Year 2006 Experiments Continued...

Experiment 4:

Scrip: Williamson Magor

Reason for Purchase:

Adrenaline Rush

 

What I did:

It was a day, in which most experts will be debating about What Finance Minister should do. Yeah, it is a Budget day- 28^th February 2006.  Then Finance Minister P. Chidambaram was delivering his Budget Speech in the Parliament.

Barath told us (Nafiz was on leave/came late) that there will be good news for fertilizer stocks and Williamson Magor will freeze in upper circuit* today. Suddenly my adrenaline rushed & I put a buy order of 100 shares @ Rs. 85.50/- to make a gain like "meter vatti". 

After that both my mood & stock price were spiraling downwards. Then, I started to search my mobile (like a BP patient searching for tablets) to call the broker. Sold @ Rs. 82. The 15 minutes adrenaline rush costs my 4 days stipend. "Adrenaline Rushed... Im Crashed... Broker Cashed..."

After my sale, the stock was spiraling upwards & finally froze @ upper circuit –Rs. 87.60/-. I was in situation like the dialogue in 3 idiots movie "It feels bad when a friend fails, but it feels even worse when he comes first”. Likewise, "It feels bad when u sold at a loss, but it feels even worse when the sold stock rises after that."

*Freeze in Upper Circuit: For the stocks which are trading only in Cash Segment (not in both Cash & Derivative Segments), the Stock Exchanges will fix circuit filters of 5%, 10%,20%. The circuit filters will vary based on the stocks. i.e. If previous day closing price of a stock (in 5% Circuit Filter) is Rs.100/-, the next trading day the stock may trade at a high of Rs. 105 (or) at low of Rs. 95 & not beyond that. If it closes @ Rs. 105, the stock is frozen @upper circuit (or) if it closes @ Rs. 95, the stock is frozen @lower circuit.

Experience learned:

Nothing

Experience we can learn from this experiment:

Learn the art of practicing Self Control.( I am practicing, but yet to improved a lot)

Experiment 5:

Scrip: Reliance Natural Resources Limited (RNRL)

Reason for Purchase:

To make a Quick Buck

What I did:

I went to my heaven Jayankonda Cholapuram for collecting my Voter’s ID card, when the demerged Companies of Reliance Industries (bcoz of the dispute between Ambani Brothers) i.e. ADAG Companies were listed on the stock exchanges in March 2006. 

When I came back to office, the three musketeers told me that Barath & Nafiz made a killing (quick buck i.e. profits) in one of the Demerged Company, RNRL(which has no assets/business with it). They bought the shares around 16 levels and sold it around of 30 levels within a week’s time. 100% profit in a week (5200% annualized return). 

Then also, it was continuously frozen @ upper circuit in the following days to reach a high of Rs. 40. Next day, it was down to Rs. 39/-. 

By hearing and seeing this, what I would have done?... Yes, u guys are absolutely right. Yeah, I bought that stock @ Rs. 39/-. From then, it was continuously frozen @ lower circuit in the following days. Finally, I sold that @ around 24 levels. 

Even after my selling, the stock was falling like a knife to find its anchor in the ground. It did found its anchor @ its listing price Rs. 16/-.

Experience learned:

Since, whenever I sell a stock, it will move upwards like a rocket waiting for my sell trigger. Even after my sale, it was falling. It was new to me & I was literally shocked. LOL….

Experience we can learn from this experiment:

There is no free lunch in Stock Market.

I did speculated my stipend in so many other trades in 2006, some yielded miniscule profits which is not even comparable to the losses I have incurred.

But, one stock which I found in 2006 is worth of writing a separate blog post. Hope that is my next post.