Otherwise you will keep hitting resistances, or keeping rotating around the pivots, or you may slip on downtrends, or you may find it hard to climb in upwards, or you may find yourself squeezed into closing triangles. In the end, you just end up waiting for somebody to throw you out of it, only to fall with loud thud.
I buy stocks with an objective to hold it forever. This, for most people, is very difficult to grasp. I started investing about nine years ago (eight of which are being buy-and-hold investor). In these eight years, I can count on my fingers how many times I have sold a given stock. Conversely, I will have to check my records to determine how many times I have purchased a stock.
My friends and acquaintances keep telling me if you never sell a stock how you will make money. You need to buy low and sell high to make money and increase your wealth. I politely ask them only one question, “You have been buying low and selling high for xx number of years. What is your wealth?” Almost every time the voice starts stammering.
To some of them, who are close and good friends, I put a proposition to them. I tell them, since your “first investment” to “as of today”, tell me honestly what has been the real percentage appreciation to your “wealth” (chuckle!). If it is more than my “wealth” appreciation (again more chuckle!), then I will transfer my entire portfolio to you. If not, then vice-a-versa. What is surprising to me is many start mental calculations; hmmm, not including tax, and transaction, ignoring commissions, not considering my subscription fees, blah blah blah…. I end my conversation there itself. Beyond that it’s a waste of time because they do not understand the meaning of total return or wealth. Discussing these two aspects is a topic in itself so I will leave this for future post. Continue reading rest of this article…
The current rally has added 48% to the SENSEX relative to February 2009 low of 8160 points. Is this the start of next Bull Run? The market players and traders will make you believe it is in fact the start of next Bull Run. Any rational investor will ask himself one question, what has happened since February 2009 that justifies this rally. Has the global economy turned around? Has the Indian economy turned around? Has the earning of companies turned around? Or the general question can be has it even stabilized to say it is turned around? Some may argue that equity markets are leading indicators and hence things have changed for better.
I started writing about equity investing on this particular blog from February 2009. However, I have been investing on my own for last eight years or so. Over these years I have learnt a lot about equity markets, macro economics, stock advisors, tipsters, mutual funds managers, etc. I am sure that you also have had your own experiences the good, the bad, and the ugly. 
My Secret Asset for Building Wealth
Year 1997, I was freshly minted engineering graduate, secured well paid job in my first month of final year, and thinking I was smarter than the rest. My final year was what we call “bindass, with damn care attitude”. I was young, naïve, and believed being above few hundred odds in my class is being equal to best. Reflecting back, I couldn’t have been more wrong.
This continued in my early years of investing which can be characterized as impatience, that extra energy to do something, and continuous urge to make an immediate impact or getting results. Like everybody else, I wanted to earn quick bucks and what better way than investing (or trading?) in stock market. You see, I was under the impression that making those few hundreds (or thousands) in small trades and repeating that often will increase my wealth. In other words, it will make me rich. How can that be wrong? After all, I am increasing my cash flow with small profits, isn’t it? Again, I couldn’t have been more wrong. Continue reading rest of this article…