Investing - "One's Partnership with India Inc."

I read in an article, that one could look onto investing as one's partnership with India Inc.

To build up on this, there's lots of karmic positive to investing.

An investment builds up a cash-vacuum around the investing person, which attracts more cash to the person. The longer the cash-vacuum is sustained, the more cash is attracted in the long run. To extrapolate this view on investing towards an extreme, one could look onto investing in India as an act of charity towards India till the investment is terminated and the money returned to one. Investing in one's country results in good Karma.

On the other hand, trading results in myriads of mini-vacuums daily, which get annihilated in the short-term. This frenzy of vacuums leads to chaos and no replicable gain in good Karma as such, unless one does good deeds like helping others, as many of the Traderji site members are doing.

The intriguing part is that one of the Trader's goals is to make money on the flip and on the flop, i.e. when the markets are going up and when the markets are coming down [The investor makes money when the markets go up]. To earn when the country's on the downslide, and to be gleeful about it is something I need to think hard about. I don't know if I'll be able to do it, since one of my goals in life is to commit actions with the highest possible positive Karma values.

Regards,

Uday.

In the first CNBC investor camp at New Delhi this issue was raised by somebody and a technical analyst anwered well by saying that it should be left to each individual to decide for himself what he wanted to do without making a virtue or a vice out of it.

No matter how strong a fundamentals are, like a baby, a company's share price cannot go up by itself. Speculators, traders initiate and are joined by investors as shown by guppy moving averages. They do financial value addition just the way distributors do in the film industry. Not many producers would have the guts to produce movies by himself if the distributor were not there to share the risks.

Similarly, thousands of traders by speculating among themselves raise the price apart from the company's fundamentals as the share mkt runs more because of perceptions. Without that capital appreciation, nobody would be interested in shares and no factory or company could run without share capital. So both the mkt and the company need each other.

We are primarily investors too but I don't think there is anything noble in it or anything wrong in trading. There are many individual professional traders in the US. Two of the best investors in India said in the CNBC camp that panic was the right time to buy and profiteer. How do you explain that? Even from an investor's perspective, it is said that one should be greedy when others are fearful and vice-versa. In fact if you see traderji's posts on bull cycles, he says that savvy investors start buying at the end of the bear cycle when everybody is down and out and the prospects are bleak because indices like nifty and sensex represent country risk much more than stock risk. That is how the new cycle starts. The concept of derivatives was also introduced to balance the country risk in the future.

Many finance ministers have said they don't understand the mkts so in my view, the country does not really come into the picture much. I also don't subscribe to the view that the mkt is always a good barometer of country's progress.

I remember reading somewhere that fear is a stronger emotion than greed and one could make more profits in bear markets. One can do this only throug h index futures I suppose since one cannot shortsell stocks one does not have. One can make a virtue out of this and say that one should never sell what one does has not invested but the whole concept of derivatives goes for a toss and derivative volumes are much more than cash volumes.In the movie "Wall street" someone said that greed is good and spending drives the economy.

Let us sum up by saying that patriotism and mkts do not exactly converge much.

Thanks for the views, sh50,

I guess I'm currently dealing with some mental blocks and clarification of concepts for myself, being very new indeed in this line,

Regards,

Uday.