Investing in stocks

The Indian stock markets are becoming a gambler’s den. Knowing when to buy, and more importantly, when to sell is more a game of chance than science. I’m increasingly coming to the view that this is something best left to professionals. For the retail investor, sifting through the volume of information (and dis-information) that is available and arriving at a right investment strategy is virtually impossible. To boot, many of us don’t have the nerve to hold on and sell too early in a rising market, or in a falling market, we don’t know when to sell and continue to hold on to stocks way past their sell by date.

A case in point is my investment in the three oil marketing companies, BPCL, HPCL and IOL. I had made good profits in these stocks in the 2003-04 period. Sometime last year, when the market tanked, I thought that I would take a contrarian bet on these stocks, after all, the demand is ever increasing, they were well off 52 week highs and the market was totally ignoring them. To my misfortune, the market conditions became extremely negative for these companies, crude oil prices spiked, the government did not allow them to hike prices and their losses mounted. Though they were compensated for their losses, the markets took an extremely dim view of their prospects and the stocks lost almost 35-40% from the prices that I bought them. I had completely stopped looked at their prices as it seemed like I had no hope of ever making any money on them till 2025.

And then suddenly last week, the stock price of these companies went up by almost 25-30% each. There was absolutely no trigger for this, crude oil prices were rising to all time highs, there was no sign of the government allowing them to increase fuel prices, nothing to indicate that their prospects were getting better. To me, it looks like the other stocks had got so expensive that the punters were looking for something cheap to buy. Whatever the reason was, I didn’t care. For the first time in almost 2 years, they hit my purchase price. I sold and exited with no profit or loss.

It’s not just these stocks. In the mid 90s, I’d invested in a company called VBC Industries at Rs 20/share. After the IPO scam, the company disappeared and I got so frustrated that in 2001, I tore up the certificates and burnt them. Recently, I found that their shares were trading at Rs 35.

These are just a few of the companies that I know about. I wonder how many more are out there and when investors are going to get burnt. I'm not waiting around to find out.

Fancy dress video

Fancy dress competition at Nisha's school

Satisfaction

You're stuck in yet another horrible big Bangalore traffic jam on the
Outer Ring Road. You decide to play by the rules and sweat it out behind
countless vehicles on the main road. All around you, you see people
trying to beat the jam by getting on to the service road. Suddenly, the
jam magically clears on the Ring Road. The service road is now horribly
jammed. What satisfaction!!!

Stupid stupid BBMP

The rain that we received over the past few days have made a total mess of the roads in Bangalore. In HSR Layout, where many of the roads were laid just a few months ago, the rain has exposed the shoddy workmanship. What takes the cake is how the authorities deal with the problem. There is a stretch near my house which is particularly pothole ridden. Some genius thought that the best way to deal with it is to dump a lorry load of mud on to the road.

An ode to America

Enjoy

Kimi - World Champion 2007

Wow, what a way to finish off the most closely fought championship in recent memory. Before Shanghai, only the most optimistic (and foolish) Kimi supporter would have given him a chance of being world champion. At Brazil, the odds shortened but it was still a very long shot. How it all came together is something that we will be wondering for a very long time.

With this win, Ferrari also move away from the Schumacher era into the Kimi era. Massa was very brave in the press conference hoping that his time will come, but I think that it is very unlikely. Kimi is now comfortable with the car, is the fastest driver out there still and as world champion, there will be a definite tilt towards his side of the garage. Massa should resign himself to playing the second driver role and collect a few wins, poles, fastest laps and a few million dollars along the way like Rubens and Eddie Irvine did.

With the championship over, all talk is going to be about Alonso and Mclaren. Everyone says that he will be leaving Mclaren to Renault. Renault are not even announcing their driver lineup until this plays out. It should be an interesting few weeks, keeping fans interested through the winter break.

I really enjoyed the world championship fight, but cannot say the same for the races. The only ones that will stay on were Canada, Nurburgring, Fuji, Shanghai and Brazil. Three out of those five were rain races, that speaks a lot about how boring F1 is nowadays.

My picks for the drivers this year were

A+	Hamilton	came up way beyond expectations
A	Rosberg, Kovalainen, Heidfeld, Raikonnen, Alonso, Massa	All of them had flashes of brilliance but their fair share of mistakes
B	Webber, Vettel, Sutil	Each of them could have done far better if their car had been better
C	Kubica, Button, Coulthard, Liuzzi, Speed, Sato, Davidson, Trulli	All of them were disappointing, did nothing of note
D	Fisichella, Wurz, Barrichello, Schumacher	career ending performances for this bunch

Infosys

After the somewhat disappointing (??) quarterly results from Infosys, one of the irritating TV anchors on CNBC asked an equally obnoxious analyst, "Is this the end of Infosys as a bellwether stock?". I wanted to strangle both of them and tell them to cut out the rhetoric, but thinking about it now, it is a good thing.

For too long, the importance of Infosys has been wildly exaggerated and many other companies that were doing equally well (TCS comes to mind) never got their fair share of recognition. I also think that the Infosys management plays too much to the markets, which is not a good thing for the longer term. So, if the markets write it off completely and start focusing their attention elsewhere, it will give the management the freedom to take decisions that will help them in the long term.

In other news, the market touched 19000, just 4 days after it touched 18,000. People are now talking about 20000 and 25000 levels by the end of the year. I wonder if any of them recall the famous words "Irrational exuberance".