forget about profit

forget about profit or loss of money

is your system prediction in profit or loss, that's the point

who wins if system is wrong

and who loses if system is right

if you are happy at profit, you will be sad at loss. 

if you are in indifferent or nonchalant about profit, you will be understanding of the loss.

being conscious of profit makes you fearful of losing it

being conscious of loss makes you more fearful of losing more.

being conscious of the process is important

look at the mental stability of the shooters in olympics... calm and stable...

standard advisory : trade 3 times less than what u can afford to lose.

"hone ko to bahut kuchh ho sakta hai?"

"hone ko to bahut kuchh ho sakta hai?"
(as it is, anything can happen)

market can rise unexpectedly, market can collapse.....

that u can come to know only once it has happened! u can ofcourse wait to see what happens and then come in the trade. but then what's use? what was to happen has happened? u were not in the contention for the possible rewards.

trading and fishing are rarely meant for those who intend to keep sitting at the shore waiting for the absolutely calm sea......which anyhow, as they say, never makes a skillful sailor!

"hone ko to kuchh bhi ho sakta hai!"

but u can't make a living out of trading like that! u can't realise ur dreams like that!

here, probability comes into play.

trading, as i always say, is probabilistic and not deterministic.

there are times when the market's move in a particular direction high probability and then there are times when the said probability is low.

a good trading method + trading judgement is the one which can segregate the low prob opportunities from high prob ones.

a trade can never be assured. otherwise, all trader universe will jump in that direction and there will be no buyers for sellers or sellers for buyers! market will vanish!

probability is the sister of opportunity.
sensing the probability is like spotting the opportunity.

with time, practice, experience and learning, probability picking skills can be astonishingly honed!

and the beauty of the probability going wrong (mostly initially, rarely later) is that a trader anyhow always has the brakes and steering in his/her hands.....isn't it?

u can always stop and turn!!!

indecision is dangerous in trading. doubt freezes ur ability to act.

it is the indecision which causes loss in trading.

who will bear the cost?

66 years ago

a 14 year boy

filed an income tax

of $7 !

not just that,

he had deducted

the cost of his wrist watch

and bicycle

as

business expenses!!!

even this boy

knew

that in job

first you pay income tax

and then bear all the expenses

whereas

in self-employment

you deduct all expenses

from gross profit

and pay tax

on the leftover!

--

the boy?

warren buffet!

capacity

the auditorium burst

with waves of thunderous applause

by the final year students

of a reputed management institute

hypnotized by the electrifying speech

of the legendary businessman

invited to deliver the annual address!

--

immediately thereafter

open-house question-and-answer session started.

--

question after question

was put forward

only to be immortalised by the answers of

the businessman-of-the-decade!

--

after almost an hour

there was time for just one more question

--

"how do you effortlessly manage to increase

the turnover of your business

year after year

even when the sector is reeling under slowdown pressure!"

a girl student asked!

--

"when i was a child"

replied the veteran business-legend after a brief pause

"i used to accompany my grandfather to the temple.

the priest used to give me very sweet 'parshad' in my tiny folded hands.

it was so tasty that it used to be my main reason for daily going to temple!

but i always felt bad that i used to get very less of it!

my sweets used to finish too quickly!

one day, the priest noticed my sad face

and asked me for the reason!

'why do you give me so less sweets' i askedhim

'because you have so small hands' the priest told me.

that night i couldn't sleep well past midnight!

that day i had got the most precious lesson of my life

which stayed with me ever since.

i have always reminded myself

that to have more and bigger 'prashad'

from destiny

you need to have bigger folded hands to receive more!

you get only what you can comfortably hold and manage!

you get only what you are psychologically ready for...

it's not about the market-size

it's all about the basket-size!

since that day

whenever i have to increase the turnover

all i have to do is

stretch my mental barriers of reality

revise my definition of possible-impossible

upgrade the scale of my blue-print...

and that is the only constraint that i have to struggle to increase.

once that is done

everything else just falls into place

and i get the desired growth!"

