Hi!
I have invented a new term Inverted Investor
How can an Investor be Inverted?
To understand this, let us first understand about Bulls and Bears
It is a common mis-understanding that there is a separate group called Bulls who wants to take the markets up and another group called Bears who wants the markets to fall. There are no such two groups. The ground reality is very different.
Almost everyone who first enters the Stock market, it is in the Equity market by Investing in one or the other scrip that one fancies. Each of such persons wants the markets never to fall and keep going up and up, so his investment appreciates.
But that does NOT happen. Markets fall when profit booking takes place. Profit booking is essential. Having bought a stock for Rs 100 that is now trading, say at Rs 5000, one can remain happy, but may get a shock if markets have a steep fall that takes this scrip down to say, Rs 1500.
If profit was booked at Rs 5000, then the same stock could have been bought back at 1500. So one has the stocks and also has additional money @ 3500 per share. One is happy.
This is possible through technical analysis, that tells the probability of the markets [and the stock] getting corrected and the targets thereof.
As the downward correction starts, all the Investors [with exception of many] book the profits and get out. And mostly stay out, unless they are sure that markets have once again started going upwards. The unfortunate ones remain invested an blame their bad luck.
These all are Bulls. Wanting the markets to go up.
But there is a group of people, who, possibly know nothing about the analysis of any kind, BUT are backed by a team of expert analysts. Here I mean the Expert Analysts, and NOT the charlies talking with Udayan & Co on TV channels.
These guys, having worked out a major support level, want to test it thoroughly. So, they make a severe attempt in breaking it. If they are successful, they go for the next support level, and repeat the procedure. In short, these guys have the required financial backing and the technical know-how for anticipating the bottom, for bottom fishing. We all CANNOT do it.
These are the Bears. And as soon as they are un-successful is breaking a support, they realise the importance. If, after trying hard, the support does NOT get broken, it is less likely, that it shall get broken by itself.
This is where the whole group changes its Bear tactics to Bull tactics and goes on a rampant buying spree, which shoots the markets up rapidly. This is a clear signal to all those on the fence, who also jump in and buy, which pushes the market still higher up.
This is how I look at Bulls and Bears, who are essentially from a single group with large financial and technical abilities.
We all know what an Investor is. Now let us take an example, to know what I mean by an Inverted Investor
This year in January, the markets were at the top. Then as the downward move started, the above mentioned group should have noticed that the top was the hard resistance that could NOT have been broken, and there shall be a steep fall in the market.
So, lets say that 2 lots of Nifty futures [100 points] were sold for Jan 2008, and also for each of the subsequent months of Feb, Mar. Dec 2008, then approximately 12 lac rupees would have been the margin money requirement.
As per the perspective that appeared in Jan 2008, that most of the futures for all the months, were running in the vicinity of 6000 Nifty.
Calculate the earnings, if the person does NOT do anything during the whole year till the last day of the year. He would be just sitting tight and laughing at others.
Or maximum, he would roll over his from Jan to Feb to make 200 points for Feb, then Feb to March to make 300 points for March and likewise, based on the output of Technical analysis group that is supporting him.
Throughout the year, he has invested negatively, by selling futures well in advance, and has made better than the others.
During the Bull run from 2003-04 to 2007, those who remained invested since 2003 earned far better than those who traded.
During the current Bear run, this Inverted Investor would have earned likewise. Far better than all the traders.
This thought came to my mind late. Obvious. I am NOT the expert ;-(
But some of the members who are learning the analysis today, may have a chance to face yet another Bear run many years from now. They have sufficient time to develop expertise to sense it and become an Inverted Investor, to take advantage of it.
Good Luck. Nothing personal to anyone. Just my Brain Storming J
Cheers!
SS
I have invented a new term Inverted Investor
How can an Investor be Inverted?
To understand this, let us first understand about Bulls and Bears
It is a common mis-understanding that there is a separate group called Bulls who wants to take the markets up and another group called Bears who wants the markets to fall. There are no such two groups. The ground reality is very different.
Almost everyone who first enters the Stock market, it is in the Equity market by Investing in one or the other scrip that one fancies. Each of such persons wants the markets never to fall and keep going up and up, so his investment appreciates.
But that does NOT happen. Markets fall when profit booking takes place. Profit booking is essential. Having bought a stock for Rs 100 that is now trading, say at Rs 5000, one can remain happy, but may get a shock if markets have a steep fall that takes this scrip down to say, Rs 1500.
If profit was booked at Rs 5000, then the same stock could have been bought back at 1500. So one has the stocks and also has additional money @ 3500 per share. One is happy.
This is possible through technical analysis, that tells the probability of the markets [and the stock] getting corrected and the targets thereof.
As the downward correction starts, all the Investors [with exception of many] book the profits and get out. And mostly stay out, unless they are sure that markets have once again started going upwards. The unfortunate ones remain invested an blame their bad luck.
These all are Bulls. Wanting the markets to go up.
But there is a group of people, who, possibly know nothing about the analysis of any kind, BUT are backed by a team of expert analysts. Here I mean the Expert Analysts, and NOT the charlies talking with Udayan & Co on TV channels.
These guys, having worked out a major support level, want to test it thoroughly. So, they make a severe attempt in breaking it. If they are successful, they go for the next support level, and repeat the procedure. In short, these guys have the required financial backing and the technical know-how for anticipating the bottom, for bottom fishing. We all CANNOT do it.
These are the Bears. And as soon as they are un-successful is breaking a support, they realise the importance. If, after trying hard, the support does NOT get broken, it is less likely, that it shall get broken by itself.
This is where the whole group changes its Bear tactics to Bull tactics and goes on a rampant buying spree, which shoots the markets up rapidly. This is a clear signal to all those on the fence, who also jump in and buy, which pushes the market still higher up.
This is how I look at Bulls and Bears, who are essentially from a single group with large financial and technical abilities.
We all know what an Investor is. Now let us take an example, to know what I mean by an Inverted Investor
This year in January, the markets were at the top. Then as the downward move started, the above mentioned group should have noticed that the top was the hard resistance that could NOT have been broken, and there shall be a steep fall in the market.
So, lets say that 2 lots of Nifty futures [100 points] were sold for Jan 2008, and also for each of the subsequent months of Feb, Mar. Dec 2008, then approximately 12 lac rupees would have been the margin money requirement.
As per the perspective that appeared in Jan 2008, that most of the futures for all the months, were running in the vicinity of 6000 Nifty.
Calculate the earnings, if the person does NOT do anything during the whole year till the last day of the year. He would be just sitting tight and laughing at others.
Or maximum, he would roll over his from Jan to Feb to make 200 points for Feb, then Feb to March to make 300 points for March and likewise, based on the output of Technical analysis group that is supporting him.
Throughout the year, he has invested negatively, by selling futures well in advance, and has made better than the others.
During the Bull run from 2003-04 to 2007, those who remained invested since 2003 earned far better than those who traded.
During the current Bear run, this Inverted Investor would have earned likewise. Far better than all the traders.
This thought came to my mind late. Obvious. I am NOT the expert ;-(
But some of the members who are learning the analysis today, may have a chance to face yet another Bear run many years from now. They have sufficient time to develop expertise to sense it and become an Inverted Investor, to take advantage of it.
Good Luck. Nothing personal to anyone. Just my Brain Storming J
Cheers!
SS
