I came, I saw, I ruined my investments

“Sensex zooms past 15000 mark”. Retail investors minting money, with some people getting even 200 % return on their investment… Sensex likely to cross 25K mark by next year, say pundits. Such were the headlines appearing in business dailies and magazines in mid 2007. Ever since the Sensex began its bull run, I had been eyeing the stock market for investing. Some of my friends had already made small fortunes investing in “blue chips” and “mid caps”, though at that time, I didn’t have the slightest idea what these terms were supposed to mean. So, such headlines made me impatient to start investing in stocks.

So, when ICICI Bank people dropped by at L&T, I found it all the more convenient to open a demat account to start trading. Sadly though, two weeks later I found out that the bank had sent out my user name and password to a wrong address and I would have a long wait for getting them. The sensex was already past 17000 by then. I decided to rope in a friend of mine who already had a demat account to help me start trading. And thus, finally, my long awaited stint in the stock market started.

I started with a few stocks recommended by my friend. Call it beginner’s luck, or plain coincidence, these stocks moved up in the first few days I had bought them. I was so excited that I began to think I was a fool not to have ventured into this earlier. I began reading Udayan Mukherjee’s columns and any article in newspapers related to the stock market. I soon understood what is a “blue chip”, a “mid cap”, “small cap”, etc. I joined the group of people in L&T who give anxious looks at NDTV Profit/ CNBC during lunch in the canteen or who cast an occasional glance at the rediff money website during office work. Soon, I started joining discussions about the stock market with the finance whiz kids of our department and was proud of this. The stock market meanwhile was continuing its run to dizzy heights. Though the prices of some of the stocks I had bought kept oscillating (were “volatile”, to speak technically), the overall trend was upward and I kept rejoicing each day when my friend told me about my profits. But, because of inexperience, or in plain words pure greed, I didn’t sell off any stock, and what is more, kept buying other shares. The sensex breached the 21000 mark. L&T share value was at an all time high, and everywhere in L&T, especially during lunch, one could see beaming faces. And, in between, I, along with my friend applied for Reliance Power’s much hyped about IPO. Like many a retail investor, we hoped to make some quick bucks.

And then, it happened. January 21, 2008. I watched in horror, transfixed, like many others, as the sensex fell. The shock on people’s faces around me was comparable to the shock on faces of Americans when WTC twin towers collapsed. The next few days were ones marked by confusion, speculation, fear and what not. Some respite came in between in the form of allocation of the Reliance Power share we had applied for. But, alas, it was short lived as the stock listed well below the expected price. Prices of majority of the shares which I had invested in had dropped by about 50 %. Stock market gurus said it was a good time for buying and now called for investing in blue chip companies and stocks with “strong fundamentals”. So, even though I was short on funds, I invested in the best blue chip stock I could think of: L&T. And as if to mock my strategy, L&T stocks which had remained sort of stable above 3000 levels plummeted into the 2000’s, a week after I had bought them, courtesy a loss incurred by the company in hedging. This was the last straw for me.

I, like many other retail investors, have withdrawn from the stock market, no longer interested in peering at the stock price ticker on television or on the internet. All my investments have suddenly become “long term (read as : term till sensex reaches its previously attained heights) investments” and now, it’s back to full time work in office. Of course, if I can borrow a statement from the finance expert of our department : “Woh aadmi sukhi hei jinke padosi dukhi hein”, I can find some solace in the fact that I have lost only 50% of my investment, but some others around me have lost even 90%.