There are many myths in investment management …let us break some of them:
Buy low and sell high: Such a simple statement to make, and impossible to do in real life. Buy cheap and sell dear. People would like to think this is easy to do, but remember whether a share is high or low is something you know only in retrospect. For e.g. if you buy Hdfc ltd. today at say Rs. 2400. Six months later if the price is, say Rs. 3000 and you sell it, you would be right. However if you buy it today at Rs. 2400 and 6 months later it is at 2100, you would be wrong. So it is a nice maxim which is easy to espouse, but difficult to do.
Have greed when others have fear, and have fear when others have greed: A very good, brilliant saying again difficult to implement. When the index was 6000, there was a program on one of the Television channels. The 3 speakers were Comrade Raja, Shankar Sharma, and Rakesh Jhunjhunwala. Rakesh said people should not keep their money in savings bank account but put it in the share market. Raja was of course on a spiel about how Americans are here to corrupt (Oh completely as an aside did we hear any Comrade complain about Russia in Georgia?) us etc. Shankar Sharma told Rakesh “Aha, now that the market has reached 6000, you want the common man to lose money?” and put RJ on the defensive. However what happened to the market after that is well known! So to be fearful when others are greedy and greedy when others are fearful is nice to say, difficult to implement.
as life goes on…we will break some more myths.
Buy low and sell high: Such a simple statement to make, and impossible to do in real life. Buy cheap and sell dear. People would like to think this is easy to do, but remember whether a share is high or low is something you know only in retrospect. For e.g. if you buy Hdfc ltd. today at say Rs. 2400. Six months later if the price is, say Rs. 3000 and you sell it, you would be right. However if you buy it today at Rs. 2400 and 6 months later it is at 2100, you would be wrong. So it is a nice maxim which is easy to espouse, but difficult to do.
Have greed when others have fear, and have fear when others have greed: A very good, brilliant saying again difficult to implement. When the index was 6000, there was a program on one of the Television channels. The 3 speakers were Comrade Raja, Shankar Sharma, and Rakesh Jhunjhunwala. Rakesh said people should not keep their money in savings bank account but put it in the share market. Raja was of course on a spiel about how Americans are here to corrupt (Oh completely as an aside did we hear any Comrade complain about Russia in Georgia?) us etc. Shankar Sharma told Rakesh “Aha, now that the market has reached 6000, you want the common man to lose money?” and put RJ on the defensive. However what happened to the market after that is well known! So to be fearful when others are greedy and greedy when others are fearful is nice to say, difficult to implement.
as life goes on…we will break some more myths.
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