Investing tricks not taught in grad schools

We learnt calculus, organic chemistry and Shakespeare in college, but investing in the stockmarkets, arguably a subject of interest for scores, never formed part of our curriculum. A subject that would have shaped the monetary destinies of each of us was never even considered.

Being well acquainted with the stockmarket and having a clear understanding about it are two different things altogether. There are millions who make money through the stockmarkets, many of whom have transformed just a few thousand rupees into huge portfolios. But, an equally large number has suffered losses.

So, what do you do to understand the market and invest accordingly? Where and how do you begin the journey? In an attempt to help you begin your education as an investor, Outlook Money identifies training courses that teach you the art and science of investment.

Enrolling for an expensive course at the stock exchanges is one way of educating yourself about markets. These courses are organised over three to 10 days. Investor camps held every year in many parts of the country fulfill the same need at a lower cost. Most of these seminars are free of cost, or charge a nominal fee ranging from Rs 100 to Rs 250. But beware of product push by the organisation.

Background

The concept of investor education never existed a decade ago, and crystallised only after the IPO scam in 1994-95. Fundamental and technical analyses, which are the key to participating in the capital market, were made available only to the privileged sections of the society then.

Now, investor protection and awareness is becoming a necessity. The Securities and Exchange Board of India took the lead in making the Indian retail investor well informed.

A first

Sebi, under then chairman G N Bajpai, began its drive of conducting investor awareness workshops in 2003. It also roped in the Bombay Stock Exchange and the National Stock Exchange to start conducting similar workshops. Today, Sebi has authorised a list of 18 investor associations and NGOs which conduct all its workshops. Sebi, in return, funds them. These workshops comprise interactive sessions on topics such as 'how to read a prospectus', 'how to apply for an IPO' and 'what are the risks that an investor should be aware of'.

The electronic medium has also contributed a lot to information dissemination among the common people.

Other players

Other than organisations backed by Sebi, a lot of broking houses are also into this field. They conduct seminars regularly, usually on a large scale. While some of these seminars are only for the clients of the brokerage, others are open to all. These sessions specify what a retail investor should do with his stocks and how he should strategise his future investments. They also discuss a bit of history and share information about the indices of other countries.

Overall, these sessions are helpful for newcomers as well as seasoned players. Rajesh Ved (49), an investment advisor himself, attends at least one camp every three months. He says, "I really gained a lot by attending these seminars and have even made good profits. I actually changed my decision of buying a certain scrip after attending one of these seminars and it worked in my favour."

Use your discretion

Apart from discussing individual scrips, these camps also give useful tips to individuals. For most people, these workshops make things simple. They follow the advice given at these workshops and implement them while investing.
However, one needs to use this information prudently and not blindly follow it. "I do my homework thoroughly," says Mumbai-based Allen Mark Fernando, a third-year student who has been investing for the last four to five years. He never takes the guidance provided in these workshops at face value, and neither should you.

"Most of the broking houses, which conduct these seminars, may be trying to manipulate the market. They might ask you to buy a particular stock, while selling their own stake in the same stock," says N.L. Bhatia, president of the Investor Education Welfare Association in Mumbai.

Before signing up for any camp you should check what the topic is, who the speakers are and who is conducting the seminar, says Vipul Modi, vice-president of the Investor Grievance Forum, Mumbai. "Ideally, investors should go to educative seminars such as those organised by the BSE. They will give an unbiased opinion," says Modi. He continues that a seminar, which talks more about the risk factors and allows you to think fundamentally and make a decision rather than spoon-feeding you on which scrip to purchase or sell, is likely to help you learn more.

The Investor Education Welfare Association and Investor Grievance forum are both NGOs that have been authorised by Sebi to conduct these workshops. "We also discuss various scams and issues faced by the investors, but never give advice on buying or selling a particular scrip," Modi says.

Specialised areas

Other than these basic seminars, special tutorials are also conducted at various places, including colleges. Some of these cater to a particular audience, which wishes to specialise in a particular area, be it derivatives or reading charts. Other specialised workshops are conducted for different sizes of portfolios.

"We conduct special workshops for first-timers and for those with small portfolios," says a sharekhan.com official. The Investor Education Welfare Association focuses on women investors too. "Other than investment, we also teach them basics of banking and finance. In short, we tell them anything that they may have to deal with if they need to take care of their investments," says Bhatia.

Seminars are also conducted in smaller towns and cities, where the need for information is far more than that in urban areas. NCDEX conducts nearly 60 per cent of its workshops in rural areas. Its main objective is to inform them about price dissemination and risk management through futures and options. "We get responses from up to 1,000 farmers at a time when we conduct these seminars in their regional languages," says V.V. Ganeshan, assistant vice-president, NCDEX.

The attending investors go back with a responsibility - making more people aware of the existence of such camps and to come back themselves to attend these camps again. When it comes to the stockmarkets, even little knowledge can go a long way.