I have seen recent exchange of views on this forum and have following to say:

It is very important for an individual to first understand “who am I?” It is not possible to be both Investor & Trader simultaneously, because your confusion will increase since you may for short-term gains, miss out on long-term potential and vice versa. (Those who claim to be successful as both investor and trader are either lying or they are Supermen)

Once it is decided “who am I?”, it is very very essential to stick to the discipline/systems to be followed to carry your plans.

Now coming to the most common lot amongst us: those who: “do not know who they are”. They are RJ one day (hold positions forever), and a pure trader the next day.

Let me try to relate this to the real-life experiences I had with this lot.

1. They come to the markets only when they see it is going up and after they hear about how their neighbour/colleague/boss/junior/senior/cousins/uncles have made money in this rising rally.
2. We all know and understand that buying at bottom is impossible. But Mungerilals achieve something very unique to them: BUY AT TOPS AND SELL AT BOTTOMS! Great feat, isn’ it?
3. Their portfolio consists of very few blue-chips, but most of junk stocks recommended by brokers/media/analysts and also by neighbour/colleague/boss/junior/senior/cousins/uncles.
4. Most of the smart stop-losses Mungerilal applies, get triggered and then the market reverses trend! He is a firm believer that some "operator” somewhere knows about his stop-losses and blames him for losses.
5. Mungerilal would immediately sell blue-chip when he sees little profit, but will hold onto junk stocks for ever.
6. Mungerilal would also be required to sell his blue-chip holdings in order to meet margin calls. This is because he is lured into F&O trading by smart brokers, he is heavily leveraged to earn quick buck.
7. On the days he is lucky (day-trading) most Mungerilals would blow that money off partying. Mind you, Mungerilals, do not take pay-outs from brokers, so what he is partying off is only for gains in books.
8. Mungerilals who are lucky on a particular day (when they make some quick buck day-trading) are easily identifiable in dealing rooms. Look for the person who is most vocal, blowing his trumpet, rendering advice to not-so-luckies. On the down days, however he would be all quiet, sitting in a corner, going out for a smoke etc etc…
9. Mungerilal would be constantly looking for “hot tips”! Be it in media, brokers, internet, chat rooms, office colleagues neighbour/boss/junior/senior/cousins/uncles. During bull rallies they subscribe to even capital market journals/magazines. (However, during bear phase of markets who knows where these Mungerilals disappear).
10. With the advent of technology, they will subscribe to internet trading. I have seen some Mungerilals, who trade just because they have subscribed to that fancy software (marketed smartly by brokers) and because they have to pay some fixed monthly/yearly cost (again brokers are smart- they say that this can be adjusted against brokerage!!).
11. Most of the Mungerilals would also subscribe to sms services and when they see some calls being successful, follow the advice blindly by taking huge leveraged positions.
12. If a day-trading position is in loss, they will take delivery. That’s how most of the stocks in their long-term portfolio are. Typically, they would have more than 50 to 60 stocks in their portfolio.
13. Mungerilal would never buy Reliance at 900 but he would go long when Reliance is 1140+ (that too with heavy leverage…) just because the broker says that it’s a clear break-out!
14. The relationship manager/dealer of their broker is their best friend (during bull rallies). They will be constantly in touch with this guy from 9:55AM to 3:30PM. (Timings may change due to sun outage…!!). Warren Buffet says that “Wall Street is the only place where people who own Rolls Royce seek advice of the ones who travel to work by subway/local trains”. Now these dealers (20+ somethings) have only formal NCFM certification and have not yet seen bulls and bear cycles, so they lack experience. And moreover, they have ajob to increase trading turnover. If you don't call them they will call you and give you tips. But Mungerilal would blindly take their advice for granted.
15. They follow bulk-deals very closely. Mungerilal would easily buy a share because a particular HNI has bought it. Or sell their holding because a certain FII has off-loaded.
16. Mungerilals would have little knowledge of everything: fundamentals/PE ratio/BookValue/Candlesticks/Chart Patterns/Global Factors/Fed Meeting/Crude oil/Opec and god knows what not…
17. Typically a Mungerilal would also know, by heart, Index highs/lows…support/resistances of not only Indian market, but also Dow/Nasdaq/Bovespa/Nikkie/FTSE….Most of the Mungerilals would get up late in the night to watch CNBC and see "global cues"
18. Some adventurous Mungerilals take advice of their punditjee/astrologer/numerologists or devise their own method like deciding longs/shorts based on colour of tie/dress of TV Anchors.
19. I have also come across a new breed of Mungerilals, especially after May’06 carnage, their brokers have lured them into commodities trading on MCX/NCDEX….Then there were calls of Gold US$1400, Oil US$100, Guar Gum ….and what not….Though since last week’s meltdown in global commodities market, I wonder where are they now?.

