Experienced Levels Coming Soon

Next Version of Stock Market Gamification App is Coming Soon.

It will complete the Experienced Level and mainly Covers :

  • How to do a basic evaluation of a Business
  • Institutional Money Managers and challenges they face
  • What it is to be an Individual Investor
  • Basic Investment Guidelines for Individual Investor
  • Efficient Market Theory (EMT)
    • Opinion about EMT in Academia & Real World
    • Fallacy of EMT
    • EMT to Behavioral Economics
  • Value Investing
    • Introduction to Value Investing
    • Concept of Mr. Market
    • Basic Tenets of Value Investing
    • Attributes of a Value Investor
    • How Value Investing behaves in
      • A Bull Market
      • A Bear Market
  • Concept of Moat
    • Things that constitutes Moat
    • Role of Moat in evaluating a Business
    • Dangers to the Moat
  • Health Check of a business through important numbers
  • Concepts of “Intrinsic Value” & “Margin of Safety”
  • Importance of the Management for a Business.

Overall this level will take you from Knowledge to Basic Strategy.

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Stock Market Gamification Next Version Coming Soon

Next Version of Stock Market Gamification is Coming on 3-Feb-2017

It will complete the Intermediate Level and mainly Covers :

  • Aspects of a Business
  • Stocks versus Bonds
  • Types of Stocks
  • Dividend & its impact on Business
  • Stock Market Enablers
  • Investment Advisor versus Stockbroker
  • Events like Stock-Split,Bonus Issues & Buyback and their impact on stock.
  • Mutual Funds
  • Basics of Derivatives

Here is some preview :

*Images from Stock Market Gamification App

Keep sending your valuable feedback and suggestions.

In the Beginning There Was Idea

Every business starts as an idea which is generally a new thing and in most of the cases adds some value in some existing thing and generates cash flow in the process.

To convert the abstract concept of idea into a concrete business it requires financing.

How an idea can be financed?

One option is to get money with a promise of giving extra as per the pertinent Interest Rate.
It’s pretty straightforward and simple to understand.

You have an idea and other person has money and he is willing to give you the money with a promise of some additional money after a fixed period of time…Simple.

Another form of financing comes through Stocks.

How this form of financing works?

Now, this one is quite interesting and one of the greatest invention after the concept of money itself.

Let’s have a look at this more closely…

You are willing to give money without a promise of anything in return.

No Interest Rates……No Security of Principal….just a faith in the business ….. Seriously….How it works then!!

This is an astonishing thing as well as something that baffled many and make it difficult for them to fathom.

Let’s take a further look at this….

A business is divided into many parts and those parts are called Stocks of the business and people can buy those parts in the initial public offering (IPO).

Over the time these stocks are traded at a place called Stock Market based on‘perception’ about their growth in future the price changes over time.

Why price changes so much if the value of underlying business is not changing?

It’s all about Greed and Fear and it’s discussed here Greed & Fear

How an investor with a right mindset should see it?

The analogy of Mr. Market by Benjamin Graham is very helpful in understanding the overall scenario.

According to that, you are partner in a business with a crazy person Mr. Market.

Mr. Market has wild mood swings.

Every day he offers you to Buy your shares at a particular price or Sell his shares at a particular price.

But leaves the decision up to you entirely.

Sometimes he’s in very Good mood and tend to name a price higher thantrue value of business and he will accept with joy your shares at that price.

At other times he is in such Bad mood that he tend to name a price very low than true value of business and you can take advantage of Mr. Market’s crazy offer to buy his shares.

And not to mention that you always have the choice of not doing anything.

That’s the real beauty no penalty for inaction….Which is the greatest edge for an investor with the right mindset.

We’ll explore more…Stay Tuned.

Greed & Fear

The two emotions that drive any financial decisions are Greed & Fear.

The emotion of Greed is usually the first emotion that you have to encounter in your investing journey.

How it starts?

As a human it is natural to desire to acquire as much wealth as possible in the shortest amount of time and this excessive desire is Greed.

It starts as soon as the process of finding an investment option begins and it tries to control your decision from that point onwards.

With so many mythical short term success stories and sure-shot investing ideas floating around….all promising the financial heavens in a short span of time clouds the judgement of the investor.

The cumulative effects of Greed is very conspicuous in financial markets, where many things are overpriced just because every investor swayed by Greedcontributes to the insanity by following the herd of overconfident investors &experts who believe that no price is too high even if it defies the basic fundamentals of investing.

This get-rich-quick mentality makes it very difficult to pursue a long but fruitful pursuit of understanding the investing options and evaluate them against the basic tenets of investing so that you will invest only in things that you understand and where the prices makes sense.

How you can identity that Greed is affecting your decisions…actually it’s quite simple…just answer some very easy and basic questions…

  • Does this investment sounds too good to be true?
  • Do you understand how this investment works?
  • Is it currently available at a price that makes sense?

You know the correct answers already in your mind but this process of reiterating over these basic questions is very crucial and will clear any doubts and reduce any effects of Greed while selecting a particular investment option.

Now coming to the next dominant emotion that is even more powerful than Greed…….which is Fear.

Why Fear is even more powerful than Greed?

The main reason Fear is more powerful is because it remains with you for a longer period of time which can starts right at the moment you commit to an investment.

It also has more capability to decide the degree of damage that can be imposed on your financial well-being if not handled correctly.

Fear can clouds your judgement to the extent that it can jeopardize even your best investing decisions and make them appears to you that you made a mistake.

How it starts?

Fear starts when you start seeing that herd is going in the opposite direction.

The level of damage that Fear might induce can be devastating.

There are many instances when a person who appears at ease during the drop of price of an investment at a level of 100 eventually decided to sell it at level of 50.

What prompts this illogical choice !!

Fear of loss compels the investor to sell at price that is even far below than what is the ‘true’ or ‘fair’ price.
This along with Greedduring buying makes a lethal combination that leads to most of the “Buy High and Sell Low” situations.

How it can be handled?
For this you need to change your perspective of how you see the situation.
If BUY decision had been made with due diligence then the price drop only makes it more attractive investment.
It gives you more chances to magnify your returns if you can control your nerves and train yourself to see the situation with this perspective.

Greed and Fear are inevitable part of an investment journey and more you are prepared to tackle them better are the chances of success you will have in your investing journey.

No one summarizes how to handle Greed and Fear better than one of the greatest investor of all time.

“Be fearful when others are greedy. Be greedy when others are fearful.”
Warren Buffett

One just have to keep their head when others are losing theirs…We will explore more…Stay tuned