Saturday, October 05, 2002

I’m God fearing all right but hey even I have my itsy bitsy doubts about God. We Hindus have so many Gods, sheez it would take me years to just name them. But every day when I pray I sort of look at the images and think “hmmm.. does God still look like this? I mean does He still wear ‘dhoti’ around his waist or has He shifted to jeans and t-shirt? Does He still have a conch and a lotus in his hand, or has He graduated to mobiles and laptops?”

I’m sure quite a few of us have thought like that. And sometimes when I walk on the streets and see idiotic and vulgar behavior, I kinda get my doubts on God. As Calvin tells Hobbes, its kinda hard to believe in God, when He doesn’t strike certain people down with bolts of lightning.

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 :-)

Thursday, October 03, 2002

Stock Market # 3

Ok I think I have been rambling on some un-necessary things. So now I will get to what 'actually' happens inside the stock market. Or more like - the daily life of a stcok broker.

Stock brokers work on an average 6 hours a day but those hours are some of the most stressful. Its similar to a doctor performing a complicated surgery for six hours everyday and if the operation is not successful he will tend to lose a milion dollars. Can you imagine getting up every morning for that? So now you know why I sound like a geek sometimes (or is it most times?) when I visit your blogs and post my comments there ;-) I end up being a bigger geek because London and New York work for longer periods (upto 10hours a day).

So what does a broker do at 7 in the morning? He walks in with a really strong cup of coffee, switches on the multiple screens and the first thing he does is check e-mail (yes even brokers can't live without emails). After that he looks at the trading screens, which show the charts and numbers of various major stock exchanges around the world. The key ones that we keep a watch in London are the New York, Japan, Hong Kong, S'pore, and some other developing nations including India. Within minutes brokers have to analyse how the global market is moving and what the trends are. With one eye on the screens, the other eye is now focussed on the news clippings of all major business stories (which explains why they look cock-eyed). News obviously has impact on the share price and it is upto him to assess how much the share will move on that day because of that news. By the way - Indians are pretty relaxed. Our market opens at 9:30 and closes at 4 in the evening - with a chai break at 11. The only stock exchange in the world where there is such a break!

In most other places the actual hungama begins at around 8am when market opens. The traders will have to quickly buy/sell the stocks and minimise the losses / maximise the gains. Remember that there are literally thousands of people putting in the orders are at any given second and even the fastest of computers will take time. Value of each order runs intho thousands of dollars and sometimes into millions. Traders punch in their orders direct from their screens which has live connection to the stock exchange. The computer at stock exchange matches the buy orders with sell orders and crosses them out. So if X from London wants to buy at £20 and there is Y from Delhi willing to sell at £20, the computer will automatically match them and cross those orders off the order book. It doesn't care whether X likes Y or vice versa. Only prices that match will get crossed. The heaviest trading takes place in first two hours and the last two hours of the day. In between its usually small time investors (like you and me) who wake up late, have breakfast, read papers and then decide to do some trading.

By the way, Im NOT a broker. I'm an analyst who tells the brokers when to get into the market and when to get out. I will tell you what I do, tomorrow.

Wednesday, October 02, 2002

Stock Market # 2

Ok, now for the gist of where this sort of money comes from and how it gets churned in the markets. Have you ever wondered what happens to all the money that is in the banks? What happens to all the surplus money that is with the companies/socities/associations? What happens to all the money that the government lotteries collect? What happens to all the money that people save and decide not to keep in bank? It all gets churned in various hands and in one way or the other ends up in share market. For instance Maltman decides to save some of his income. He decides to put that money in Bollywood Ltd (in return for shares) because the company claims to give 10% more returns than what one would get from a bank. Like Maltman there are millions of people who come to a similar conclusion and they all invest.

If Maltman wanted to sell those shares because he has urgent need for money, he would have to go find someone to buy it. Likewise if he wanted to buy some shares of Aishwarya Ltd he would have to go to the top of a building and use a loud speaker to find out if there is anyone willing to sell their Aish's shares (no one likes to partake Aish you see). In order to stop this kind of hassle, a stock market was formed (like fish market, vegetable market... ) so that all the buyers and sellers of all shares in various companies could meet in one place and do their business.

Hmmm.. come to think of it, the situation would be worse than a fish market because there would be millions of people trying to find the right buyer / seller at the best price and all bargaining with each other. Someone also had to keep the records after each transaction to make sure that fake shares didn't get traded. So what did the stock markets do? The appointed brokers. Brokers are people through with you can buy/sell without much hassle. To become a broker you have to pay a large deposit (to ensure they don't cheat). Of course you can do transaction without them but they are the people who are more likely to give you the best price for either buying or selling. Of course they charge some commission but overall you will come out better if you do the business through the brokers and will also ensure that 'genuine' shares get traded. So its safer - safe from the likes of Salman Khan Ltd, which I will elucidate tomorrow ;-)

Tuesday, October 01, 2002

Stock Markets #1

Quite a few people tell me they have no clue what a stock market is, what it does, how or why the money flows through it, what is its role in the economy etc. These type of questions prop up especially when there is a scam or some one mentions that Mr.Xyz became pauper because he gambled on the stock market. Sometimes stock brokers are considered nothing but gamblers who try to make a quick buck. Partly true, mostly false and over the next couple of posts I will try and explain the false part of it because the true part needs no explanation. I know that not many people read my blog but if ever someone asks me these type of questions again... I will ask him / her to go see my blog ;-)

Type 'stock market' in Google and you will get more than 3.6 million page hits. Wow...thats a lot! [Type 'maltesh' and you get 631 pages... thats a lot too :p ]. So what is a stock market? Actually in today's world, the more appropriate word would be 'share market' because stocks have gone out of fashion. In earlier days only a certain amount of total shares could be traded between people (hence that particular 'stock' of shares). But nowadays almost all the shares of all the public companies are available for trading.

Why the need for stock markets?: People have a tendency to save hard earned money for rainy days. This money could be put to better use if it is pumped back into the economy. How do you entice a middle-class family to give that money to some bio-tech firm or dot-com company to go burn it? Without exaggerating let me tell you that without an active stock market any economy will come to a standstill. In London alone, in these difficult times, the daily amount of shares bought / sold is worth £10 billion (or Indian rupees 7,500 crores). Bombay registers about 1,500 crores every day. In good times, this figure triples - and this is just one stock market!

Where does this type of money come from, where does it go, who is in charge of it... ??? More of this in my next post. I don't want to drill your heads in one go ;-)

Monday, September 30, 2002

A new day, a new week and a new deodrant and I'm all raring to go (Not!!!). There I was waiting for the lift to stop and take me down to the morning meeting. *bing*. Lift door opens. I step in; a beatiful girl gives me that early morning lazy smile.

She: hiiiii....
Me: How are you?
She: Im fine.. how was your weekend?
Me: Quite... and yours?
She: I think I partied too much.

~ moments of silence ~

She: you smell nice
Me: ~ a geeky smile ~
She: you could atleast say "thanks" you know... *eyebrows raised*
Me: I was actually waiting for you to continue...
She: For what?
Me: You know... kiss me...
She: Whattttt???
Me: That's what happens in the advertisement. The guy who wears this deodrant, gets kissed.
She: *almost rolling on floor with laughter*

My brain: ~damn, I have been a sucker again. I burnt my pocket on this new deodrant hoping I would get a kiss; Not some girl laugh at my face ~
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