1. We need not invest in shares, but in the business of the company.
2. We need to select investor-friendly companies.
3. We need to conduct our own research — which company to invest in, which sector, and why.
1. Categories of Stocks – Large caps, mid caps, small caps, and penny stocks, along with their definitions.
2. Ratios – Importance thereof.
3. All ratios by themselves can be misleading – they need to be used in conjunction with other ratios, factors, and news, including government policies, international scenarios, etc.
1. Ten Rules.
2. Some guiding tips.
3. Risk profile – to be prepared – like Janam kundli or horoscope.
During the last session, we discussed India’s growth story — identifying future businesses, the importance of innovation and AI, and inclusive growth. We also explored the concept of India as one — with a unified national policy framework covering areas such as education, law, and taxation — promoting unity. The discussion emphasized understanding the nerve of the market, and the ‘lift vs. stairs’ paradigm, encouraging the patience and foresight needed to know when to enter or exit the market.
1. Which securities or instruments are considered less risky?
2. Which shares fall under 'seismic zones' or are considered 'volcanic' in nature? (i.e., highly volatile or unpredictable)
3. What are consolidating zones in the stock market? Please share examples.
4. What is your personal experience with IPOs? Should one apply for every IPO?
5. What is your opinion on bonus shares or companies that declare dividends?
6. Must share your views and those can be different but may be valuable in order to reach a thoughtful decision to invest in a particular share or not?
In this lesson we learnt how to earn our targeted goal of 20% earning from our researched stocks after keeping into consideration various factors and adopting strategy to minimise loses and maximising profits.
In this session, we focused on infrastructure stocks and evaluated the potential returns from a selected few. We considered all relevant factors that could impact profitability and growth prospects over the coming decade. Stock selection was based on the competency of the management, future growth potential, past performance, and the level of government support and policy alignment.
Before investing in a particular share, it is essential to evaluate 31 key parameters that help justify your decision. These parameters include consistent profit and revenue growth over the past three years, a comparative analysis of profitability versus revenue performance, and the company’s market share within its industry. Other important factors are whether the company is cash-rich, the influence of government policies on its operations, and the diversification of its client base — ensuring it is not overly dependent on a few clients or limited to a single country. Altogether, these parameters provide a comprehensive view of the company's stability, potential, and overall investment worthiness.
The next topic focuses on the 12 Wonders of the Stock Market, exploring unique patterns and phenomena that every investor should be aware of. Following that, we will discuss portfolio movement strategies, such as selling stocks that have significantly risen and buying fundamentally strong stocks that are temporarily down — a technique to optimize returns while managing risks effectively.
Why do we join a stock market class? To earn returns greater than the market — in other words, to beat the market. This is certainly possible, provided we approach investing with the mindset of a sport, combining strategy with patience. In the stock market, patience is a virtue. Without it, consistent profits are difficult to achieve.
1. Another important aspect is to reflect: how often do we achieve double or triple turnover on our investments?
2. One effective strategy is to define a clear goal — for example, selling a stock once it achieves a 20% profit and reinvesting in a fundamentally strong stock that has recently fallen.
3. What truly matters is making decisions on merit — knowing when to sell and when to buy, based on analysis rather than emotion.
4. A happy and emotionally stable person is often more likely to make better financial decisions — and, therefore, more money — than someone driven by fear or frustration.
5. The stock market is like a boxing ring, where most people know the price of everything but the value of nothing.
6. True investing wisdom lies in buying when others are selling, and not just following the crowd. As Warren Buffett famously said, “Be fearful when others are greedy and greedy when others are fearful.
The stock market is a place of allurement, where greed often takes the lead, and as a result, instead of making profits, many investors end up incurring significant losses. As Jason Zweig rightly said, “The biggest risk in the stock market is not the volatility of the stocks, but the volatility of the investor's emotions.” Studies show that only 1–2% of investors make substantial profits, while around 70% lose money, and 20–25% merely break even or live hand to mouth. The stock market is essentially a place where impatient investors transfer their wealth to the patient ones. Successful stock selection requires a deep understanding of multiple traits and parameters, along with the ability to read and respond to market emotions intelligently.
