I am sharing a story sent to me via email by one of the readers of TIPBlog. Here, this reader is narrating this experience about multiple attempts to make quick bucks from stock markets. After the story I will present my views and thoughts about it.
Sometime in 2002, March/April, I was doing my engineering and started working for a call center in the night to take care of my extra spending. I never knew or thought about stock market or any kind of investment. I spent two years in call center and spend many hours in the night watching CNBC after coming back from work. I learned few things about banking, credit cards, insurance, investment, and so on. In two years, I watched markets go up. I always thought I should invest in IPO and make some money on listing. However, I could not do so because I didn’t have a Dmat account.
- By 2004-2005, I go to learn about income tax, such as how to save tax, how to secure my future, and so on. In 2005, I was 25 years old and wanted to buy an insurance policy.
- I bought Aviva life insurance (ULIP) for a annual premium of 12k. I still have this policy.
- I came to realize that was not sufficient, so thought about buying another one. Even though my dad does not know anything about market, he suggested me not to buy ULIPs and all. But then, I bought Jeevan Anand for 10 lac sum assured. The premium is 68K/annum. The policy is still in force.
- In 2006, I bought a retirement plan for 10K/annum from ICICI. It is still in force. Same year, I bought another plan from Birla Sunlife 100% equity with premium of 12k/annum. I sold it this year Feb with 12k loss on original capital.
- In 2007, I opened a DMAT and my brother is using it. He made good money in some IPO and then lost some in trading. During 2007-2008, my brother bought 5 stocks for 5L cash for trading at life time high. Till date he hasten sold it cause the market crashed the day he bought it, now it’s worth 1.7L.
Anyways, 4 years went by with lot of money related mistakes in life but nothing to do with stocks. In 2009 I got married. After getting married, I wanted to have a secure life. November 2009 is when I found your website while searching stock investment. I found many other sites and read almost all of them, One thing was sure, I needed a huge insurance cause I smoke and drink.
Did all my research and bought a pure term plan from ICICI for 50L (annual premium 12K). I seemed everything is now set.
Meanwhile, I am reading your blog from starting and learned a lot of things (specially stay away from intraday and all, have 3 months salary as cash in hand for bad days and so on). Saw your previous picks and saw that all your picks have been doing exceptionally good. I know I was suppose to first have 3months salary in my bank account for bad times, but I could not stop investing when I saw some recommendation from you which were cheap and within your buy list. So I bought whenever I could, such as:
- 150 shares of graphite at 86
- 130 shares of ABCIL at 87
- 16 shares of Tata Invest at 500,
- 60 shares of Aegis at 178
- Made a stupid mistake of buying 200 shares of Alok Text at 21
By this time, I have completed reading all your post and becoming very inquisitive to see what happens in intraday, especially after DS post.
So what did I do, I thought let me just see what is this intraday and started to play in intraday. Buy 100 shares and sell 100 shares on the same day. For two days, lost 200, then 400 then 2000. By the way, before I started intraday, I had spend 30 days watching two companies and saw a trend that it goes by when the market starts and comes down at 12:30pm and then again goes up. I am thinking what am I doing I am losing money continuously, so I decided, ok, let me just get my money back and then I will quit.
I stopped, and then one day, I see that the stocks which I was playing with both of them have gone down by 2% to 3%. I had never seen that in last one month so went ahead and bought them in huge quantity 2000 each. After 20 minutes, the stock in down another few %. What should I do, I am gone, so I go ahead and now 100% that it will go up, so I buy 2000 more (each). Now what I see, 1 hour and the stock is 7% down.
You would be thinking where did I get the money to buy all these, I didn’t, I don’t have any money on me, it’s the margin which is available on my Dmat from my brothers holding on which I am playing. Anyways, I ended losing 32K and I don’t have any money to pay. So arranged some and then told my wife, she didn’t say anything and gave me the money. She had saved from January. I paid and decided it’s done, not anymore.
During the month of May 2010, I had to pay my LIC premium for 68K. I had 66K with me. At that time, I was also talking to the trader community in my office and told them I had lost 32k. They all told me, you should never play in intraday, you should play in futures. I then happen to talk to my RM and he too told me that I should play in futures. Because I get time to hold it for longer. I also learned that you can go short which I was not aware till now.
Now, the markets were down at 4800, everyone is telling go short the market, it will go down, market will go down. At that time, I needed 2K. I forgot about all the losses, as futures looked very promising. I had no idea that if it goes in –ve then I would need to pump in money. I thought I can hold it till the expiry date without paying anything.
I went short on nifty, 3 lots at 4822, it never came back to that level. I am at loss of 69K and just few days back the broker squared off all my positions including ones that I had bought using your recommendations and few of my brothers holding as well. I have bought all my brothers holding back now. I haven’t still told my wife about it, I don’t have the guts to tell her. Somehow, I was able to pay my LIC premium with the help of one of my friend (borrowing 2k). I should have done this earlier.
I have to start all over again. But, yes, I do realize all the mistakes I did. And, won’t do it again. Yes you are free to screw my happiness or ask any questions if you have.
The title reflects the moral of the story. That’s a one line description of what I have to say.
beginners guide, investor story, life