Having understood these traits, we might think “hmmm….even I behaved like a Mungerilal at some point of time!”. Let me clarify again here that I do not have any intention of hurting feelings of anyone (either living or dead!)

My sincere suggestion is that let us learn from our/other’s past mistakes and try not to act like Mungerilals. That would be a major success of this forum “The Equitydesk”……

Last evening I had a classic opportunity to have interactions with lots of Mungerilals at a social function. Thanks to the Bull Run, I was lucky enough to have met so many at one place together.

Mind you, the hot topics of discussion were of course Sensex having closed above 12000 and ongoing Cricket tournament in Malaysia, in that order.

I asked all of them how it feels having made tons of money due to rise from 8800 to 12000. Almost all of them confirmed that they have missed the rally. Here is a snapshot of different responses:

a)    the leveraged ones were so much in debt due to May’06 carnage, they had no money, so could not participate.

b)    some were so bearish at 8800 they sold most of their blue-chips (but keeping those junk stocks for the long-term) as they believed “sell” signals from their trusted technical analysts. And as per some chart patterns they believed it was best to get in only below 7000. Dr.Doom’s forecast also supported this view.

c)     few who follow EM trends, fund flows and all that stuff fundamentally said yes we also came to 30% cash (still in cash ready to be deployed!) in June because of those usual firangi experts who found India very very expensive at 8800 compared to many other emerging economies. (The same firangis are now saying we are fairly priced at 12000!).

d)    One Mungerilal who has just got married confirmed he was scared to death after seeing May’06 sell-off that it was not possible to allocate more money to equity as an asset class. He said “my Mother-in-law is right…stock market is like gambling”

e)    One guy who had courage to buy some stocks at about 9000 level, promptly sold it off (with some gains of course) because he was told by some analyst that there was a double top formation at 10940. He believed the prediction that markets would tank and not only retest, but breach June low…so he thought he could always re-enter at lower levels. This view was supported by another analyst following candlesticks…some hammer or star formation…(Our Mungerilal is very eager to light a candle on that analyst’s graveyard)

f)      couple of HNIs proclaimed (the guys who were so rich that losses in May’06 did not affect them much due to their inherited wealth) that big money is into commodities only, because of huge intra-day volatility. One of them even tried convincing all of us that “yaar, what’s there in equity”, its only a piece of paper. In commodities you can at least feel it, see it all around us, use it (I wondered what this gentleman would do with 30Kg Silver, 1 Kg gold or 100 barrels of Oil, or worse Tonnes of Urad Dal, Guar Gum!!!). I later found out that this guy was (fortunately) short on Silver and made some quick buck as it fell from 22000 to some 18000. His rival and envious HNI, rather privately, whispered to me that the same guy has lost huge bets in Crude Oil as he was damn positive of it going to US$ 100, but it corrected to some $64, and out of over-confidence he went on averaging till it was too much to handle! I immediately remembered Charlie Munger’s (Buffet’s partner) words: It is a wise policy to trumpet your failures and to stay quiet about your successes.

g)    there was another class who were of the opinion that they were not convinced because this rise was on low volume, lesser institutional participation, poor advance-decline ratio. They are sitting in some cash to be deployed at next available correction. These guys have vowed to be in only fundamentally strong companies.