A disciplined approach is essential, especially when it comes to risk management, emotional control, sound judgment, flexibility, and patience. While large-cap stocks are generally safer and the risk of losing money is minimal, they often do not deliver returns as high as mid-cap or small-cap stocks. However, the latter come with greater volatility and risk. Sometimes, a quote can express a powerful truth — "If you want to go fast, go alone. If you want to go far, go together." This applies well to investing: long-term success often requires collective wisdom, patience, and shared insight.
Why should one diversify their stock portfolio? And more importantly, how many stocks should an ideal portfolio contain? According to Warren Buffett, one should not hold more than 12 stocks — a view I have come to agree with after gaining experience in the stock market.
Another approach is to select one or two stocks from each of the major seven sectors. With over 8,000 companies listed on the exchange and more than 20 major segments available, even selecting just one stock per segment could easily push the number to 20 or more. This highlights the importance of exercising control over the urge to keep adding new stocks just because they appear to offer better returns.
Ideally, a well-balanced portfolio should consist of 10 to 20 carefully chosen stocks, which allows for focused research, better monitoring, and more informed decision-making.
India’s growth story remains strong. The ‘Make in India’ initiative continues to gain momentum — impressing even global economic powerhouses — as India rises to become the world’s fourth-largest growing economy.
The rise and fall of shares can be influenced by a variety of factors — such as quarterly results, poor performance, tariff-related news, and more. Analyzing the true reasons behind these movements can reveal opportunities in either direction. While trends do matter, it's important to note that sometimes, even after a company posts good results, its stock may still decline — often because the positive news has already been factored into the share price.
Seasonal fluctuations also play a role. For example, in the case of Varun Beverages, a sudden large order or unexpected windfall profits can impact the stock significantly. Other events like demergers or government approvals can also make a substantial difference.
As the saying goes, "Never test the waters with both your feet" — a reminder to proceed with caution and avoid going all-in without proper evaluation.
1. It is important to monitor and study such turnaround cases. However, this is not an easy task, as one must consider several factors — such as changes in management,
2. Reduction or repayment of debt,
3. Securing large government contracts, and
4. Government support for specific sectors, like the renewable energy sector.
5. A key question arises: Can we identify emerging companies or sectors in advance?
6. This is where AI can play a significant role — by analyzing large datasets, identifying trends, and providing early indicators of potential opportunities.
7. Lastly, volatility is the hallmark of the stock market — it is the lifeblood that creates both risk and opportunity for investors.
How to Burn Your Money in the Stock Market?
There are about 15–20 common mistakes that, if followed, make it surprisingly easy to burn your hard-earned money in the stock market. In fact, it's one of the easiest things to do — considering that over 70% of investors lose money. However, those who reflect on their losses and genuinely try to understand the mistakes they made can learn, adapt, and eventually succeed. On the other hand, those who blame the market or make someone else the scapegoat are unlikely to earn profits under normal circumstances.
How to Lose Money in the Share Market?
We have explored this in detail during the 15th session. Now, we move on to a more important aspect — how to avoid losing money. In this session, we will uncover 8 super-secrets that can help develop a deeper understanding of how to actually make money in the stock market. These insights will serve as practical tools to guide better decision-making and long-term success.
The Domino Effect Understanding the domino effect is crucial — it teaches us how one small, smart move can trigger a series of larger positive outcomes over time. Identifying this effect in the stock market and applying it to our goals requires consistency, persistence, and unwavering dedication — as if our entire life depends on it.
The theory of compounding perfectly illustrates this idea. A classic example comes from the game of chess: placing one grain of rice on the first square, then doubling it on each subsequent square. By the 64th square, the amount becomes unimaginably large — a powerful lesson in how small efforts, when compounded, lead to extraordinary results. This story is not just about getting rich — it's about becoming truly wealthy, both in mindset and financial freedom.
After the 17th session, one thing has become clear — stock valuation is a complex process. It is influenced by a wide range of both logical and non-logical factors. Let’s explore the key elements that impact stock prices:
Logical factors include company performance, news flow, order book strength, quality of management, and financial ratios. However, there are also non-logical influences — such as market sentiment, speculation, and behavioral biases.
Beyond these, external players like mutual funds, financial institutions (both domestic and foreign), mergers, demergers, and global economic events also play a significant role in driving stock prices.