Apples of Himachal !

Himachal is famous for Apples!

Wherever you are, whenever you eat an apple, there is a good chance that it has come from the high altitude orchards of Himachal (whether from Shimla, Kinnaur or Kullu distt.).

Each box of apple contains 90 to 175 crisp, juicy and nutricious apples (depending upon the size of apples)!

Last year Himachal produced 1.5 Crore boxes of apples.

And it was considered a bad yield!

You must be thinking that the orchardist must have regretted the poor output!

On the contrary, they laughed all the way to the bank. Tax free!

Since the supply was drastically reduced from the previous year, a box of apple which normally fetches Rs.800-1000 fetched upto Rs.2500!

Supply and demand at work!

This year the crop is bumper!

Estimated 4.5 crore boxes!!!

Should the orchardists be partying?!!!

Think again.

The bumper crop has resulted in the fall in the prices!

The price has dropped to 800 per box!

You think the quality of the apple in the 800/- box was poor!

You are grossly mistaken.

As per my first hand information from a young orchardist Ravi, it was painful for him and his family to get 800 per box for 'A' grade mouthwatering export-quality apples whereas last year even 'B' grade apples fetched 1700 per box!

Fundamental quality of apple crushed by the supply and demand market forces!

Hail fundamentals!!!

Who's a smart trader?

The trader who knows everything but is still losing

is a smart trader!

His "smartness" is preventing him from implementing what he has learnt.

His longing for being "smart" influences his decisions.

His craving for being acknowledged as "smart" forces him to keep looking for "smart" trades even when none is there.

His enjoyment of the title of "smart" trader results into subconscious pressures.

"Experts" are always humbled and punished in stock market.

The moment a trader feels he knows it all and can out"smart" the market, market puts him in place!

There is nothing called "smart-trader" or "wise-trader" or "genious-trader" etc.

These are mere phrases of appreciation or acknowledgement by lesser traders of the last good trade by the traders on the public screen!

But these adjectives create reputations which are death-knell for traders.

Being a "trader" is in itself a complement.

A trader doesn't want any title

or prize

or appreciation

or recognition certificate

or trophy!

There is nothing called "Profit of the previous trade" in a trader's vocabulary.

Neither is anything called "Profit of the next trade".

"Trade in hand" is everything to a trader!

A true trader doesn't want to be on the public radar.

He doesn't want anything to distract him.

Vegetable and Fruit traders of Azadpur, Delhi

Marwaris of Rajasthan

Banias of Gujarat,

Komati of Andhra Pradesh,

Suds of Punjab,

Chettiar of Tamil Nadu.....

....and many more are great examples of true traders

who are not smart

only profitable

without trumpets!

A hen for 100 bucks?

If you were to sell your healthy hen, how much will you ask for?

100 bucks?

That's the approximate going market rate of a broiler!

But considering that a healthy hen can lay up to one egg per day (5 to 7 per week),

and considering that a hen has a productive life of about 70 weeks,

a hen can give you approx. 400-500 eggs in a year and a half!

@3 bucks per egg, that means a hen can give you a revenue of upto 1500 bucks before fetching you 100 more bucks in the end. (Though I request you to spare her life after she has already fetched you 1500/-)

So, now what will you ask for as the price of the hen?

==========================

Similarly, the price of a business is not the price of the net assets in the business but the cashflow it can generate in future!

==========================

If you can somehow estimate net profits from a business for the next 4 years,
then add the net current assets of the company to that figure,
and then divide that figure with the total number of shares
you will find an estimated fair futuristic value of the share
in the current scenario!

==========================

go with the growth! (Quick Word)

Consider 4 types of companies

1. Large cap growing companies

2. Small and Mid cap growing companies

3. Large cap stagnant companies

4. Small and Medium cap stagnant companies

The third ones struggle to be as good as bonds.

The fourth ones are the biggest advertisers of bonds.

The first type grow faster than inflation and bonds.

The second types grow fastest.

Smell the sustainable growth & follow

almost blindly!

True value of a share?

