Thursday, September 12, 2013

How to make money in Stock Market in India

- Chellamuthu Kuppusamy

Whenever I meet people who happened to know about my book, I am invariably asked set of questions.

a)      How do you get time? What makes you to write?
b)      What company can be bought now? What share can I buy now?

Handling the first question is relatively easier. Second one is as embarrassing as the queries involving how many copies are sold and how much royalty I earn etc. These questions come from people who are aware of the fact that I am not into the stock broking business and that writing is not my full-time profession. It is very difficult to say no to these questions, read requests, seeking stock recommendations. It takes a lot of politeness and courage to encourage them to do their own analysis and stock selection.

Firstly, vast majority of friends who seek stock recommendation advice know little about the fundamentals of capital markets. Asking for a share market tips is like asking, ‘How to hit a sixer?’ without knowing the rules of Cricket. To quote from the 9th chapter ‘Analysing the Stocks’ introduction from the book The Science of StockMarket Investment - Practical Guide to Intelligent Investors:

//We discussed about the structure and functioning of the stockmarket in previous chapters. They can be compared with the description, “Thereare two sets of three sticks are fixed at 22 feet distance. You have a pair ofbatsmen in the middle, a bowler bowling at them, a wicket keeper and then ninemore fielders” that introduces the basics of the game of cricket. Everything wehad gone through so far is nothing but a similar description about theinvestment game – kind of ‘know what’.

Which deliveries to defend? Which ones to go after? Whichone to leave to the keeper? – Intricacies like these are yet to discussed. Nextsix chapters should serve this purpose as they aim to present such techniquesand approaches. One should develop his own rules and selection criteria beforepouring in his money into the stocks. That is what we are going to share, learnand unlearn, if needed. In short, we can term these as ‘know how’.//

Books like these only help in understanding the rules of the game and various shots such as cover drives, hook shots, inside out shots, helicopter shots, reverse sweeps etc. I do recommend and encourage friends to read this book, for that matter any other good investment book, before trying their fortunes in the marketplace. I also personally vouch to refund the money if they are not happy with the book.

While getting an idea about know whatand know howin Cricket does not make a person the next Sachin Tendulkar, we don’t have such limitations in share market. No one selects or drops us from team unless we chose to do so.

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