h)    There was tragedy with one Mungerilal: He went long RIL futures, but as a hedge was short on Nifty (as suggested by some strategist). This guy booked profit in RIL, but due to greed and some forecasts of global slow down, kept Nifty short open….The last I heard was that he wanted to average his position on Nifty short….and the market is going up, up and away…(His wife told me they are planning a trip to Tirupati to offer prayers)

i)      One Mungerilal sold off all his holdings to move into 100% cash after he heard Ahmedabad based brokerage expert analyst (who wears different hats---fundamental, F&O, technical) on CNBC that Indian demographical story/consumer driven demand is all bullsh*t, Left parties are taking us backwards, global recession is ahead.. This two minute genius talk (off-the cuff remarks) on TV, shattered all his conviction about India Story. I sincerely hope that that Analyst does not meet this Mungerilal in person…(I learnt privately that this Mungerilal was talking on his mobile to one Bhai about some “supaari”)

j)      Quite a majority was satisfied that they have started to recover their cost at least with the rising prices and are promptly selling.

k)    One Mungerilal who is known as KING OF NIFTY OPTIONS for his various strategies (like spreads, condor, butterfly, straddle, strangle… and what not) informed me that he made net Rs. 1,100 in a month during August volatility (but was quite furious that for these trades his brokerage bill ran into more than Rs.25,000, later I overheard him telling someone that he would use “strangle” strategy on his broker!

l)      few Mungerilals confirmed that they will re-invest only after the Sensex breaches the previous top convincingly with high volumes, a net positive FII inflow and strong global markets. Also this has to have supportive F&O cues like implied volatility, cost of carry, open interest etc.

Consensus was that with lower brokerage (competition due to slashing by Kotak/ICICI Direct) they would be able to trade more.

Majority of these Mungerilals have over the past few months formed very strong opinions about variety of matters:

1.    Fed will stop at 5.50% and start cutting rates from next year.

2.    BoJ may raise quarter bps. EU may be cautious in their approach. German consumer confidence index is rising.

3.    Nifty, if it crosses 3800 and closes above crucial figure of 3822 (of course with high volumes, there has to be a rider---a condition), next logical (?) target is 4600.

4.    Dollar is going to be weaker.

5.    Rupee will be largely in the range of 43.5 to 48.

6.    Biggest threat to India is twin deficits. PC will fail on FRBM.

7.    Sensex will rise to a new high and then tank due to FII pull out.

8.    US will attack Iran. Gold is a must buy as a hedge against war/inflation.

9.    FTSE index will tank due to uncertainty over Tony Blair.

10.                 India will be a economic super-power by 2020

11.                 Be cautiously optimistic on ONGC because US winter severity and heating oil demand will decide the course (?). Before playing on ONGC futures, keep a watch on Wednesday US inventory data and CNN weather forecast. My friend working with a major foreign brokerage is working on co-relational movements of Crude Oil on Nymex, Exxon Mobile & BP stock on NYSE with ONGC. He will feed me with inside information with Beta of the movements. I’m a bit concerned about attacks in Nigeria on oil facilities though.

12.                 Oil if cannot cross US$78.40 will retrace to US$38.60, otherwise in a trading (?) range of US$42 to US$68. Bit bearish view on oil.

13.                 There will be a global equity meltdown (like or worse than May’06) in FY’07 or FY’08 or early FY’09.

I sincerely thought that these gentlemen were getting ready for full capital account convertibility of Rupee so that they can play global markets. I had an inferiority complex and promised myself to be in touch with the times.

By the way, I forgot to mention that none of these Mungerilals have read a single FY’06 Annual Report of companies they hold, which they confirmed having received over the past 3 months.

Two stock tips I got in this party: Consumption of whiskey, white-rum, vodka & beer as well as cigarettes seems to be on the rise. (Disclosure: I’m a teetotaler, non-smoker…..but love and hold ITC as a very long-term bet)

We all promised to meet again during Diwali for celebrating not only the festival but a magical Sensex figure (I wish to keep this a little secret…will share it only after the event!)

However, during the next Diwali party I will quote this to all the Mungerilals:

Even now I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children!—Warren Buffet

Thanks for patiently reading this long posting….

mr    kulman

Dear Kulman,

Good humor.... Nice discussion..

Reetesh.

LAGE RAHO MUNGERILAL

Hi everyone… Thanks for your reactions! I'm not very well qualified to write a book. My idea is that investors should learn from Mungerilal.

What happened meantime was that those Mungerilals who had missed cocktail party on Saturday, came over to my house last night for dinner. Due to this unexpected gathering and impromptu party, I ordered Domino’s Pizza for all.

