Veena  Bhambwani's  home  page - updated monthly

 Are you missing the smaller picture ? - May 25, 2003

Yes you read correct ! I'm talking of the smaller picture, not the bigger picture. We are all so pre-occupied with making superlative profits that we have formed fixed ideas on how to earn them. Riches can be made only with high pressure trades, on leveraged ( borrowed ) capital and speculation is the best and fasted way out to make "quick money". How many times have you felt this way, and more importantly, how many times has it worked for you ? I can wager my last rupee that this system doesn't work very well, exposes your capital to high risk and gives you sleepless nights as well. All this time there are better opportunities, safer and more profitable - it's just that they are unexciting and devoid of glamour. Ultimately, you have to decide whether you would rather have excitement or profits. If you choose to pursue profits, read on....

The recent market upmove has seen traders rush to high priced stocks, "favourites" of the FII's, operators and mutual funds. Volatility on these counters is high and you trigger stop-losses very frequently. In the same market are instruments that are less volatile and inch up steadily and provide fantastic returns. Since I am restricting myself to equities, I will not talk about index funds, equity linked funds etc etc. What comes to my mind is UTI's Mastershare. The trust itself is being re-structured, since stock markets are rallying, it's NAV must be improving and so will the stock price. 

What every trader / investor needs to realise is the fact that a Rs 10.50 scrip appreciating to Rs 11 doesn't sound very exciting, but gives you approximately 5 % returns in a month !! Though annualisation is a tempting exercise, it is not fair to claim a 60 % annual return as markets need not continue to climb at the same pace. However, had you segregated some money into this instrument, you would have enjoyed high returns, safety and peace of mind. While it does not imply that you buy "penny stocks", I am of the firm opinion that investors need to recognise that small is highly profitable too. Start looking at buybacks, dividend plays and quality in your investments.

SEBI disclosure - the author of this article does not have any exposure to the securities mentioned above.

Veena Bhambwani is a director of the company and views expressed herein are her own. She invites feedback at Veena@bsplindia.com 

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