How Stock Markets work?
Recently, I have been looking at investing in Stocks. Being a novice in this field, I asked few close friends for advise. How do stock markets work? Where to invest? When to invest? blah blah…
One of them mailed me this reply:
It was autumn, and the Red Indians on the remote reservation asked their New Chief if the winter was going to be cold or mild. Since he was a Red Indian chief in a modern society, he couldn’t tell what the weather was going to be. Nevertheless, to be on the safe side, he replied to his tribe that the winter was indeed going to be cold and that the members of the village should collect wood to be prepared. But also being a practical leader, after several days he got an idea. He went to the phone booth, called the National Weather Service and asked “Is the coming winter going to be cold?” “It looks ike this winter is going to be quite cold indeed,” the meteorologist at the weather service responded.
So the Chief went back to his people and told them to collect even more wood. A week later, he called the National Weather Service again. “Is it going to be a very cold winter?” “Yes,” the man at National Weather Service again replied, “It’s definitely going to be a very cold winter.” The Chief again went back to his people and ordered them to collect every scrap of wood they could find.
Two weeks later, he called the National Weather Service again. “Are you absolutely sure that the winter is going to be very cold?” “Absolutely,” The Man replied. “It’s going to be one of the coldest winters ever.”
“How can you be so sure?” the Chief asked. The weatherman replied, “The Red Indians are collecting wood like Crazy.”
This is how stock markets work!!!
Comments (15 comments)
Hahaha…wow…that was a fantastic way to explain it…good one!
Aaina / January 20th, 2005, 7:38 am / #
[Aaina] Yeah.. this explains how do deal with bulls and bears
Manpreet / January 20th, 2005, 10:35 am / #
Hehe..that was a nice one.
Enjoyed it. So did you bought shares?. 
Govind / January 20th, 2005, 6:53 pm / #
Great! that is the way…
Rumours very much effect the markets.
Many strange things happen in the markets, you can’t predict so its a little risky to invest.
Before investing now-a-days, you need to take care of one more thing…. stock market is at its high.
In the last 2 years, all the share prices have doubled and also many are 4-5 times of 2002 prices… Like Hexaware, Mahindra, Bank stocks.
But careful investments will surely bear fruits.
- Look for solid shares, profit making companies.
- Never invest in small companies.
- Look for the company news, which include the proits declared, big orders bagged.
I am sure you must have recived some Infosys Shares from the company. As I have heard every employee receives 10 shares on joining, which are kept in lock-in-period for 3 years.
If you are looking to gift them, no worries… I am available
Ankur Raheja / January 20th, 2005, 8:23 pm / #
[Govind] Yeah.. Today, I added shares of TCS and Biocon to my portfolio
just trying my luck 
[Ankur] O wow!! You seem to have great knowledge about the Share market!! Yeah.. even I follow the same funda.. never buy shares of small companies..
Talking about Infy shares, Infy had already stopped giving ESOPs before I joined
So, no Infy shares in my bag!! 
Manpreet / January 20th, 2005, 9:02 pm / #
manpreete joining in the share market fun??
that’s great..nice place to do an investment..but risky as well..take in a good consultant (it seems Ankur would be a good one 
)…prior to making any investment. 
poonam / January 20th, 2005, 9:46 pm / #
now that was NICE…good piece u shared here…
Priya / January 20th, 2005, 10:33 pm / #
No more ESOPs
Boicon & TCS are really very solid companies.
Is broker advising you…
Ankur Raheja / January 21st, 2005, 12:36 am / #
[Poonam] Yeah, its risky.. but I just couldn’t resist the temptation to make some easy money
[Priya] Yup
[Ankur] No ESOPs
:( 
No advices any broker shroker 
Just using my comman sense 
Manpreet / January 21st, 2005, 10:04 am / #
best of luck… and you might want to read this: http://www.hicstatistics.org/2003StatsProceedings/Heping%20Pan%202.pdf
abhi / January 21st, 2005, 4:32 pm / #
[Abhi] Thanks for the link… Will read it and get back to you
Manpreet / January 21st, 2005, 6:17 pm / #
Without advice, such a good investment.
Everybody TCS declared Dividend yesterday, so you can ask for a treat from Manpreet
I was going to start a section on Stocks on my Website, but didn’t get time. Lets see…
Ankur Raheja / January 21st, 2005, 7:46 pm / #
[Ankur] Hehe!! Yes, I am richer by free hundred rupees!! So far so good!!
Manpreet / January 21st, 2005, 11:03 pm / #
Did you made the purchase before the Dividend was declared
Ankur Raheja / January 22nd, 2005, 12:54 am / #
[Ankur] Bought before the dividend
Manpreet / January 22nd, 2005, 4:07 pm / #
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