Tuesday, July 11, 2006

Make hay when the sun shines but can you Predict

This could be said about the Indian Stock Market. When I started trading the BSE (Bombay Stock Exchange) was at 6000 levels. I experienced good returns as the index doubled to 12500 levels.

I usually sell shares if my margin is around 20% but as the index was rising I decided to hold shares for a longer period. Everyday you see your shares increasing and the virtual profit made me fly high. I was lucky I sold all the shares I was holding when I was in Germany (just before the stock market crashed). If I had not sold my shares I would have lost all the money I had made in the last 12 months. Did I know the stock market would crash? I had no idea… just being lucky.

When the BSE fell by around 1000 points I decided to re-enter the market and bought Mutual Funds and some selected shares but lost a lot of money because of investing in an extremely volatile market with a bearish outlook. I guess my biggest mistake was to sell them after a month at a considerable loss.

Share trading is similar to gambling but we can make hay when the sun shines but can we predict when it will fall? It is time to make systematic investments and buy in small amounts every month. (Mutual funds or shares)


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