Without boring you with more details of the party (cricket-D&L Method-Sachin, Jhalak Dikhlaja- Sanjeev Kapoor’s new look were other hot topics), let me brief about new interesting things involving M&M (Markets & Mungerilals):

1. One of the Mungerilal’s wife was quite unhappy with her husband, and she publicly was scolding him like a teacher scolds a primary grade student. I tried to intervene to stop their fight, but she was so angry, she even shouted on me “Aap chup raho!! You don’t know him…..He forgot my Birthday…..but he even remembers 20, 50 and 200 Day-Moving-Averages of Nifty, and that too exponential which changes everyday!!” This reminded me of a old joke: A doctor told his patient that her test results indicated that she had a rare disease and had only six months to live. "That's such a short amount of time, doctor. Isn't there anything I can do?" pleaded the patient. "Marry a stock-trader”, the doctor advised. "It will be the longest six months of your life!"
2. Quite a few of the Mungerilals complained of chest pain, BP, sugar, insomnia problems. And these symptoms started developing from mid-May’06. Some have started taking anti-depression pills because now they have this “can’t miss the rally feeling”. I felt sorry for them that at such a young age they are facing these problems. (I started wondering whether this could be the sign of good things to come for domestic Pharma companies but did not of course spoke about it as I was the host)
3. Majority of the Mungerilals involved in Day-Trading had a complaint of another kind. They said their performance in the office as well in the bed has been severely affected over the past few months. The reason could be inability to catch tops and bottoms, & perhaps bad timing, I murmured. (I noted mentally to keep a watch on Pfizer’s quote, as Viagra could be a big hit here)
4. One Mungerilal, after watching a presentation on CNBC by a lady they claim as “Commodity Expert” is convinced making big money there….just pay 5% margin, sell Silver one lot, cover it next day when it falls 5%...you have doubled your money overnight! (Maybe she forgot to mention what happens when the call goes wrong and it rises by 5%...you lose your entire margin in no time!) He displayed his new expensive PDA-cum-Mobile phone. He has subscribed to a software (I think it’s from FT) which displays live commodity prices (MCX/NCDEX) to help him to be in touch with the market even on the move as he does not want to miss single minutes action anyway as it’s all about timing. Some website also provides him “trading ideas” as well as some “US data…like housing starts, non-farm payrolls, Jobless data, PPI, ISM, and more….” by sms/e-mail. Great, I wondered! (I would closely follow quarterly results of F.T. and the brokerage this Mungerilal uses) But restrained myself quoting the legendary master: "There seems to be some perverse human characteristic that likes to make easy things difficult." & also “What’s the sense in getting rich just to stare at a ticker tape all day?-Warren Buffet”

So long friends…..I have an incoming call, from the caller ID- I can see it’s from another Mungerilal…maybe we shall get some more stock (ideas)……

MUNGERILAL & CIRCUIT

Venue: Dealing room of brokerage “Gabbar Stockbrokers Security Advisors & Wealth Creators Pvt Ltd”

        2. Circuit--the dealer, who punches orders at the speed of light

        3. Mob involving other traders, couple of more dealers

Time: 9:45AM

Day: Listing of RPL shares

Circuit: Morning Sir Jee (most of the Circuits in the industry call most of the Mungerilals, Sir Jee)

C: Aaj to gap se khulega, Japan, Korea dekho…kal Dow, Bovespa bhi strong tha. Aur RPL ka listing hain…

M: Arey yaar, maine 3 alag demat account se apply kiya tha lekin nahin mila.

C: Kya baat karte ho, Sir Jee? Apne almost sabhi clients ko RPL allotment aaya, demat mein bhi credit hua.

M: Hmmmm……. (cursing his luck). Kite pe khulega…RPL?

C: dekho, boss-log (?) to kehte hain 100 se jyada…Long term ke liye bahut achhaa hain. RPL 120 to aaj-kal mein dikhayega, Sir Jee. Kuchh naya plant aa raha hain Gujrat mein. Aur 82 pe bahut strong buying aayegi…

M: haan haan, world’s largest refinery hain, heavy & sour crude oil can be refined…Nelson index…. (as usual he has little knowledge of everything....…but now getting more concerned that he does not have allotment and it’s going to run away)

M: Opening dekho, phir dalna

Market opens…strong on global cues & euphoria….Mungerilal getting impatient….

