Save water or Trade Water in future

Save water – The Liquid Gold of our Planet

Water is the most important asset required to manage all life on the planet earth. It is so important that UAE is towing Iceberg from the southern end of the world, Antarctica to quench its population’s thrust. Save water or Trade Water in Future

Many Analysts have already predicted that the Third World war would be for Water.

Despite the fact that it has been battled about, sold, redirected, dammed, guaranteed by governments and administered by experts. Stock Market has not been able to get its hands on it as a tradable commodity like in case of Oil.

Clean drinking water is relied upon to end up as the more human race grows. Many environmental changes are already visible due to humans.

So the question is, Will this most valuable product turned into a trading asset that will be dealt for, and exchanged on a futures and options market,  much like oil, corn or gold?

Bitcoin BoomThe recent Bitcoin boom is a great example of what happens when the demand for something which is limited in quantity is traded. Until a few years back no one cared about its existence. Now everyone wants to have it. A pizza was bought with hundreds of bitcoins a few years back. Now, a  single bitcoin can buy thousands of Pizzas.

Just imagine that a string of computer code has appreciated so much then why not water. Which is the most important resource for humans? Later in the 21st century when water will go dry in many parts of the globe. Who knows we might see a new commodity on the Wall-street in form of Water Futures and Options contracts. Continue reading “Save water or Trade Water in future”

Survivorship bias in Trading

Survivorship bias and Trading

I know you are also unaware of the term survivorship bias and right now scratching your head or googling it. Here’s a Wikipedia link to get information on the Survivorship Bias.

Survivorship bias is the logical mistake we make while thinking or decision-making process about something. We ignore certain facts and fail to think on the opposite side. Which might impact your decisions and outcomes.

Let me explain by some examples.

Startups: Nowadays everyone is thinking about starting a new startup, Including you 😀 .  Why? Because startups make you rich in a big way. You can be master of your own destiny and enjoy a lavish life.

Wonderful isn’t it?

You are super wrong. According to the survey done by IBM in collaboration with Oxford University, Only 10% of Startups survive till the age of initial 5 years. God knows how many survive in the long run.

So, If the majority of Startups fail then why we are still thinking of taking risks?

Because the media and the Internet say so. They paint a rosy picture and show interviews of successful start-ups. They show success stories of individuals who seek after their fantasies and beats the chances. you feel so damn motivated after you see an interview with a smart young man, way younger than you, earning in millions. Books and the Internet are filled with articles on how to become a millionaire or how to start your startup?

Nobody talks about the remaining 90%. Everyone feels taboo talking about those. The astounding numbers of failures are not visible to the individuals, and only those who succeed are shown regularly.

The Misbelief: You should follow the successful people and their habits if you want to become successful like them.

The Truth: When disappointment ends up noticeably undetectable, the contrast amongst disappointment and achievement may likewise wind up unnoticeable.

Another example

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Free advice can cost you 1 billion

How a Free advice can cost you 1 billion (1 crore rupees)?

free advice can cost you

Why pay for financial advice when you can get it for free? You get it free from friends, colleagues, relatives, bank executives and insurance agents, right?
But have you ever wondered that the free advice can cost you a lot of money? For example, if you buy a costly insurance plan that you don’t need or a mutual fund that does not suit your investment profile, you will lose much more than the annual fee of a financial planner. True Financial Planners are not Advisors or Product Sellers and they prepare a Financial Plan that is based on your need, your situation, your goals and your risk appetite.

Let’s do some Maths

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Why you’re not a Millionaire and how to practically become one!

Why you’re not a Millionaire and how to practically become one!

It seems to me that most people I meet really have no idea why they’re not wealthy. They blame luck, misfortune and a host of things that they simply couldn’t control. This right here is the number one reason why these people are not a millionaire! They blame things that they had no influence on instead of looking at the things they could control.

The cold hard truth is that most people would rather sit and watch TV or go out drinking then challenge themselves to make a living outside the “norm”. Let me clarify what the “norm” is here when I refer to the “norm” I am talking about a 9-5 job making an average livingbecome a millionaire and that’s the end of their way of making any income at all. Working for someone else, making their boss rich while they take home a “living” wage. Now even with this “living” wage, it is possible to become a millionaire through saving and investing, but for most people, they won’t become a millionaire dollar bankroll until they’re 65. This is just plain boring, better than nothing but boring!

You lack purposefulness in life, ever seen big business tycoons or millionaires on television sets. They seem so charged and full of purpose. They are always trying new businesses.

So below are the quickest and most practical ways of becoming a millionaire now!

 

  • Learn the stock market and reinvest wisely
  • Start your own business
  • Create a blog and market it aggressively
  • Invent a product and sell it
  • Go out there and do anything and everything until it works!

 

The most important part of becoming a millionaire is believing in yourself and removing “ I cannot,” and “if only” from your mindset. Remember, no one will believe in you if you don’t believe in yourself! Start Young!

 

direction in stock market

Direction in Stock market

Direction in Stock market

It’s not easy to find direction in stock market.

It is difficult to make money in a bull market, but what do you do when you are in a bear market?

In what direction should you go not only to make money but to protect you have from loss?

Almost immediately investors think what should I buy that will help me reach my financial goals? This answer may not be the one you will like. It is really not important what you buy as long as you know the rules of the game – the stock market game. Continue reading “direction in stock market”

Cash in hand

Cash in hand

Cash in hand

Currently, stock markets are in a bull phase and new people are entering stock markets daily. However, I am a regular profit Booker in these markets. I am investing in cash, not trying to time the market tops and bottoms. I have my own way of trading as everyone has his unique trading method. My cash in hand position rise when markets are above Nifty PE 24 levels and I keep buying stocks when Nifty PE is below 19. This way I get value stocks at a bargain.