If you were to buy the entire company, how much will you pay?

If there are 10 lac shares of the company and each share is available @50/-, you can walk away with the company if you pay value of the entire 10 lac shares i.e. 500 lacs or 5 crore.

But if you don't know the share price or if you don't trust the share price or if the company is not a listed one, how much should you pay?

In such a case you need to find out the true value of the company by alternative methods.

One obvious way is to find out the net worth of the company.

Net worth = Assets - Liabilities = Net assets

But many a times this can give you very wrong picture.

For example, there is a decades-old super-famous Chane-bhaturewala shop on the mall road in Shimla.

It daily downs the shutter at 4 pm. Irrespective of how much stuff is prepared in the morning everything is sold out by around 4. (I must myself admit that they make damn tastiest Chane-bhature!)

If you were to buy out his business and go by the above formula of net worth, you may commit the mistake of offering him the cost of his shop minus whatsoever liabilities he has (by the way, he has none!)

He will fry you in his Bhatura vessel!!!

Why?

Because he daily sells Chana bhatura worth approx. 11000 and his shop's value in municipal corporation's accounts book is just 2 lacs! Putting the networth of this shop at just 2.33 lacs!

Therefore, as in this case, it may be grossly wrong to judge the value of a company by its net worth.

So, how do we find the fair value of a company?

Another way is the cash flow way!

This chana bhatura shop is generating an annual cashflow of 3years x 11000 per day x 365days days = 1 crore 20 lacs!

So according to a formula, the minimum price of his business (and not shop, mind you)
= (Potential profits for 3 years) + Assets and Inventories

Assuming a net profit margin of 50% in chana Bhatura, this gentleman's empire will be valued at

= 50% of 1crore20lacs + book value of shop

= 60 lacs + 2 lacs

=62 lacs

Now, would you be surprised if I told you that this gentleman's shrewd son is demanding 80 lacs as "pagri" from the potential buyers!

And would you be surprised if I told you that some businessmen are already willing to pay as much as 45 lacs! (The negotiation was going on till the writing of this article!)

But why is the son of the chana bhatura king asking for 80lacs and not 62lacs?

In his words "People come here in 'our' name!!! We have been serving mouth watering chana bhaturas since 60 years! we have a reputation and a pull value! We have a brand equity. 18 lacs is just for that. You can expand the business with that name!"

What if the potential buyer says

"We don't want to keep your name. Reduce the price now by 18 lacs" ?

And what if the equally-shrewd son of the bhatura-empire replied

"Ok, we will reduce the price by 18 lacs. But i hope you will not mind if we open another Chana bhatura shop in the neighbourhood in our name!!!"

-------------------

Now if I told you that this Chana bhaturawala floats 10,000 shares what will be the fair market value of each share?

= (Market value of the company as decided above i.e. 80 lacs) divided by (1000 shares)

= 800/- per share

-------------------

If this company was making software instead of chana Bhaturas and had a huge future value, that value would have been added to the share value!

-------------------

Now, what will be the value of this company if its current owners decide to start giving franchisees under their brand name in all Tier-II and tier-III cities along with their secret recipe !!!

Investing without tears!

Yesterday I met the grand old man of stock trading at a club in Shimla.

On finding him alone, I asked whether I could have a cup of coffee with him.

He obliged.

-------------------

"What are you doing these days?", he asked.

"I am itching to get into fundamental side of trading, Sir! Till now I was so focused on technicals that fundamental part got totally ignored. I am trying to make up for that!" I revealed frankly.

"So, how are you entering this sea of fundamentals!", he smiled!

"Well, I have got my hand on a few good books of stock fundamentals. I am burning my midnight oil to get the head and tail of balancesheets and Profit & Loss accounts and ratios....etc." I shared, albeit with a sigh of exhaustion.

He was listening quite attentively but didn't speak.

"It is a big big syllabi and I'm afraid I am already tired!" I admitted.

"But why are you getting into all this junk?" he said.

I was rather shocked at his question.

