Friday, October 04, 2002

Ok before I start, can I make a request? Could those of you who visit my site, participate in my polls :-) I will try and post some funny polls going forward and your participation will be most appreciated.

Stock Market # 4

And now for the last part of my stock market stuff. Today I'm gonna talk about analysts and sales persons. Yes, even stock markets have sales people (you can't get away from them can you??). But to be honest, they play a key role in the markets.

First the bit about analysts. There are two three types of analysts - fundamental, technical and economy. The technical guys look at charts and historic movements of shares to decided how the market will go in future. So basically they try to guess the trend and make money out of it. The fundu guys (like me) are more smart. They meet the chairman and directors of major companies, talk to them, take them to ocean cruises, parties and movie premiers and in return (when the directors are drunk) try to get insider information which is market sensitive. With that info, they go to the market, trade and make money. Umm.. ok I wish it was that easy but it ain't. We do meet and entertain them etc but we do that to get guidance from them as to how their company is doing. With that info, we design models which predict their future income and we take a reasonable view of what its share price should be. Economics guys are boring guys. They look at countries economy and study features like inflation, interest rates etc.

Now for the sales-men and sales-women. Yes! the stock markets have lots of women who do the sales pitch. Their job is to sell ideas to fund managers. Who are fund managers? These are guys with loads of money (like UTI, IDBI, IFIC, ICICI in India) who wan't solid ideas to invest in market. So the technical and fundamental analysts think of ideas and write a report. The sales guys go sell these ideas to investors. And if these guys like our ideas they give us orders to buy/sell shares. The traders (whom I talked about yesterday) execute the deals on the stock exchange. In return they give us comission (usually 1% of the sales value). Thats how we make money. Simple uh? ;-)

Ok now thank me, coz this is my last post on stock markets. From tomorrow it will be back to my non-sense. :-p And yes, if anyone wants to learn more about stocks / shares / bonds, then don't hesitate to write to me. I love talking about this - but I just don't want to bore my fellow bloggers :-)


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