Stock Investments

03 Sep

Posted by Aditya Kulkarni as funny stuff, mudslinging, mylife

Soon after I started working at Trilogy, I started getting interested in the stock market. The world’s biggest Casino! Where fortunes are made and everyone gets rich! I used to work with this guy, let’s call him Atif*, who got me very interested in this stock business. He used to give me stock tips everyday, and made “guaranteed” predictions that stock X was going to double within a month.

One day, he “highly recommended” the Reliance Petroleum stock to me. They were coming out with an IPO, and, according to Atif, anyone who didn’t invest in it had “bloody stone-cold rocks in their head”.

So I go ahead and apply for the Reliance Petroleum’s (RPL) IPO. It’s only 90 rupees a share. That’s cheap. Even Fried Rice in Shanti Sagar costs more than that. It must be a good deal.

Day 0: The stock opens on the stock market, and rockets to 110 Rupees. I’m feeling good. Wow, this is easy money. Why haven’t I been doing this for years?

Day 1: RPL = 85 rupees.
Oh man! I’ve already lost a few thousand rupees. I should have sold it off on the first day itself. But that’s OK. I read on the internet that investing in the stock market requires a lot of patience. So I’ll wait one more week.

Day 3: RPL = 80 rupees.
Oh, great. Just great. The stock just keeps on going down. And Atif has suddenly disappeared on vaction.

Day 7: RPL = 89 rupees.
I learnt that the absolute price of a stock is meaningless. What matters is how much the price changes. RPL stock can be 90 rupees, Infosys can be 19,000 Rupees and TCS can be 500 Rupees. There is absolutely no meaning to the absolute price of the stock. There goes my cheaper-than-fried-rice theory.

Day 12: RPL = 118 rupees.
Ah! My patience has paid off. I’m going to sell the stock. Or should I wait for a few more days for it to go up? What if I sell it now and it goes up tomorrow? Maybe I’ll wait till it reaches 120 rupees, and then I’ll sell it off. I promise.

Day 13: RPL = 119 rupees.
One more. Just one more rupee and I’ll sell it.

Day 14: RPL = 75 rupees.
Aaaaaaarrrrrrgggghhhh! Dammit! I should have sold it yesterday only. The stock has fallen to it’s lowest level! I’d have been better if I had kept the money in my Savings account. At least they pay 3% interest!

Day 40: RPL = 120 rupees.
Finally! After more than 1 month, the stock has finally reached my sell-off threshold. I immediately sell it off. That’s it. I don’t want anything to do with this stock market. It’s too risky.

Day 41: RPL = 149 rupees.
Oh, COME ON! The stock goes up AFTER I sold it. Why does this happen to me? WHY ME?

Day 42:
The bank pays me the money received from the sale of the stock. But wait, there is more bad news. The bank has charged me 0.75% transaction fee. Unfortunately, that’s on the selling price, which is equal to 20% of the profit. Plus, there’s a 2% education tax and a service fee and VAT on that. Additionally, I also have to pay Capital Gains tax. I calculated that I’d have been better off putting this money in a simple Fixed Deposit. %@*#@!$ stock market.

*Some names have been changed to protect the guilty.

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5 Responses

jyothirmayee

September 3rd, 2007 at 6:35 pm
1

patience guruve..

btw..
s/b/n/
s/s/t/

you really got to get better at changing names
Asif

September 4th, 2007 at 1:48 am
2

Apparently, Atif was last heard to be working on Wall Street…..it seems some people are willing to pay for his investment advice!!!
Vinay

September 4th, 2007 at 2:22 am
3

First of all, your profit was 33% and not 20%.
Then you need to pay capital gains tax on it.. It is 10% of your profit. After deducting that, you still have 30% of profit left for yourself.

Then, the 0.75% transaction fee is levied upon your principal + profit. So, it totally comes down to 1%. Deducting that, you still have 29% of profit for yourself.

The amount of tax you pay is only 10% of your profit, i.e., 3.3%. Education cess is just 2% of this tax amount, i.e.,2% of 3.3%, which comes to 0.066%.
Deducting the education cess, you have 28.93%.

There is no VAT that you have to pay. And the service fee should be the same as transaction fee.

So, finally you have 28.93% absolute profit after deducting any tax, trasaction fees, etc, that too, for only 40 days. (The annualised return comes to 260%).
You have made quite a handsome profit that you can’t even compare to your simple Fixed Deposit.. So, I don’t see why you are complaining.
Aditya Kulkarni

September 4th, 2007 at 5:05 am
4

Hey Asif. I don’t know who you’re talking about. Atif is a functional character!

Vinay: If I was capable of so much Mathematical rigour, I wouldn’t be loosing money in the stock markets in the first place
Sameer

May 25th, 2008 at 1:22 am
5

@Vinay:

C’mon dude.. Everything’s fair in love, war and written humor…