When you are in a bear market the old saying is, “He who loses the least is a winner”. No, you can’t live on that small a return, but you can lose large sums by trying to be invested at all times. There have been many years in the past where cash in hand with no percent return beat the heck out of the stock market.

Example:

Go back to 2000 and remember the NASDAQ lost 78% of its value in 3 years. Since March 2000 investors in the 50 hottest-selling mutual funds have lost an average of 42% according to the Lipper Analyst. Fidelity Magellan, the largest fund at that time remains a loser of 23% and Janus, 4th largest, is down 45%. The Buy N Holders have still not recovered their investments.

Why buy and hold is not a good strategy when the market is overbought because when markets go down. It does not care about fundamentals of a particular stock. Horses and donkeys are treated the same way.
If you had sold out near (I did not say at) the top, say within about 10 or 15% your account would have been pretty darn healthy when it finally did start back up. You would not have lost 30 to 40% or more of your hard-earned money. That is what I refer to as a “reverse profit”.

If you had put a loss limit on your portfolio of 10% on each position and taken out just enough to live on it probably would that have been less than letting it stay invested in the market? You can easily check that.

What Smart investors do?

Putting 100% of your money in a money market while the market is declining does not mean you are not invested. You are invested – in cash. This protects your savings from huge losses that can and do occur regularly in market cycles.

The smartest investors set a limit from where they bought from the highest price their equity has reached as to where they will sell if it starts going down. Usually, 10% is the rule of thumb, but it can be 5% or 20%. That is your choice.

All investors must learn that cash in hand is a position or they are sure to lose their money.

Again, This is not an advice, This is my personal way of trading and you need to research yours.

free stock quote

The convenience of a free stock quote is it immediately gives you the latest price of your stock being traded. If you’re an active stock trader, free stock quotes are deemed a necessity. After all, to generate a profit, you need to control your costs. Stock quotes are provided by financial sites and stock brokers. In addition to giving free stock quotes, a good stockbroker needs to be competitive on commission pricing and have a reliable stock order system.
Getting a free stock quote is just one ingredient to making money from trading stocks.

You need to access to information which gives you insight on stocks that are ready to breakout on the upside. This entails becoming familiar with the company’s business, the industry it competes in and its financial standing relative to its peers. The key to generating good investment returns is recognizing the stock purchasing opportunity before the rest of the investor crowd.

How Often To Get a free Stock Quote

Being updated on the last price dealt of the stock you’re following is part of being a stock investor. You want to know whether you were up or down from where you originally purchased the stock. Should it be once every hour, once a day, once a week or even every half hour? The answer depends on what type of stock investor or trader you are.

The Buy and Hold Investor

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Your kid may be the next Warren Buffet

Your kid may be the next Warren Buffet or a businessman.

next warren buffet

Sounds Childish?

Yes, It can look to you a bit too vague statement.

You will say:

  • My Kid is too small to understand about money now, Let him study.
  • I do not want him to do stocks and become a gambler.
  • Next Warren Buffet or Rakesh Jhunjhunwala etc is a myth, most people fail and entrepreneurship is risky. See how many start-ups have failed lately.

Our Indian Mindset is such that we are too protective of our kids. Sometimes the over-protectionism make us force our kids to do what we want them to do. The result, One more engineer added to this world who will look to make money by alternate means after he gets his job. LOL :D.

As per India Today article, only 7% engineers are employable. What’s wrong? Indian education system, population, Job market.

In my opinion, NONE. It is you to blame, The parents. You made your kids cram for marks and never taught them one of the most important parts of life  Money. 

Teaching kids about money, savings and investment are like teaching kids about Sex education. Parents keep it a deep secret or just ignore the importance of it.

Enough of the Scolding for the Parents ;).

When asked to Warren Buffet about What he thinks is the biggest error parents do when teaching their kids about money. He replied: I believe parents need to start teaching kids about the importance of managing money at a lot earlier early age when they are in their preschool. Sometimes parents wait until their kids are in their teens.

So, What are few key traits of a successful investor?

Patience

“I never try to make money on the stock market. I purchase on the presumption they could close the stock market the next working day and do not re-open it for next 5 years.” — Warren Buffett

Goal oriented

“My two rules of investing: Rule one — never lose money. Rule two — never forget rule one.” — Warren Buffett

Emotionally strong

 “Every few seconds it changes, up to an eighth, down an eighth. It’s like playing a slot machine. I lose $20 million, I gain $20 million.” — Ted Turner

Persistent

“When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.” — Henry Ford

 

In Next post, We will discuss how to develop these skills in kids. These traits will help your kid become more confident in life and a foot closer to the path to success in life. Who knows your kid may be the next Warren Buffet

Please, keep following for the second part of the post. To be continued….

How cash & future price is related

Cash & future price are co-related

Cash price is the base of Futures price. That is why futures market is also known as a derivative market. They are derived from spot price. Futures price usually fluctuates above or below the cash price, but the cash price sets the standard of any move in the
The futures market, because large Trading houses with low dealing costs will have an established arbitrage Channel. Their actions will force the future price back in line with the spot price.

This repetitive process keeps the price movements between the spot and futures markets largely similar.

Sometimes sudden movements away from the spot prices are usually caused by the activities of the big players known as Market-makers. These professionals are trading their own accounts and can see both sides of the market (i.e. The buy and sell orders).

Syndicates are in the process of selling or buying large blocks of shares. they know these large transactions will have an immediate effect on the market. They will also trade the futures and options contracts in order to offset or lower risk. This is why the future often seems to move before the spot.

Another example, Let’s assume that the market participants predict that there’s going to be a severe shortage of Gold in next quarter. It makes sense for the future price of Gold (today) to rise, reflecting the expected fall in supply.