Before writing about SIP-one of the most beautiful topic and the Evergreen sectors, I couldn't stop myself from writing about this funny tale which somewhere describes how most of the people see the Indian stock markets. The person involved is sort of my client and a close friend. So this funny story starts like this -
"Once two persons set on a journey and stopped somewhere near the village Mahi (fictious) in the western part of our country. They stopped near a large village and decided to settle there for few days. In the morning they called a meeting of the villagers and made an announcement and this announcement read : 'We have come from a far off country and one of us is the King of that place and the other my minister. We are very wealthy and have come here for some specific task. We want you to catch monkeys for us from the interior of the forests and we will pay you guys heavily for this'. The remuneration announced for each monkey was Rs. 1000. To your surprise the villagers got hold of 700 monkeys and got their payments. The same announcement was made but with a remuneration amounting to Rs. 2000. This time 300 monkeys came in the trap and they were again paid off for their hard labour. Few days followed and again a meeting was called and the remuneration was increased to Rs. 5000 as the task was getting more and more difficult day-by-day (monkeys were getting lesser in number). After making this announcement, the King went back to the city and the minister was left. The villagers tried hard but no success. They were sad. They went to the minister to suggest them some way out as they didn't want to lose the 5000 offer. The minister told them that he had 1000 monkeys in his custody, he can release 500 of them but at a price Rs. 4000 and they could easily earn Rs. 1000 on each monkey from the King. The offer was not bad. The villagers were convinced. They did the same. The minister after selling them the 500 monkeys also went back to the city. The poor villagers kept hoping that the King would return but none has returned till date".
King's Profit :-
Total investment in the story: (1000*700)+(2000*300)= Rs. 13 lakhs
Total returns on his investment: (4000*500)= Rs. 20 lakhs
Total profits made = Rs. 7 lakhs.
This is how the people think about the working of Indian stock markets or the companies listed in the market. They do not understand the mere fact that markets are all about ROI (Return On Investments). You can't exchange a Rs. 100 note for Rs. 200 in the same currency, then why to expect unreasonable returns (200-1000%) on your investments. No sensible business even give these returns. My advice to such people Don't greed, invest right and sit tight. Rest is luck because there is no hard work involved in the stock markets. It's just your brain and instinct that works.
Have a Good Day !!!
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