Saturday, January 2, 2010

Welcome note - Year 2010

Dear Readers,

First of all, wish you all a healthy, peaceful and prosperous new year 2010. Today, I wish to discuss on few virtues of equity investments as a welcome note to the new year, which may helpful for freshers or those who are planning to invest in equities.

One of the most thriving years in our investment life has departed. Sensex has crossed the 17500 level but closed a bit lower on December 31st 2009. It has gained the highest percentage gain in a single year ever since 1991 or in 18 years of history. And if we look at year 2009, closing figure of Sensex on Dec 31 2008 was 9647.31 and it has bunged at 17464.81 in Dec 2009. An 81% hike. Check your status, if you already an investor.

The year 2009 rewarded me as well as to my clients some excellent gains; moreover the year has taught me certain precious investment lessons which I appreciate more than the monetary gains. The year also answered practically to my little long-lasting confusions on the behavioral side of the market. I am passionate enough on year 2010 as an ordinary investor because I have been firmly experienced the big truth, `Market always give good opportunities to make money irrespective of Index figures’. Moreover, I hope the globally improved scenario subsequent to recession turmoil or India specific favorable circumstances may bring our market to higher levels in coming days. I hope, companies showing lose statements even now, will improve in coming months.

It is remarkable that India, our motherland stood as a concrete mast without any bruises in the recession blizzard. Our nation boldly faced the calamity and successfully fought and triumphed in the conflict, by arming with its pure internal potency, gathered by transparent and highly disciplined financial/banking set up. Our powerful banks, our leaders and our corporate community responded in a matured manner to the myriad repercussions of recession and I would like to say, they saved us. We have to be grateful to those souls too, who has shown the vision or dared to nationalize our banks decades back, implemented other solid financial regulations, which turned the real saviors.

The World has realized well that India is the most appealing equity market to invest. Check the FII figures, how much money they pumped to our market in recent past. Whatever the reason behind, a country which safeguarded itself in a sturdy way to a crucial phase must be a favorable corner to all kind of investors. Furthermore, a country that achieved a far better growth rate and managed its economy without much confusion in an ever crucial phase, increases the confidence on its financial strength. I think we were the people, who nowhere had a count except in the population figures or in the numbers of gods. But now the international community is compelled to count us, and I hope they will start count from us in near future.

Majority of common investors stay away from the share market because of fear or lack of knowledge. They hardly know a person who actually made money from the market. Most of them depends nominal 8-9% returns from Bank FDs or Post Office based investments which are safe with assured returns. But the gains are normally crushed by inflation, means the money is idle.

I said this much to persuade the point, investing in equities will be one of the best decisions in this New Year for any individual, as India has such a solid base to multiple your money. Thousands of new investors opening demat accounts every day, especially after the parliament elections/Govt formed with lucid majority. The recovery symptom from recession and other positive views on Indian growth story is continuously boosting the numbers of equity fans.

If we take the number of active demat accounts as a measurement to count share market investors (direct or indirect), we have some 1.60 cr demat accounts. If we pass up the numbers who have multiple accounts, still approximate 1.30 cr demat accounts are there. Instead of figuring more statistics, I wish to say, the current percentage status of equity investors in India is equivalent to the figures of United States in 1960s. Means, we have to travel much distance.

On the other side, never select stocks as your only investment options. Or never put your entire savings to stocks. It is a place where you can achieve unbelievable returns equally prone to irrecoverable destruction. I have placed below a rough equity allocation chart considering the age factor/risk tolerance level. You can have an idea about the approximate percentage allocation, consider for direct investment in shares. These are the nearest imaginary figures but you can choose better %age levels depend on your poise.

Age group -- Max allocation %age(equities)

18-30 -------- 70%

30-40-------- 50%

40-50-------- 40%

50-60-------- 30%

>60-------- <30%>

There are lots of investment options in front of you like Bank FDs, Debentures, ETFs, MFs, Properties, Bullions etc. Personally, I prefer stocks first and then bullions as the best options for now. I least prefers MFs or ULIPs because we enjoys the gains after a lot of filtering other than brokerages. It is better if you have the knowledge of basic concepts related to market or you are bit familiar with the market. The blind long term investment does not make any logic, if you don’t have a specified target, you should be very careful. As I said earlier, Investing directly in shares are riskier compare to other investment options. Because the market movement as well as share prices depends on various known or unknown factors such as political, financial/banking rules/regulations, Govt policies, Global economical issues, drastic wheather changes, agriculture productions natural calamities, terrorist activities wars/war like situations, etc… etc..

If you are not yet started investing in shares, you must start it in very near future, because the popularity of equity investing as well as it’s importance as an investment option is spreading in such a fast pace. We can see this trend of popularity or growth in increasing numbers of financial/brokerage firms. So, decide as earliest.

Invest time for wisdom prior you invest. You will never lose both…


Shabu Thachat -



  1. Happy New Year....Hope you have a rewarding 2010 as well and so do your clients...

  2. Good to see experts like you still talk about value investing. Most of us do research before investing but only few experts like you know how to research undervalued stocks. Good stocks like infosys and hero honda gave good returns in last one year. But the profit from these stocks are less compared to profit we got from undervalued stocks. If majority investors are bullish on a stock, we won't be able to buy that stock at lower rates. If majority investors are bearish on a stock, we won't be able to sell the stock at higher rates.

  3. Dear PKB2000,

    Thanks a lot for the wishes and I wish you the same with peace and prosperous.

    Dear Faisal,

    Same to you and family. I wish to travel in unconventional ways throgh market this year.. lets see..

    warm regards

  4. Dear James,

    Thanks alot for the comment, Wish u and family a great year ahead.

    Yes, you are correct. The reputed or established players always do a bit better or performs slightly above the average in any case, but strangers/unknown people makes history always which we treated as real SENSATIONAL NEWS. So search Sensational rather the expected ones.

    warm regards

    Shabu Thachat

  5. Good Observations Shabu. Have great New Yr.


  6. A very happy new Year Shabu.

    A nice article indeed, I liked your comment about the blind long term investing. If you can share some information around profit booking, at what levels should one book profits would be helpful....

  7. Sir,

    You are right. Large cap stocks will give only expected returns. Some large cap stocks may also give unexpected losses. Yesterday one channel reported false news about death of former AP chef minister. If that news was correct reliance stock may have gone down like satyam.

    Today our stocks like Evinix and R Systems went up when market was going down.

  8. Dear Jagadeesh,

    Thanks for the comment. Regarding profit booking, please go through the link below.


  9. Thanks for your information. Most of the posts in the blog is really valuable. Regards

  10. Great post.... I like your writing style.



The blog is associated with information on Indian stock market and author’s investment view points on various emerging stocks/sectors. The contents discussed in this blog are purely my own personal opinion and in no case weigh it as any kind of recommendation for stock market investment. The sheer purpose of this blog is to educate the interested community on market related subjects based on my experience and I am, in no way, responsible for investment decisions based on the contents described in this blog.

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