C: thoda sa profit booking aayega…neeche laga do buy order…bolo Sir Jee…

M: Lagao 1000 shares 95.15, buy order!

C: Confirm 95.15, buy order RPL quantity 1000? OK Sir jee?

M: Daal do jaldi…(he is too excited)

C: Order daal diya ….yeh dekho exchange confirmation aa gaya!

This weekend I would like to share with you a real life story of another Mungerilal. Here is how he got bust into playing "infrastructure" boom theme:

wow kulman...from buffet to livermore....quite a range.....

A long time ago, a visitor (named Mungerilal-our dear old investor-cum-trader-cum-punter-cum speculator)  from out of town came to a tour in Mumbai. At the end of the tour they took him to the financial district.

Mungerilals, Diwali & Diwaala

As planned earlier a grand pre-Diwali bash was organised at a banquet hall of a reasonably priced hotel. The gathering was even larger than expected. The song from Tejaab was blaring: “Ek, Do, Teen, Chaar, Paanch……Baarah….. Teraah” to celebrate in advance the event of Sensex crossing 13K mark.

There was one specific Mungerilal under heavy influence of liquor; I was told he had 8-10 pegs and that too of some heady cocktail. He was behaving like Chunnilal of Devdas-fame (Sanjay Leela Bhansali’s Devdas, not the original classic)…if you remember Jackie Shrof’s dialogues like: “D se Diwaana, D se Daaru, D se Devaa etc etc…”. This guy was going from group to group in that party to offer his “expert comments” which are mentioned at the end of each section. Please pardon him for using some unparliamentary words. By the way, I found out that this Mungerilal a.k.a. Chunnilal had lost huge money trying to play the futures both in equity & commodities markets. He was the classic case-study on effects of excessive “Liquor & Leverage”.

1. A large group of Mungerilals was assembled in a corner loudly singing, in Qawwali style: “Ghar ghar mein hain Diwali, mere ghar mein….” This song sums up the ‘investment returns’ most of the Mungerilals got from this bull rally.

Chunnilal: “Q se Qawwali, Q se Quarterly results, Q se Qayamat ..…”

2. One Mungerilal had this to say about financial markets: “There are various types of animals in financial markets..like bears, bulls, pigs etc….but one must remember that Market itself is a MONKEY!” He further added his experience…..After hearing the news about North Korean N-Test, he went short on Nifty Futures and went long on Crude Oil Futures. Apparently, he lost money on both the trades. That’s why he was convinced that Market is like a Monkey, for its indifferent & irrational behaviour! I was also told that the same Mungerilal had similar experience when he was long on TISCO Futures and as a hedge shorted Steel Futures on a commodity exchange. (Unfortunately lost on both the positions)

Chunnilal: “A se Animals, A se Andheraa, A se Antarctica, A se Amaranth ….”

3. A Mungerilal told me why he fired his good looking secretary. When he ordered her “Get my broker, Miss Maria”; her mistake was that she asked him: "Yes sir. Stock or Pawn?"

Chunnilal: “B se Bellary, B se Betting, B se Bovespa, B se Broker aur B se Bh****…”

4. A Techie Mungerilal- a software professional was fired by his employer (a large organization) for using online trading software during office hours. This guy had attended some free seminar on one of the weekends & was convinced that by timing the market in momentum (swing) trading one could make lots of money. By the way, his educational qualifications are Engineering graduation & some PG course in Comp Science. I recalled Buffet’s quote that there is no relationship between your IQ & Investment returns.

Chunnilal:”S se Software, S se Silverline, S se Sadak, S se Suffer, Se Sazaa…..”

5. I overheard conversation of two Mungerilals who were drinking like a fish. First one: “Yaar, this Nifty trading strategy has really hit me hard, I’m unable to sleep well nowadays” The other Mungerilal replied: “Hmmm…The market may be bad, but I sleep like a baby these days. I wake up every hour and cry!”