Everyone knew that this guy was a gem of an investor. His opinion about potential multi-baggers was famous in the Shimla circle.

"Sorry, I didn't get you!", I said.

"I am asking why are you mugging all this financial stuff?", he clarified.

"But why not, uncle!" I got involved!

"Afterall, how can I be a fundamentals-based investor without being a master of all this technical stuff?", I retorted.

"Look, Mr.Singh. You don't have to be an Chartered Accountant or M.Com or MBA (Finance) to be a good fundamental investor.

Rather, the more you entangle yourself in this jargon the more you will be vulnerable to being befooled by the army of financial special-effect experts of the corporate world.

You just can't think of beating them!", he explained.

"To be a good fundamental-investor you need to be good at psychology and common-sense!"
he continued.

"What!", I couldn't help reacting.

"Yes, you heard it right!", he calmed me down.

"All you need to focus on are these two things

1) The future of the business

2) The man behind the controls.

That's all I look for when I commit my money to a stock!"

"Sounds very interesting!" I was surely amused.

"So long as a budding Anand Mahindra or a Rattan Tata or a Sunil Mittal or a Kiran Majumdar or a Y.C.Deveshwar is at the helm of affairs....how can I be worried."

"When I am taking these names I don't mean I invest only in these bluechips or their new ventures.Rather, I have a big chunk of my investment portfolio into small caps and mid caps. And I must share that I regularly keep coming across tomorrow's Ratan Tatas and Anand Mahindras and Mittals..!"

"When I see common-sense business opportunities picked by able unstoppable men, I know I have found my investment opportunity!"

"So, all I am interested to know is

- what's the business opportunity

- who's heading, and

- what's in his head!

..............Period!

why should I bother about the fundamentals when I am sure "my" man-in-charge and his team is competent enough to manage it quite well for me?

His or her track record, the fire in their belly, passion in their body language, promise in their eyes............these all reveal it all!

If the fundamentals are not good, my man (or woman)-friday and his team will set it right for me.

Rather a situation where good team inherits a good business with marred fundamentals is a fantastic investing opportunity as the stock will be available at peanuts!!!

I know I can never be expert enough to be able to sniff-out the rat or cat in a cleverly dressed balancesheet, statements and ratios! So why bang my head into these?

Besides, what's the guarantee that a good balance sheet and P&L account will stay good?

Only a great team headed by a great leader can do that!

So, I should rather put my senses and energies to know about the guy (or guys) at the helm of affairs besides some common-sense gaze into the future of the business!

Once I am sure that the business potential is huge

Once I believe in the ability, integrity and intentions of the captain, I relax and let him and his team sufficient time to deliver results!!!

So, all I do to pick a stock for investment is

- look for emerging business opportunities

- read hell lot of interviews and anecdotes and stories about budding businessmen."

--------------

"I hope I have not bored you dear, you haven't finished your coffee!" he said.

I was awe-struck!

I just got rid of a mountain of books!!!

Is fundamental stock picking difficult?

Is fundamental stock picking difficult?

Think again!

In his international bestseller

"One up on the Wall Street"

legendary Peter Lynch said

"Twenty years in this business convinces me that any normal person using the customary 3% of the brain can pick stocks just as well, if not better, than the average Wall Street expert".

"You can know it (a great stock pick for investment) before Wall Street knows it"

"....I stumble onto the big winners in extra-curricular situations..."

These words made me 10 times more alert in day-to-day life about the signals around me which could throw up possible multibagger winnercandidates for investment before it becomes "talk of the town" in business channels!

I successfully picked Jubilant Foodworks Limited when I noticed that Domino's were renovating their outlet in Shimla, were opening another one in solan and many more.

"They must be growing pan-India if they are into tier-3 cities like Shimla and Solan!" I thought.

I bought the shares @282 and today it is at near 500! I am sure it is going to grow as their number of outlet grows!

This success has made me sit up and keep my eyes wide open in search of silent loud signals around me of the emerging winners.

So many times we are so blindly dependent on the TV channels and print media and brokers that we miss big winners right under our nose.

