Facts of Equity Investments

1. Equity investment is not a business of EPS and P/E alone. Its a business of valuation of products/ companies/ management/ business models/equity ownership. 

2. Many technical analysts in India sometimes fail to factor various time zones to work out crucial resistance or support level.  Price movement preceding and following events like long holiday, death and/or resignation of key management personnel, purchase or sale of a brand, addition and/or deduction of a large customer,book closure and the no delivery period. In short, charts have to be Indianised.

 3. Seasoned market observers have often commented that a study of human nature is far more useful for investors than just number crunching skills.

4. Stock Market is a market of contradictory opinions and contrarian behaviors. Unless there is a disagreement, price will not move on either side. There will always be a seller for every buyer.

5. Wherever one invests, however research one carry out or whom ever one consults; ultimately 99% is one's destiny. Only 1% factors are within human control. However, this 1% is very much crucial. One must put in best efforts in this 1%-human to make the other 99%-destiny work in one's favor.

6. "Good Equity' moves up irrespective of any push or support or market operator. The company selection should be such that later on it becomes buying compulsion for others.

7. A financial asset is valued after factoring true possibility of some unprecedented event in the future. For good event market starts giving price premium in advance and for bad event market starts discounting the price in advance.

8. Many of the IPO during year 2000 were very highly priced and marketed in such a fashion so as to induce gullible semi literate investors to chip in their money. Retail/institutional investors normally are more inclined in subscribing the overpriced IPO than directly buying an undervalued listed stock from the stock market. He derives a fallacious comfort from  many people subscribing the IPO and does not wish to be left out. While buying straight from market needs lot of skills and many a times one is alone to buy the listed stock and sometime price falls after he buys. One should buy VALUES and not illusory SAFETY.

9. Most of the investors, retail or qualified, do no wish to face a downward price after he buys. Now, if the downward occurs from secondary market purchase he has no one to blame but himself which in no circumstance he wants under the fear of sarcastic remarks from peer pressure group like wife, partner, colleagues, banker, his staff, friend or relative. (Qualities of investor) Now if IPO goes below issue price on listing he has so many things to pass the blame on to save attacks from peer pressure group.

10. Following the same principal the average investor chooses to be fiscally illiterate, though appearing to be educated and he buys from secondary market most talked about stock at almost peak level which very often 10 to 100 times higher than stocks 52 week low.

11. No investor on his own can sell at the top i.e. after you sell price must go down. Similarly no one can capture bottom i.e. after you buy it is not necessary that price must go up, it may go down further. Only Equity specialists can be nearer to top and bottom.

12. Old saying at Bombay Stock Exchange: BHAV BHAWAN. This means PRICE IS GOD. However savvy an investor you are if market price is going against you, better be careful and start interospection.