Chunnilal: “N se Nifty, N se Nasdaq, N se Neend, N se Naalayak, N se Nuksaan…”

6. One Mungerilal was telling about the advantages of online trading: “Trading online is just great. I find it really speeds things up. You see I now get my margin calls 5x faster than before!!”

Chunnilal: “M se Margin, M se Market, M se Morgan-stanley, M se Mehangai..”

7. There was a heated argument about financial ratios wherein one Mungerilal was adamant & wanted to prove that “P/E ratio means the percentage of investors wetting their pants (pee**g) as the market keeps crashing!”

Chunnilal: “I se IFCI, I se Investment, I se Interest-rates, I se IFSL, I se Ispat, I se Idiot…”

8. In another corner a group of ladies were discussing and complaining about how their respective Mungerilal husbands misbehave moodily according to their day-trading fortunes. One of the Mrs. Mungerilals of the artistic kind started singing: “Kabhi neem neem, kabhi shahad shahad, kabhi naram naram, kabhi sakht sakht…..…mera piyaa….” After hearing this, another Mrs.M started singing “Kya se kya ho gaya Trader-wa….tere pyaar mein….chaha kya, kya milaa….” The third one was a poet herself so she recited: “Dil ke armaan aasoon mein beh gaye….…hum Nifty average kar ke mar gaye….”

Chunnilal: “P se Piyaa, P se Pyaar,  P se Power-your-trade, P se Panga……..”

9. A young son (9 years old) embarrassed his Mungerilal Father by asking loudly: “Papa..Papa… If all the business channels have ‘PROFIT’ in their name or tag line, then how come you make such huge losses by watching these channels all day & night? You even do not allow me to watch Pogo, Cartoons, Disney!”. I thought for a moment and realized how bright this young boy was! Look….NDTV “Profit”, Zee Business---Aap ka “Faayda”, CNBC TV18----“profit from it”.

His other son (12 years old) asked: “Papa, tell me…about those Technical Analyst Uncles (TAU jee!!) who appear on business channels giving advise to buy & sell….Tell me Papa….how come those expert TAUs (Technical Analyst Uncles) do not sit in front of trading screen to make money…why do we see them in TV studios during market hours?”

To add insult to the injury, his youngest (7 years old) daughter said this: “Papa papa, bhaiyya log theek kehte hain!! Dekho naa…aap ke woh khaas dost- Circuit Uncle (dealer working with broker) woh to sara din computer screen ke saamne baithte hain….phir bhi naa toh aapke ke liye naa khud ke liye paisa bana paate hain! Aur aap Papa, aap to Mummy se jyaada Circuit Uncle se hi baat karte hain naa!”

Naturally, father Mungerilal was too embarrassed and speechless. I however felt that at least GenNext is smarter & is unlikely to follow footsteps of Mungerilal father.

Later I overheard this Mungerilal screaming at his wife “Yeh sari tumhari galti hain, Tum ne bachhon pe kuchh acche sanskar nahin kiye hain! Teeno sach bolte hain!!! aur meri izzat kaa faaluda kar diyaa sab ke saamne! Agle parties mein main akela hi jaya karoonga”.

Somehow, I saw couple of Lawyers wandering around this family, could be sensing some business opportunity.

Chunnilal: “Ch se Channel, Ch se Chamatkaar, Ch se Chaalu, Ch se Chandramukhi, Ch se Ch***…”

10. Another Mungerilal, who was successful in making some short-term money, was busy scolding his wife. The reason was that his wife was told during a kitty party & was convinced that “Bull Market is nothing but a random market movement causing a ‘trader’ to mistake himself for a financial genius”.

Chunnilal: “T se Timebomb, T se T-Group, T se Trading, T se T-Spiritual, T se Timing…..”