Earlier I used to mute the TV when ads came!

Now I don't.

I carefully enjoy every ad!

Ads are nothing but the fashion parade of the emerging winners in the business arena.

Though not all ads are from the winners, but winners are in those ads!

Character of ads hints at the winners.

Rest is common-sense followed by some googling - fundamental and technical!

"No lollipop please!" (Understanding Balancesheet-II)

If you are an Investor

who is about to invest hard-earned money in a company

would you be interested in the lollipop talk of the company or its advertisers or agents?

or

would you be interested to know

* How much cash the company has? Is it too less? Why? Consequences? Is it too much? Why? Consequences?

* How much money it is due to receive including credit? Is it too high? Why? Consequences?

* How much bad loan it is carrying? Why? Consequences?

* How much inventory it is carrying? Why? Consequences? What is its Inventory Turnover (cost of goods sold divided by average inventory)? Why? Consequences?

* What is the cost of fixed assets (property,plant, equipment etc.) it has? Market value? Replacement Value? Implications? What portion can act as buffer for any contingency? Is the value of the fixed assets correctly assessed? Why? consequences?

* What are its short-term liabilities? Why? How much? Consequences? How manageable these are?

* What are its long-term liabilities? Why? How much? Consequences? How manageable these are?

* How manageable these are?

* Are these less than or more than the cash flows? Consequences? What is the companies Quick Ratio (current assets without inventory divided by current liabilities)? Consequences?

* Are these less than or more than the assets? Consequences?

* Are total assets of the company more or less than the total liabilities? Why? Consequences?

* What intangible assets (like patents, trademarks, copyrights, technology, processes, brands etc.) does the company have?

If you are interested in the answers to the above questions before you write the cheque, you are within your rights and wisdom.

Where to find all this info?

Balance Sheet!

Do you need a Accountant to understand it?

If you have a good one whose abilities you trust, then great!

Otherwise, it is easier than learning to ride a bicycle

provided you have fun playing with it!

Reading a balance sheet is like playing hide and seek! A treasure hunt game!

The real info is hidden somewhere there!

One of my friends doesn't solve crossword puzzles!

Instead, he amuses himself by reading one balance sheet with evening tea everyday!!

There are plenty available on the net!!!

"Dearest Papa!" (Understanding Balancesheet)

This is a letter by a daughter to her Business Tycoon father explaining why she was turning down her marriage engagement with the son of a top-shot business house.

-------------------------------------------------------

Dearest Papa,

This may come as a rude shock to you but I have decided to cancel my engagement with Kartik.

Papa, this is the question of my future.

You had said that I shall have a great future with this family, but when I had a closer look at their Balance Sheet I was shocked to find their true financial status and moral ethics.

I am sharing below my findings from the balance sheet so that you can understand what I am saying!

- short term receivables are very low

- too much of credit is being extended to the supply chain

- NPAs are high

- advance credit retail has been shown to jack up sales figures

- too less cash in hand (how are they managing the payments to suppliers etc.? Employees, Suppliers etc. must be highly dissatisfied!)

- in last year's balance sheet they had too much of cash-in-hand. This shows that either they had no idea of how to deploy the excess cash or they had no plans! All that excessive cash has evaporated from balance sheet this year without any meaningful asset creation this year!

- they are carrying too much of inventory. Their inventory turnover (=sale/avg.inventory) is too low. I am surprised at the inefficiency! They must be paying a lot of interest on this inventory pile! How can they be managing their lives efficiently?

- they have calculated their fixed assets (land holdings, plant, machinery etc.) at market value instead of at cost. they have given highly inflated figures for these not-meant-to-be-sold-till-distress assets. why have they done that? obviously, their actual financial position is not as healthy as they have made out to be - by inflating these non-current assets. Had they used genuine 'at cost' figures for these assets, their net assets would have nose-dived even further!

- they have huge current liabilities. how come they didn't manage their debt?

