Investing in the Share Market- a Meeting with an 'expert'.

A few days back I was attending a party and overheard a conversation wherein a young man was explaining to a group of people that it was very simple and easy for him to make money in the stock market. He mentioned several companies whose stock had gone up 3-4 times in last one year and mentioned that if he had money, he would have invested in those companies and made a ‘killing’. He made the entire process looks so simple and easy that most of the listeners agreed with him and were willing to invest money with him. I was quite surprised that people so quickly and willingly agreed to part with their hard-earned money/savings. It is, perhaps, understandable – who doesn't want to get rich and sooner the better.

I couldn't resist myself and asked the young man where he studied about ‘Securities Market’ and how long he had been investing in the stock market. He said, “No. Uncle! I deal only with ‘Share market’. I have not attended any program/course and have been following the stock market for last 12 months or so. Now I understand the nuances and can easily spot the winning stock”. He added that being aware of what is happening in the market, following it for an hour or so every day had enabled him to understand the trends and market sentiments so clearly that he has no problem in identifying winners.

I asked him, if he had read the book called ‘The  Intelligent Investor’ by Benjamin Graham or ‘The Little Book of Common-Sense Investing’ by John Boogle. I asked him a few other questions viz., Do you go with the ‘Fundamental Analysis’ or by the ‘Technical Analysis’. How do you work out and suggest what portfolio would suit which investor? What ‘Portfolio Management Strategy’ would you recommend for a retired person like me?”

He was quick to reply, “Uncle these are all bookish things. There is not much point in going into the theory or what happened in the earlier years. That is history and you understand ‘history is history’ and ‘future is future’. Stock market is not about ‘history’ it is about ‘future’. In the stock market you must learn to accurately predict what is going to happen and those who have the sense to do this make a killing. Most investors and companies follow the book, and their actions can be predicted. I am an intelligent independent investor, and they cannot predict what I would do. This is my unique advantage, my ‘USP’ and it would give me 200% return in a year.”

I asked him how much money he had made in the last 12 months. He replied that since he was doing a job and not able to save much money, he was not able to invest large sums in the market and that his investment was not very big. I again asked him how much money he had invested in last 12 months. He didn't like the question but answered that he had investment of about ₹60,000/- and purchased shares of one company and his investment has appreciated by about ₹30,000/- in last 12 months.

I asked him what he proposed to do in the coming time. Very enthusiastically he told me that the friends around him had promised to raise and give him about ₹60,00,000/- which he would invest. The money would double within a year or so. He was certain that he would be able to raise more money and the more money he invested, more he would make in the stock market. This way he would fulfil his dream of becoming rich and sharing his wealth with his friends who would be raising money for him.

As I was about to move of, he urged me, “Uncle! you please invest your retirement fund with me, and I will double it for you in two years. Then you can go for the world tour.”

When I think of this young man, I am reminded of a talk I had with a bus driver in Uttarakhand. He was a very jovial chap and kept singing or humming some songs as he drove the bus in the hills negotiating sharp curves on the hilly terrain. During one stop at a roadside eatery, I had asked him how he managed to remain so cool and composed while driving on such a difficult road. I asked him if he was ever scared while negotiating sharp curves on the roads particularly at points where there was a steep hill on one side and a deep fall on the other. I also asked him how come he was not afraid of passengers beating him in case there was an accident. He replied, "Sirji! I close my eyes while negotiating difficult curves and turns and then I am not scared. In case of an accident, I would be the worst hit person. The passengers and public will only have sympathies for me, in case I survive”.