I wondered if this was true, then “Bear Market shall be defined as a period when the kids get no allowance, the wife gets no jewelry and the husband gets none”

11. Then I heard this heartbreaking experience of one Mungerilal which is quite emotional. His daughter got engaged in April this year and marriage is scheduled in first week of December’06. He had saved money to buy 10 tolas (100 gms) gold jewelry as a wedding gift (dowry is a legally banned term in India). A Broker-Friend (I think it’s a misnomer!) suggested to him that instead of putting Rs. 1 Lac in buying physical gold, why not buy gold futures, after all with the same money he could play to buy 1 Kg worth of Gold (Power of Leveraging, you know)! And he had further convinced Mungerilal that by rolling over his position, in the next six months he would be able to multiply his money, so not only gold jewelry but entire marriage expense will be free!!! Around the same time, couple of firangi “expert analysts” on CNBC predicted gold prices to touch US$ 1,400, which meant double the level it was trading at that time.  This was about first week of May’06. So, Mungerilal calculated that by leveraging, his money would grow exponentially in a very short time (simple calculation explained by Circuit: Gold will double, so… 20,000-10,000=10,000 x 100 = 10 Lacs profit!). By paying Rs. 1 Lac towards margin & some buffer amount to take care of volatility, he bought a contract of 1 Kg Gold at the rate of Rs. 10,500 odd.

It was very very unfortunate that gold started falling thereafter…below 10,000 level he got his first margin call….Circuit somehow convinced him not to book loss…so Mungerilal borrowed some money (personal loans are so easy these days….just dial-a-loan…HUM HAIN NA!) to pay up additional margin. But Gold refused to go up due to global factors. Broker-Friend & his technical analyst came out with some research report showing strong support at 9,600 (some US$ 660 odd level on Comex). The Broker-Friend, Tech Analyst and Circuit all proved to Mungerilal the Power of Averaging (remember first it was power of leveraging!).Mungerilal further borrowed on his credit card limits and bought one more lot of 1 Kg contract. One fine evening, when gold breached sub-9,000 levels, Mungerilal got frantic calls from Circuit & Broker-Friend either to pay up additional margin or else they would be forced to cut his positions. Having reached all the credit limits, poor Mungerilal was helpless.

His net booked loss was to the tune of Rs. 3 Lacs all in a matter of few weeks, apart from outstanding loan, interest thereon, brokerage, phone bills, sleepless nights, physical & mental stress etc.

Even Chunnilal got stunned & speechless after hearing this episode. However I faintly heard him murmuring: “G se Gold, G se Gaflaa, G se Gadhaa, G se Gareeb, G se  Ga****…”

12. There was one Mungerilal narrating his story about how he suffered losses due to heeding advice rendered free on some internet chat room. There was a group of 3-4 boarders who used to “talk-up” particular scrip. He forgot that rising tide raises all the ships. He started believing them blindly after he made some quick buck. It took some time and lots of money for him to realise that he was trapped into buying some real junk stocks of Z category.

Chunnilal: “Z se Z-group, Z se Zigma, Z se Zinta, Z se….”

13. Then there was a table surrounded by 5-6 Mungerilals of the Technical kind. A chart was laid at the centre of table and they were trying to forecast some future movements. I got curious as always & joined that group to get insights. One said: “it seems to have bottomed out between 54 and 59, a break out above 62 will indicate a target of 72”. The other opined: “structure is positive, it has gone down to say I’m moving up. Up move is intact. My target would be 80+”. The third offered his take on the chart: “I think once it crosses this neck line of inverted head-and-shoulder pattern, it will mean a target of more than 75”. And then I heard this from the fourth Mungerilal: “arey yaar, 60 pe strong support hain! First class to jaroor milega!!” I was completely taken aback with this comment and upon further enquiry learnt that the chart was plotted by one of Mungerilals of % marks his Son got from 2^nd  to 8^th Standard and they were trying to predict his SSC (10^th Std) results! I wished them all the best luck and moved on with a strange feeling.

Chunnilal: “F se First-Class, F se Faber, F se Fibonatchi, F se FII, F se F***….”

14. One Mungerilal was cursing Peter Lynch loudly. I was concerned about Lunch’s reputation so tried to find out more…….He had heard somewhere how Peter Lynch successfully implemented “buy-what-you-see” strategy. Our Mungerilal (during April/May this year) as usual called up his broker to ask for latest “hot-tip”. His favourite dealer (Circuit) said ”Sir Jee, LML le lo…. long term charts pe break out hua hain…Now it is quoting at 46.80, apna strong momentum call hain. Bindhast aankh band kar ke buy karo…74 ka target hain!” That day, for a change he did not buy. Later the same evening, Mungerilal went to repair his Bajaj Pulsar at a local workshop. In the corner he saw a (junk looking-old) LML scooter. He made a note of it and the next day called Circuit to buy LML at market price which was then about 49.50. This Mungerilal is now blaming Peter Lynch because loss-making LML has since been referred to BIFR!