- their current liabilities are almost equal to their cash flows! As exposed by their quick ratio i.e. (current assets without inventory)/current liabilities, which is less than 1, how are they going to save their company from debt trap? they are likely to default soon on their interest payments. Even if they go for debt restructuring, this will result in decline in their credit-worthiness which will further make debt hard and costlier to come.

- the most shocking thing is that they have almost zero net assets! Their liabilities are almost equal to their assets!

- surprisingly, they have no intellectual property by way of any good brand, patents, trademarks, copyrights, technology, processes, etc.. They have no core strength!

- I have a strong feeling that they have a considerable hidden off-balancesheet debt due to some large capital expenditures

In light of my above findings from their balance sheet, I am really shaken at even the thought of marrying into that family of hollow financials and weak ethics!

I hope my darling papa understands me and allows me to snap this relationship.

Your loving daughter

Chiki

The price u pay!

We buy stocks of companies which sell products and services.

As the price goes up, the stock price generally goes up in anticipation of increase in profitability.

Ever wondered how these companies decide the price of their product and services?

Generally we think it is just the cost price plus the profit margin.

However, it is rarely that simple. Given below the influencing factors:-

* Price is what the customers can or will be willing to pay!!!
- Every company will ask for the highest price customers will pay!

* Competition and Availability
- Lack of competition gives the company liberty to jack up the price!

* Image, Quality-perception, Branding
- Higher the quality and brand perception, higher will be the perceived price and hence the price-lable!

* Size of the market at that price
- More the price beyond a level, lesser the sales. Every company decides on how much it can
produce and how much it should produce. After deciding this number, the company decides on the highest price that will still ensure that much of sales!

* Sales Price = Cost Price + Profit
- This traditional and theoretical formula is rarely followed as it is.

* Strategy, Tactics
- Sometimes a product or service is priced strangely. It surprises you. Like Kabir Mulchandani shocked everyone by offering colour television below Rs.10000/- or Reliance offered cell phones in Rs.500/-!! But that is a strategy! A tactic!!

* Milking
- Generally every product or service is priced in a way to milk the market the most. In the beginning of the life cycle of any product, the customer is willing to pay the highest.
Gradually, the price is reduced to expand the circle of buyers more and more. The reduction (with bouts of rejouvenation and refreshing of the product) in price reaches to astonishing level to milk the most.

* Psycho pricing
- Many a times price of the product is decided to influence the psychological reaction of the customer. That explains why Bata priced its product as 299.95 or many others prefer 29 to 30 or 99 to 100!

* Cost v/s Price
- The real cost of a product can be much different (read higher) than the initial price. A Rs.500/- airline ticket costs you more than double after taxes and many additional charges!

Unlimited Business Ideas

Want to do a business? But don't know what business to choose?

Given below are some ways to churn out business ideas in bulk!

--------------------------------------------------

* Look for unmet needs and unsolved problems.

- Start a business to fulfill those needs. Ability to observe is crucial for this. Provide solutions to unsolved problems.

--------------------------------------------------

* Look for dissatisfied customers (of competitors)

- Start a business to satisfy them and thus win them over!

--------------------------------------------------

* Kaizen (Japanese for 'continuous improvement')

- Come out with a much improved product at same or lower cost and thus win over the customers and build a successful business.

--------------------------------------------------

* Guerilla / Niche warfare

- Specialise in one area of the business your competitors are doing and be miles ahead in that speciality as compared the competitors.

--------------------------------------------------

* Brand the unbranded your competitors are dealing in!

--------------------------------------------------

* Unbrand the branded your competitors are dealing in and offer the product/service cheaper (as you don't have to spend on creating and maintaining a brand.

--------------------------------------------------

* Position the product or service differently. Take one of the value corners. (Position and Value are technical marketing terms. Pl check in Google.)

--------------------------------------------------

* Renovate, Rejouvenate the product, packaging, pricing, point of sale, promotion. Offer a new experience and thus win over the competitors' customers.

--------------------------------------------------

* Takeover/buy a running business. The better choice is a truggling one. It will be available for less. Then turn it around!

