An Investor once found Aladdin’s lamp.
He had struggled so much in the stock market that at first he didn’t believe in his good luck! He thought the lamp was fake and just a decoration piece of brass. He rubbed it gently and half-heartedly.
A genie came out!!!
The poor trader couldn’t believe his eyes!
“Make a wish! My Master!!” said the genie.
“Make me as rich as Warren Buffet!”, the trader shot from his mouth.
“As you wish, My Master!”
“How much time do you give me to do that for you?” asked the Genie.
“Can’t you do that first thing tomorrow morning?!” slipped out of trader’s mouth.
“Are you crazy? Market will be in the upper circuit. You would need circuits everyday for the next 2 years to reach anywhere near Mr.Buffet! Give me a realistic time frame” commanded the Genie.
The investor never expected this conversation.
“OK, Please make me Warren Buffet in 5 years” he compromised.
“Which stock do you want me to use to make you Warren Buffet in 5 years? I mean he used Berkshire Hathaway to become so rich. What should I use for you?” asked the Genie again.
“You also need a stock? what kind of Genie are you?”
The investor was now visibly restless and annoyed.
“Mr.Investor, others in the market have not come in my wedding that they will let me have my magical ways get thru. Pick the stock”
“Ok, do it with Berkshire Hathaway only” the investor murmurred.
“How much Principle amount do you have?”, Genie asked again, with that serious look on his face!
“Why do you ask that?”, asked the trader, visibly surprised at the blunt question.
“No, I need to know that!”, told the Genie.
“I have very less amount. You are Genie. You should have guessed it!” the investor felt exposed!
“You want me to make you a Warren Buffet from that principle!!!”
“Wake up Mr.Investor Stop day dreaming. Be realistic. Otherwise you too will lose your shirt like me and would only be doing it for others and live in a lamp or under a lamp post! Good Bye!!!”
The Moral of this story is, “We think we are Investor, but from bottom of my heart we sometimes act like a Trader or a Punter”. Examples like,
“Shall I buy this stock keeping the outcome of elections?”
“What should be my investment strategy for this Budget?”
“My portfolio has fallen by 25%, what should I do now?”
Ever experience this kind of questions to yourself.
Hence the reason, I have designed this small test. Test yourself.
Take a piece of paper or open a notepad and write down your choice for the each question.
Please note: Be HONEST while taking this test. Please start now !!!
1) You buy
a) when others are buying and markets are heading to new heights every week.
b) when others are selling and markets are touching new lows every day.
c) when you got to know that Rakesh Jhunjhunwala bought a stock in a bulk deal.
d) Ignore the noice and continue with your monthly investments.
2) You sell
a) when any more loss is unbearable
b) when stock falls by 25%-50%
c) when the fundamentals of the company had changed (or change in business model like Titan Industries)
d) When the profitablility of the company got impacted due to various reasons (not yet sure, if it is long term impact or short term impact)
3) Your amount of investment is decided by
a) the amount you have at that time.
b) how strong you believe on the company and the stock.
c) If a very good company, trading at dead cheap valuations. Happy to take leverage position in it.
d) Fixed amount every month irrespective of broader market conditions.
4) You book profit
a) when the profit is too handsome to lose
b) when you feel there can’t be much more profit
c) when you have a sell signal by an analyst
d) when you have a relatively better oppurtunity
5) The stock or Mutual Fund you choose
a) is the one recommended by Value research online by 5 star or BEST STOCK of the year by ET Now.
b) is from a basket of your wishlist of stocks or MF’s
c) Every time you look for a new stock idea or 5 star fund in the market
d) Look at track record for MF and fundamentals for stocks eventhough they are not rated high by the markets.
6) You believe (Remember you need be HONEST)
a) in waiting for the right opportunity.
b) in benefitting from every situation.
c) in random investing when ever you had money.
7) In your opinion, emotions are
8) In your opinion, risk is
9) When the market is falling
a) you like it
b) you hate it
c) you stay away
10) When the market is rising
a) you like it
b) you fear it may fall
c) you wait for the fall to enter
11) When people are panicking
a) you are one of them
b) you take a contrary view
c) you think it is just a noice
12)For you, loss is
a) a slap on your face
b) a setback
c) a lesson
13) You prefer
a) timely small profits
b) untimed but big profits linked to the goal
c) profits (at whatever time interval)
14)In your opinion, Investing is
Now the rating I have given below are completely based on my learnings and there are no exact correct and wrong answers. Please feel free to disagree with me.
1. a)0 b)1 c)0 d)2
2. a)2 b)0 c)2 d)1
3. a)1 b)1 c)0 d)2
4. a)1 b)1 c)0 d)2
5. a)0 b)2 c)0 d)1
6. a)1 b)2 c)0
7. a)1 b)0 c)2
8. a)1 2)0 c)2
9. a)2 b)0 c)1
10. a)2 b)1 c)0
11. a)0 b)2 c)1
12. a)0 b)1 c)2
13. a)0 b)2 c)1
14. a)0 b)1 c)1
0 to 9: You are a casual Investor. You need little learning on the lines of difference between Investor, Trader and Speculator. Understand how the markets behave in short and long term.
10 to 21: You are in the right path but struggling with some shortcomings. Fear is stopping you to move up the ladder. Your are risk averse and being taken for a ride by your emotions. Know what you are doing. Understand your risks taking ability. Fix you investments to a goal and continue your journey.
Above 22: You have broken that crucial resistance of thinking like a trader! Your mindset have tuned to think in terms of an Long term investor and are on the right path. Short term market flucuations doesn’t bother you and are more concerned about the long term wealth creating than the short term. Congratulations!
Thanks for taking the test. Please share your scores in the below comment section.