Investing and trading in stock markets can simply be explained by the following story.
Let us assume that the stock market is an amusement park with all the roller coasters and rides acting as the stocks of various companies. Let us also assume that the ice cream vendors and food stall owners are the brokers and financial advisors to the investor. I’d like to name this park – Dalal Street! In Dalal Street there are many sorts of people.
Firstly, there are people who are adventurous and thrill seeking, who want to sit in all the rides. Secondly, there are people who are initially hesitant but after much prodding join their friends in the rides. Lastly, there are people who buy the entry ticket to Dalal Street but never sit in the rides.
In the first case, the participants enjoy the most and come out extremely happy and satisfied. This means that even after all the ups and downs of the stock market the always invested investor comes out unscathed and beaming with profits.
In the second case, though, the participants eventually agree to ride, they have already missed the bull run what their thrill seeking friends had enjoyed. So, never enter the markets when everybody is entering into because you may have missed the bus.
In the last case, the participant is ever engulfed in fear and never sits in any ride. Unfortunately, he has wasted all his time by just waiting for the ‘correct time’.
In between all this, the thrill seeking group hardly has any time to fancy the ice creams thus they reduce their costs reaping more returns, whereas the always free investor waiting for the correct time spends all that he has to take infinite advise and suggestions.
So, finally the moral of the story is to ignore that eponymous Uncle who at some cocktail party advises you to stay out of the markets. That uncle with his empty wine glass and using his extraordinarily flair language would try to persuade you to not get into this gamble. But you can best judge him by the glass that he is holding – empty!
So, join the bull ride. Stay long. Stay invested. India is on course for a great bull run! As always!