With the markets getting back into the frenzied groove, its reminds me of the time - seven years back in 2007 - when we witnessed a sharp rally in the stock markets with real estate and banking shares making most of the rally. Sadly, what followed next was the sharpest and most vicious fall in the Indian markets, with values net worth (or the Sensex) falling as much as by 64 per in a matter of 10 months. Although let me admit, that the frenzied or euphoric behaviour is not yet witnessed in the markets, and what we see nowadays are sharp weekly rallies for 3-5 weeks followed by some corrections.
One of the prime reasons for such behaviour is significant drop in number of participants in the markets. The retail investors in particular, who, have burned their fingers time and again now shy away from the mere thought of investments in stock markets. There are other investment options like precious metals - Gold, Silver, real estate - new properties, second homes, Mutual Funds - in-direct route of staying invested in the markets - which are now preferred by some of the old timers.
However, yet there are some people like me - who despite - been once bitten, twice shy - continue to play the markets for the sheer thrill of it. This may sound bit sarcastic to few readers, but yes traders (market participants) like me do end up trading for just the thrill of it. My friend once commented, saying the stock markets - especially during volatile times are more exciting and eventful than say a high pitch India-Pakistan cricket match.
There is a famous pharse which goes like this - One should never judge the book by the cover. Hence, let me share my personal experience on share markets. As a novice market participant I entered the stock markets in the year 2000 after having started my career in one of the online financial website mere nine months or so earlier. My first trade of me seems like my first love - I suppose the same may be the case with many of my fellow traders. Unfortunately - the trade was a disastrous one - yet my heart refused to accept failure - and I continue to hope again hope for a miracle. It was March 2000, and the government shares were hogging the limelight on buzz of disinvestment. I bought 100 shares of MTNL at a price of Rs 350 each in BADLA trading, as I did not have enough money to buy delivery.
Old timers - must be knowing for BADLA trading was all about, for the newer generation, let me explain in short - BADLA trading was very much like the futures & options segment, with one small difference, that the broker had to pay the margin money instead the present situation where for trading in the futures segment the client itself has to pay the margin money. In BADLA, the broker or financier in behalf of the client pays the margin money and also the mark-to-market difference (difference between the closing prices) on day-to-day basis. The trade was carried forward for a maximum of 70 days, post which one would have to surrender the trade and create a fresh position.
Back to my story, after I bought MTNL for Rs 350 or so each share, I got trapped into the markets, and after rolling over the position for couple of months, and paying the mark-to-market difference along with the interest on capital funded, I finally surrendered my position around Rs 175-odd levels. The 50 per cent fall in my net worth was huge for in that time considering I had average salary and was at the start of my career. My parents and family members advised me against any fresh adventure into markets - I did follow their advice for few months or probably a year and utilized that period for learning more about the markets. Fortunately or unfortunately the so called human behaviour of taking revenge (also called BADLA in Hindi) was very instinctive in me. And I had decided, that I shall take revenge from the markets, and earn my lost capital soon enough. Days, weeks, months and years later today with experience I have been a much better trader or prefer to call myself a smarter market participant, who can time the entry and exit into the markets in a more calculated manner.
However, the so-called first love or trade continues to live in my heart and will probably always do. For the records, there has been no divestment in MTNL, and the share price of MTNL from record highs of Rs 374 or so in March 2000, had slumped to a life-time low of Rs 9.75 in August 2008. Buying 100 or even 1000 shares at current levels will not harm me today. I may still end my making money even if there will be no divestment in the next decade or so.