--------------------------------------------------

* Start a business dealing in emerging technologies / concept where there is little or no competition. Just ensure the time is ripe.

--------------------------------------------------

* Enter the value chain

- Every business is a supply chain. Hardly any business is independent of suppliers. Enter that supplier chain. People will let you enter the chain if you bring them some value / benefit!

--------------------------------------------------

* Become a franchisee of successful business.

--------------------------------------------------

* Franchise what you have.

--------------------------------------------------

* Geo spread!

- 'Copy Paste' successful businesses of one place at multiple places!

--------------------------------------------------

* Leverage an established brand for other products / services as well (Line Extension)

--------------------------------------------------

* Outsource / Convince others to outsource (to you!) and thus reduce costs!

--------------------------------------------------

* Vertical Integration

- If you are refining petrol, then it makes sense to enter in drilling and exploration as well as petro retailing!

--------------------------------------------------

* Work for your self!

- If you are salaried, check if you can do the same thing for yourself!

e.g. If you are a doctor on salary, think about starting your own clinic. If you are a good driver and run a taxi for someone against a salary, consider buying and running your own taxi!

Uncle Chips' cool advise!

It was fine Saturday evening in Shimla.

Rain had stopped and the weather was pleasant with cool breeze!

The party had started.

But Jeet was visibly depressed!

"Why are you down today?" - Ameen (we fondly call him Uncle chips), a big time potato merchant of Shimla asked Jeet!

"I should have bought into the market when Sensex was at 7500 in 2008." replied Jeet!

"It is already at 17000 now, I really missed the bus. That's why I am sad!"

"Look, Jeet!" replied Ameen, "My Dad entered potato wholesale business in 1994 when a 100 kg bag of Jyoti variety potato costed around Rs.32/-. My dad used to make around 5-15% on each bag!"

"Today, 16 years later, the same 100 kg bag of potatoes of the same variety costs around Rs.500/-! I have taken over the business from my Dad. I, too, make 5-15% on each bag!"

"It is expected that the price of this variety will shoot to Rs.2000/- per 100kg bag in next 8-10 years and my son can be assured of 5-15% margin!"

"Trading will always be there till the fluctuation in price is there!"

"People made money when Sensex was at 100 in 1979. People made money when it was at 7500. People are making money when it is at 17000. And people will continue to make money when Sensex will be at 1 lac!!!"

"Profit of trader comes from variation and not from absolute level!"

"Businesses will continue to grow! New businesses will continue to replace old businesses!"

"Now, cheer-up and enjoy the party!!!"

"Cheers!" said Jeet!

3 Secret Trading Lessons...!

Once God was very pleased by a stock trader.

He gave him "darshan" and asked him to ask for 3 "things"

"Any 3!!!"

That trader was very wise and non-greedy!

He said, "God! pl give me those 3 secret lessons which will make me the best trader in the world."

God, as usual, tested his disciple shrewdly.

He said, "Son! I am very happy with you. Ask for something big!"

The trader was shrewd as well.

He didn't want something from the treasure. He wanted the password of the treasure!

God too was adament. He tried a few times to convince the disciple to ask for something else.

But the disciple didn't move.

Finally, the God had to relent!

He gave him the 3 secret lessons which made the trader a great trader, the best in the world!!!
Those 3 secrets were:-

1) There is nothing called free lunch!

2) Knowledge is power!

3) Money speaks!

Many interpretations are possible and all have profound implications in stock trading!

1) There is nothing called free lunch!

= No gain without pain!

= Nothing ventured nothing gained!

= No profit without loss!

= No results without efforts!

= No trade without risk!

2) Knowledge is power!

= More info you have about fundamentals better estimate you can make!

= More Technical Analyses you learn better you can estimate!

= Confidence comes from knowledge & experience

= Patience comes from knowledge & experience

3) Money speaks!

= If you don't have margin, you can't trade futures!

= More principal you have to invest, more you can earn with same % profit!

= The more buffer funds you have , bigger and more risks you can take!