HI All,
Please post your thoughts on asset class here

I say equities for now and the ability to diversify later to equity derivatives as our understanding and capital under management grows.

Ya for now equity will be the best option,, I will try to get some insight in to the commodities trading, what are the different margins and whether it would be good for us to go into that..

people.... why equity.... my reasons against equity....

1. if u r in for holding equity even for one day, then the hit from brokerage / tax etc will fuck up your profits. intraday you cant do, cause u have classes in the day time

2. one market dip and u will be unable to cut your losses

3. why take stock specific risk ? that is viable only in the long term when the volatility is damped out and drift is visible

4. even if u guys r hell bent on equity, go in for stock futures.... better leverage.... lower transaction costs... more liquidity...

and someone please fix the time on this thing.... unsettling to see the wrong time...

@munshi
First of all i would like to thank you for being a part of this intiative. Any inputs will be of great value to us.

Actually right now none among us is aware of functioning of stock futures and i think it has to start from something basic like equity.
Well any views here are most welcome.

Point is that set of individuals who are actually going to work have to know what they are doing. Your experience and guidance can be of grea value here . but i thnk we still have lot to catch up.
Purpose is to build a knowledge base around investment options and mangement. Making money is not the main priority , so as long as we are not loosing .. it is fine.


Now my point
1. market is now at 14000 , recent falls have wiped out all gains for last year . but i think we have hit rock bottom . There might be no upward movement for sometime but significant falls are also least expected. is it a right assumption to make?

2. We are not looking for quick returns at reckless rate. A extremenly conservative approach with lot of learning will be more enjoyable than speculative money and worries :-) .

3. I think loosing money is equally probable when you are in a new thing, so stock futures are not going to help our lack of knowledge. Being a zero sum game with predators all around i am not sure about competitiveness of our group AT THIS TIME (no offense guys but lets face facts).

4. @munshi isn't it that lot of people still invest in stocks and make money?

Comments awaited

Before we decide to proceed together, we first have to decide what our motivations are for doing this activity?

As I see we have two main objectives

1. To get some returns which beat the indices about which we can boast in our interviews.

2. To get some insight into the working of the financial markets and its dependence on news/economy/technical parameters/fundamentals.

As we had earlier decided, right now our main focus would be on relatively short-term results. By the end of this year (read: after summer placement process), we can probably look at long-term investing, but right now we NEED TO look at short-term gains that can be obtained from the markets.

Having said the above, no one is stopping us from doing long-term technical / fundamental analysis. It would be great if people do this kind of analysis and let others know about this. It would also be great to take suitable positions in the financial markets once our short-term goal is achieved.

I propose that we focus on short-term gains for now, and for that to happen, we need to start investing soon (read: before going home for the end-terms). F&O sounds a good option to me. Given that a lot of companies coming on campus would be delighted to find out our investing experience in derivatives, we can leverage both the returns and the experience we gain from live trading.

I agree we might lose money while investing in F&O. But, are we here to earn money or to gain+create+share knowledge?

What say you guys?

I support what is being said by Rohit in the last post.

If we invest in equities and pay brokerages and at the end when we would be showing our returns to the companies as a proof of what we have earned, it might not be so good. Its also keeps the recent market in view which is not performing so well.

So, whatever we invest, I will advice that a large portion should be in Futures/Options and some in Equity.

Another benefit of Futures is::

Whenever we buy an equity, the shares are being debited in our account after two days, so only after two days we would be able to sell them and hence the cash will come back on next two days only. So keeping in mind the time constraint, it will take a longer time.

While in case of futures, if we buy any contract, we can exercise that within two minutes. so selling and buying can be completed in two minutes and hence we would be able to get the returns quite fast. While in case of Equity it would be four days minimum.

If you have any confusion regarding what i said above we can meet and discuss the same to clearly understand the logic.


Another point is, given the market scenario, various companies have reduced their initial margin money and also some companies have cut down on the lot size of the contract.

For eg: RNRL used to have a lot size of 7800, which is now being reduced to 1950.
Also BHEL has been reduced from 300 to 75.

So keeping both things in mind we can buy the futures in relatively less amount.(obviously more than that in equity )

But i must clarify that as I have talked about the returns, same apply to the losses also. Its high risk option. High returns and higher losses:(

Please give ur suggestions on the same..

Thanks...

yups.... futures are leveraged version of stock.... its like debt and equity in a company.... losses eat up the equity so you will have higher exposure to risk... both gains and losses... but on the whole better for your CVs.... also look up nifty mini futures... maybe you can get some idea in tht direction...

as for T+2 settlement in equity, you can buy today and sell whenever you want to, as long as you buy first. this is cause both buy and sell will be settled at T+2... thus whtever you do, you will have shares in account whenever you sell em

again, you dont have the luxury of long term gains... the world is in a cyclical depression, markets are in bear mode, should take a couple of years to snap out of it... you can only go on short term gains... by making informed bets on the direction of stock/market.... and F&O will keep you on your toes

i hope you have already done some paper / mock trading... i would still recommend to avoid stock specific risk cause you will be wiped out if the stock has a bad day.... though it is tougher for the nifty to have such a bad day rest is up to you guys... best of luck... though i would say you should start trading ASAP... if not actual , then atleast paper trading...so that you have some results to show...

as for 14000.... dude pls.... the market has recovered like 20% in the last one month it had touched 12000.... the absolute bottom is 10-11k (my view).... and this being a bear market, i am just waiting for it to touch those levels again these r the best times to make money if you can ride the market