Wednesday, December 29, 2010

Anyone can buy stocks

I opened a Demat account in January 2008. After making losses for 3 years, I've decided to enlighten the masses with some insight. As the title suggests, anyone can buy stocks. I'll tell you why:
  1. Most people do not know what to do with the spare money they have.
  2. There are less than 2 crore demat accounts in India. That makes it hardly 2% of the population.
  3. Majority of the new demat accounts opened are to apply for the IPOs by PSUs. Accounts are not opened to buy stocks.
  4. Most of the demat account holders pay an annual maintenance fee of around INR 1000. To compensate the maintenance charges, they buy stocks.
  5. Most of the account holders do not know the difference between speculation and investing.
  6. People make best use of their trading accounts (did I say trading accounts?), by trading.
  7. Many of them do not know what P/E ratio means.
  8. They do not know why the price of a stock increases or decreases or fluctuates.
  9. The proliferation of finance related websites, news channels and newspapers shows that, most people do not make investment decisions on their own.
  10. They do not know what the book value means.
  11. Shareholders of most companies do not know if their companies are making profits or losses.
  12. They do not know what their companies do in their business.
The list is endless. I can keep updating this list, forever. Trust me. These are not exaggerations. These are facts on face value. When you compete with 2 crore people, of which hardly a 10000 is the real competition, with a little knowledge, you can beat these fools, hands down. Your only test are the FIIs. If you're rational enough, you will sell well ahead of them.

What are you waiting for? Call up your nearest broker, now...

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