Start the value investing now

Like many of us, who got carried away by zooming Sensex of 2007, I too thought to start on minting money in stock market. I thought to play intelligent investor and kept watching the market for 3 months (from Nov-2007 to Jan 2008). In the mid Jan 2008 I started pouring on my savings to stock markets in the hope that it touches 25000 by March 2008. Everyone on the street was talking same those days. How could I be so foolish to not to cash in the advantage. Well, to my amazement, I never saw green color! Stock market plummeted; I thought probably my entry in the market has not been so good but patience should make me a winner. I was determined that I will not do a panic selling. Soon I found my hard earned money to its 50% level. And when market tanked to 8000 level I was at 80% loss.

I then paused and brooded over the mistakes I have committed in my investment decisions.

1. I realized that I spent more time on buying Rs 14 per kg potato than on Rs 1000 stock of ONGC
   
2. I believed a lot on analysts' reports, technicals and tips. Most of the tips are not even worth the paper they are written on.
   
3. I thought I could chase a rising stock and catch a falling one. I got messed up in both of them.
4. I didn't understand the patience part correctly. There is no point in keeping a stock patiently which is not even worth a penny for times to come.
   
5. I thought I could ride the stock about which there is some rumor in the market. I could never time the market.
6. I thought if a stock has seen 1000 price and currently is at 100, it will some day come to 1000 level again. There is no such guarantee!
7. I thought if a stock has fallen steep, it is time to grab it. But again not everyone can catch a falling knife.
8. I thought I could cut my losses if I average all my holdings. It did work for a few good stocks but I am yet to recover a good portion of my money till date.

After learning these lessons, I took a pause from the stock market, invested in some good mutual funds and kept the learning process on. Time to time I have invested a small portion my hard earned money to see if my learnings are in the right direction. In the posts to come I shall post my currently loss making portfolio and its monthly updates. My aim from now onwards is to beat the Sensex at least by 10%. Lets see where do I land up.