I am 50 years old and for
the past many years, Life had been nothing but Bull and Bear, Shares and Bonds,
Annual Report and P &Ls, Announcements and acquisitions, surges and plunges,
listening to superlative comments of bosses and explaining the basic
terminologies like intraday trading to clients. This is a regular day for a
stock trader and consultant. We breathe Debt and equity and excrete dividends
and bonuses. Not a second goes by when we are not looking at computer screen
analyzing share prices or taking phone calls from the people who hate us, our
clients. To make it worse, we live in India so all the fun part of WOLF of Wall
street is absent with our bosses demanding Aaj
kuchh toofani karte hain attitude from us every day and wanting High Performance...Delivered. This
reminded me of one of HR theories, I mugged up during my MBA days: Acceptance
theory of authority. You
do as your boss say. He demands perfection and since you have signed a bond with the best stock trading and
consulting company in India, you are required to behave like the best.
My friends have a
different say on this, they feel I make easy money like any other stock trader,
which is partially correct. To outsiders our life is like market value of 1
Stock of Infosys Ltd.(>3500) but only we know the truth which is face value
of the very same share (Rs5). My job does give me money but cut short the time
to spend it with weekdays sacrificed to trading and weekends to consulting. There are some things money can't buy, for
everything else, there's MasterCard doesn’t really work for me. Anyways, this anecdote is not about my
lifestyle but yes, it is about stocks. What else can you expect from a stock
trader?
One normal day at
office, after the 4 pm rush when I was about to take my Oh Yes..Abhi break, I heard a lot of chaos from a bunch of kids in
our corridor which was obviously unusual in a stock trading firm. Witnessing
such chaos after hours of frustrating stock trading and handling stupid
clients, the very obvious thing I did was calling the security and tried to
inspect the matter. Before I could put
down my phone, I got a tap at my shoulder from my colleague showing me a sheet
of paper. I was looking at the results of the annual simulation based online stock
trading competition organized by our company for this past month which attracts
entries from many professional stock traders and followers of stock market.
Unlike any other stock trading competition, we don’t evaluate on the basis of
the profits made, but the quality of portfolio chosen which includes: the risks
and returns associated with it. Every year, the winner of the event is invited
at our office and presented with a cash prize of 5 lacs, a trophy and some more
goodies and certificates. What caught my eye was the name of the winning team “the
Spoon Feeders” making me realize the reason these school kids were creating
this mayhem. They were the WINNERS of our prestigious competition!
How can a bunch of 14
year olds who were supposed to be playing Mario on their PC were in fact doing
stock trading and what is even stranger, how can they beat the professionals
who spend night and day reading financial news and licking editorials on
Business India and other financial magazines. I cross checked the names and ages from our registration data but nothing being wrong there too.
Some Imagination at Work led us to a conclusion that, may be a professional adult would have helped them or it might be a matter of just pure luck, both of which would be proved wrong later on. I was desperate to have an interaction with those 6 kids who were accompanied by their teacher Mrs. Anita. So here we were in a meeting room where may be for the first time a McDonald’s burger was ordered and served, I interviewing or rather investigating the whole matter.” So how are you feeling?” I asked the whole group to initiate the conversation. “Happy with winning such a big event, this will definitely boost our confidence in selecting and trading our future portfolios” replied Nakul. “At the age of 14, I was trading video game cassettes and wwe cards with my friends not stocks and making portfolios” I replied in a funny way.
“Actually we organize
weekly business workshops, where students are allowed to read financial
newspapers and are taught basic terminologies related to finance to make them
aware of the financial world and enable them to savings as we believe that a penny saved is a penny earned. Moreover,
Students are allowed to invest in any company but before that they need to
explain everything what the company they have chosen does, which lead to a lot
of research and knowledge. Know before you buy is our theme” said Mrs. Anita.
I tried to know the
reason behind their success and how they made a million dollar choice of building
this perfect portfolio of Bajaj Auto, Bharti Airtel, Reliance Industries, Infosys Ltd., McDonalds,
Cadbury, and Hasbro.
Nayan started by mentioning
McDonalds saying “We bought McDonalds because, who doesn’t like McDonalds
Burgers and Fries?” It was pretty simple, every middle class youth is a visitor
of McDonalds so how can they do wrong with their financials. Their share prices
did hike manifolds in past 5 years.
Now they explained
Bharti Airtel saying that its tagline and jingle’ Kyuki har ek friend zaruri hota hai’ is very impressive and is
loved by all. Well it might seem that they were just lucky picking up Airtel
shares which soared to Rs 300 from Rs 230 in the past 6 months after launch of
this marketing campaign. But, Catchy ads and jingles do make an impact on the
customer’s mind while picking up the product, take an example of ‘Better Living Through Chemistry ads’ by
DuPont decades ago. They positioned their product well. Yes these kids might
not be knowing STP analysis but know what attracts customers. I was amazed so
far with their Analysis and here came another one.
Arjun who was in
Seventh grade replied,” We bought shares of Bajaj Auto because new Pulsar is
amazing, everyone is buying it. My elder brother just booked it and will get
delivery after 3 months. There is a huge waiting for it so we had to buy this
stock.” A financial analyst might have discarded it looking at its huge debt in
balance sheet but this little kid saw something which was more important and
forecasted their future sales. I was like What an Idea...Sir Ji!!
Why Hasbro? It’s a toy manufacturing company right? That
explains all. Kids explained Cadbury with their love for chocolates and bourn
vita and they picked Reliance Industries because they were once told the ‘Rags
to Riches’ story of great Dhiru Bhai Ambani and shareholders of Reliance who once
invested hundred gained lacs, which created a big impact in the minds of kids. They
picked Infosys because they overheard some adult speaking that comeback of
Murthy will positively affect the shares of Infosys Ltd. May be this was the
only stock in their portfolio which they took listening to adults.
Also what they did well is that they diversified their
investments across several industries including food, IT, Power, Telecom and
service since not all the stocks are going to flourish. It is a general rule in
stock trading that If five stocks are selected, 3 of them will do as expected,
one of them will do exceptionally well and might make you dream buying a BMW
but there will be one stock which will do really bad and will replace your BMW
with a Hyundai. Hence it’s better to diversify to reduce risk of losing as you
don’t know which stock will make you rich and which one will shatter all your
hopes.
After discussing all about their portfolio they did share with
me some of the rules they learnt in their finance workshop.
·
Good
Company gives increased dividends
·
You
lose money in short run but gain in long run.
·
Stock
trading is not gambling.
·
Know
the company before investing in it.
·
Never
become emotional with any stock, Think Rationally.
·
Only
because the stock fell doesn’t mean it can’t fall further.
·
You
should not invest in company because its shares are cheap but because you have done a research on it.
With this we ended
the meeting presenting a huge amount of five lacs to bunch of school kids who
don’t have any B.com or an MBA degree but a common sense which made them invest
wisely. Mrs. Anita continues to perform
her best carrying out financial workshops and promoting amateur stock-picking. In
fact now she in collaboration with other teachers is starting their own
investment club with around 20 members including me as an honorary member. P.S. The whole story is fictional.