Understanding valuation means going beyond just numbers — it requires a holistic view of the market dynamics and investor behavior.
Secured Income Alongside Investment and Capital Appreciation
In addition to capital appreciation, many investors seek secured income through dividends. There are numerous shares — including both government-owned and private sector companies — that have consistently provided substantial dividend payouts over the years. These stocks not only offer the potential for long-term growth but also generate regular income, making them attractive for conservative and income-focused investors. We will be discussing some notable examples in the upcoming session.
Why Are We Here?
Just as our body wakes us up when we need to relieve ourselves — otherwise we could sleep for hours — a clear goal is what wakes us up to purpose and direction. The same applies to investing. Without a defined goal, it's easy to drift, but with a goal in mind, we can aim for both reasonable and even extraordinary returns.
The stock market is not unlike earning a Doctorate or a Chartered Accountancy degree — not everyone can do it easily. It demands time, dedication, willpower, and a clear objective. To succeed in the market, one needs experience, which comes either from direct participation or by learning through books, expert insights, and the shared experiences of seasoned investors via media, interviews, and case studies.
Types of Investors: Active and Passive
Investors can be broadly categorized as active or passive. Among active investors, there are several sub-categories based on strategy and risk appetite. Taking risks is essential in the stock market — a person who is too cautious is unlikely to make significant gains, unless they are a passive investor who holds shares long-term, where time may eventually turn those investments into a bonanza.
When evaluating stocks within the same segment, it's useful to bring them to a common baseline — for instance, treat each share as being worth ₹1. Then, compare the P/E ratio of each stock to assess the expected growth per rupee invested. Other factors to consider include the company’s market share, frequency of new branch openings, presence in the export market, and overall expansion strategy. Additionally, it’s important to analyze whether the company is overly dependent on a limited number of clients or specific markets, as this can influence its stability and growth potential.
When an investor, in an attempt to recover money lost in the stock market, starts chasing quick gains, they begin to act like a gambler. This is a dangerous mindset, and history is filled with examples of such behavior leading to even greater losses.
Our next topic is: Should we buy shares when a company has declared a dividend or bonus?
It has often been observed that, in most cases, share prices tend to fall after the ex-dividend or ex-bonus date, making it important to understand the timing and implications before making such investment decisions.
Seven Steps to Outperform the Share Market: It is important to consider inflation while calculating real returns, and to maintain parity when dealing in international stock markets.
Discipline is the most important ingredient when dealing in the stock market. Research is essential, and understanding the basic concepts is a must. Never invest based on tips. The market will neither crash to the ground nor fly out of the atmosphere — it will always fluctuate, and we must learn to navigate within that range.
So, when is the best time to buy? The answer is NOW. If the market is rising, continue buying with each upward move. If it’s falling, buy more at every dip — provided you have already studied the stock and confirmed that it is fundamentally strong, and that the fall is due to sentiment, not fundamentals.
Selling shares above a certain limit to book profits is almost a necessity, especially when considering one’s age and financial goals. Once you have booked profits and your remaining shares are essentially "free," it is advisable to shift those investments to another Demat account and forget about them for a while. Preserving capital is crucial. One should focus on protecting their initial investment rather than chasing the recovery of past losses — because the idea of always recovering losses is a myth.
Risk Appetite Test
Taking a risk appetite test is crucial to understanding where you should invest — whether in shares, mutual funds, or other financial instruments. It also helps determine whether you are better suited for large-cap stocks, equity, or other options after thoroughly understanding the company and the sector.
Ultimate Goal: Making Millions or Even Multimillions
Once we understand how to turn millions into billions, the possibilities become limitless, as discussed in the last couple of sessions. For those who aspire to convert their millions into billions through the shortest route, this is the opportunity to explore. We will, of course, provide a blueprint to those who are deserving.
For those interested in learning the secrets of wealth-building: if your turnover is over ₹10 crore, with a growth rate of more than 20% consistently for the last three years, and revenue growth of 15-20%, the future potential for achieving this goal is very much possible. Even if it’s not immediately attainable, it can definitely be achieved with the right approach.
Key Takeaways:
Important Concepts:
Actionable Advice:
These sessions offer a comprehensive foundation for stock market investing, emphasizing the importance of research, patience, discipline, and risk management in creating a sustainable investment strategy.