May 24, 2006

And the crash....

I have always enjoyed crashes in the past. I enjoyed the stock markets around 2000 when everyone was excited seing sensex touching 6000. Balloons were flying around BSE to mark the fresh high. I loved seeing this crazy act by brokers, who are otherwise meant to be silent and unknown to the rest of the world. And then it happened, the inevitable or the truth prevailed as the Sensex crashed and it was the start of a long period of consolidation. I started investing at 3800 levels. What more exciting would it be to see the Sensex fall further to 2900 before the reversal actually start. Each time it fell, each time I would 'buy'. As a small investor, I feared that the stock markets would actually reach an all time high before I could invest my surplus money completely. This was my learning during the times it fell.

Things took a totally different turn this time around. Today I do not have surplus money to invest, I took money out of my treasure chest, close to 10% of my portfolio, which I always keep it liquid money, waiting for an excellent occasion to invest. I thought that day was last week and so I started investing in a stock that fell by 10%. It fell the next day by another 10%, I thought this was an amazing bargain and I invested further. Atleast, one thing I learnt was to always build a portfolio of stocks slowly. There is always time in this market to make money. But to my utter dismay, the crash occured on monday, and god it was one hell of a crash. I saw this stock fall by an amazing 20% in about two hours. Well, to compound this, the stock fell again the next day when most stocks were moving up. One of the "Blue-chip" ones that is beating me black and blue. But then that is life.

I tried to analyse if I made a mistake in my buying process. Not too many mistakes, but yes there were a few. The stock was pretty expensive but comparitavely cheaper than its peers. A leader in its field with business in India and outside. Well lets see what the future holds for this stock.


Anonymous said...

I think IPOs are a better option for a long term investment.. buy and forget. Get back to it after some 5 years to see if the company still exists :D

Damn.. this time again... Deccan Airways seems to be not flying on time.. Hope there is no mid air crash :P

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