realise that you are in the pits, the only way to go is up.  I took the risk and opened a demat account.  Tata Consultancy Services (TCS) was getting listed on the Indian stock markets for the first time ever in 2004.  I applied for the IPO and was allotted a measly 7 shares at 850 rupees each.  I was disappointed at not having been allotted more. Nervethless,  i held on.  A few months later the stock hit 1400 rupees.  I sold off at almost 550 rupees profit per share.  I made more than 3800 rupees (not accounting for taxes) in a few months by investing in TCS.

I had tasted blood.

Target 2015 continues….

Above target picture courtesy: David Hawkins

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Work is hectic and continues apace with no respite. Havent taken a single leave this year; and we are almost at the end of 6 months of the year.   Will be taking a vacation in July or most probably August. Have learnt a lot in the past 3 odd months than what i have learnt over the past 2-3 years.

The one thing that i believe that i always lacked is the ability to chase people to get my things done.  This is something i have slowly started to work on.  Iam happy living in my own cocoon.  Takes time for me to open up and as a result, i have a small tight group of friends and for someone else to enter the group, it takes time.

But for some reason, i have seen people open up to me easily.  I dont need to know a person for long before they confess their intimate secrets to me.  Dunno if i give them some kind of comfort or is it something else.

Meanwhile for some strange reason, i have started believing that my days as an employee is coming to an end. Sooner or later i want to do my own thing.  This has been going round in my mind for long. But honestly, i cant figure out what is that one thing that i want to do.  If nothing, i want to take a break, finish the NCFM certifications and if possible get certified as a Financial Planner.  Later on, start my own consultancy or investment firm.  Also would love to learn more about trading, commodities and stuff.

If only i could make some time to pursue all these interests.

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What a change a few weeks can do in the life of a stock market.  At the begining of the year, there were predictions of the BSE Sensex reaching 24,000.  Post the battering that the markets have received in the past 2 odd weeks, it would be great if the markets can come back to 21,000 levels.

Of course nothing can be predicted about the future.  The market conditions might become better, the Egypt political crisis might be solved, the companies could come out with better results in the next few quarters, the government might get tough on graft and a few politicians & their crony businessmen might end up in jail.

BSE Sensex performance in the past 1 month (courtesy: Yahoo finance)

Meanwhile, some of the best blue chip stocks and companies with strong fundamentals have been beaten down 20-40%.  This is another of the great time for a fence sitter to invest.  I have done too.

Bought a few stocks of Sintex Industries, Punjab & Sind Bank, Kanoria Chemicals, Noida Toll Bridge and averaged out the badly battered stocks of  MIC Electronics & 3I Infotech.

At the end of last year sold off Suzlon Energy, Reliance Communications (my worst investment ever. I would never buy any Anil Ambani companies again) and Punj Lloyd (another laggard not only on the stock market, but also in business).   I had sold them off for a loss.  It would have been a bigger loss if i had held them on as all 3 of them have been beaten down very badly.

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Sold off Asahi Songwon for a very good profit.  The below shown chart should give you an idea of how much the stock grew in the past 1 year.

Also bought more stocks of MIC Electronics & Graphite India

This year the dividend payout has been pretty good. Add to that bonus shares from both Dabur (1:1) and & TVS Motors (1:1)

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Peter Lynch is a Wall Street investor and a research consultant at Fidelity Investments, one of the biggest fund companies in the world. Unlike the Warren Buffett model of investing where diversification is not the norm and the investments are concentrated around a few good solid companies, Peter Lynch’s investment principle is to invest in what you know and to keep the basket of companies diverse and large.

He’s the one who coined the word, “ten bagger” which means an investment that is worth ten times its original buying price.  Lynch goes on to give pointers on how to pick up the ten baggers, the kind of companies to avoid, how to design a portfolio, the silliest things people say about stocks.

This book is one of the best books to read before entering the market. If you are someone who would like to enter the stock markets and get into equity, mutual funds etc, this book is a must read.

Read more about Peter Lynch at his Wikipedia page here

A list of all the books that i have read till now and am currently reading are on the right side of this blog.  Though not a prolific reader, this year i have been reading quite a few books.  With still 4 months to go for the end of the year, i hope to have read at least 12 books this year; which would mean a book every month.  Hmmm….not bad

One Up On Wall Street: How To Use What You Already Know To Make Money In The Market
Author – Peter Lynch
Pages – 304
Publisher – Simon & Schuster

Above picture courtesy: Bfanderson

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