Chunnilal: ”L se LML, L se Lobhi, L se Lynch, L se Laalach, L se Loss….”

15. There was one Doctor (himself a Mungerilal) surrounded by a group of other Mungerilals. I sneaked-in to learn more….. They were apparently consulting the Doctor on medical problems. This is what I heard:

M1: Doctor Saab, aaj kal constipation ki badi dikkat hain!

Dr.M: kya aap samay pe khana khate hain? Aur samay pe sote hain?

M2: kahan Doctor jee, M1 to day trading mein hain na……unhe kahan se neend aayegi…sapne mein  bhi tickers aur charts dikhte honge!

M1: yes Doctor Saab, aisa hi hota hain! Raat ko beech mein uth ke Dow/NYSE ka closing bell bhi dekhta hoon….phir Kudlow & Company….

M3: Doctor, I have marked that whenever I trade CALL Options, I have trouble answering nature’s call!

Dr.M: I would suggest you try trading PUT option!

M2: I have devised a remedy; I go to answer ‘those’ calls only after watching bazaar-morning-call at 9am. Having said that, my ‘motion’ however depends upon global cues & what “three-wise-men” have to say….

Chunnilal: “D se Doctor, D se Dast, D se Dinesh Dalmiya, D se Derivative, D se Devil, D se Danger…”

16. At the end of the party, near the hotel car park I saw a Macro-Economist-cum-Analyst working for a large ‘Foreign investment bank-cum-merchant bank-cum-brokerage’. He was looking for something near a light pole. I asked him if he had lost something there. The macro-economist said, "I lost my keys over in the alley."  Then we all asked him why he was looking by the light pole then. The macro-economist-cum-analyst responded, "It’s a lot easier to look over here!"

Chunnilal: “E se Economist, E se Earnings, E se Estimate, E se Emerging, E se End…”

Additional Notes for inferring stock ideas: Branded watches, branded shoes, diamond jewelry, and Camera phones seem to be in vogue. Drinking & Smoking as always is on the rise. Lots of families travel often to tourist places (both domestic & international destinations) for weekend & weeklong trips. Even high school kids were seen exchanging e-mail IDs & confirmed that they use broadband at home. Mobile phone penetration is unbelievably high. There is tremendous increase in usage of Financial services like: Credit Card, Insurance, Personal-Home-Auto-Education-HomeFurnishing Loans, Loan for tourism, Top-up loan on existing home loans, Loan to repay earlier loans & above all Mutual Funds, Stocks & Commodities Broking.

Disclaimer: The names of the characters have been changed to protect their real identity & mainly to protect the author from their likely onslaught. The characters depicted here are not meant to hurt anyone’s feelings…living, not-yet-born or dead. The motive behind this reporting/writing is purely investor education.

And here is some good reading on http://money.cnn.com/2006/10/26/commentary/sahadi/index.htm?postversion=2006102613 - "How Wall Street can wreck your life"

A Mungerilal & a stock fundamental analyst went to the racecourse. The Mungerilal suggested to bet Rs. 50,000 on a horse. The funda analyst was skeptical, saying that he wanted first to understand the rules, to look on horses, etc.

P.M.S.

I got some free lunches (dinners) and that too without enrolling for the PMS. At that time the objective was to meet the fund manager who was doing the PMS and talk to him whether he was interested in retailing and media stocks.Never got a positive response. In fact I met one of those PMS agents (dalals) a few months back and he said "aapka share toh bahut achcha chala ab profit book kar ke PMS karwa lijiye". I smiled back and nodded saying I would think over it- after all I had taken their salt at the TAJ.

Ha Ha Ha. That was good one but I have seen that most of these fund managers have this http://www.theequitydesk.com/forum/forum_posts.asp?TID=240 - Zebra mentality . Look at the kind of cash positions these people were holding when the index was at 9000 levels.

I met two Mungerilals (one 23 years old & the other 43) this evening, both very happy & in jolly mood singing loudly following songs:

M-43 years old (trying to immitate the great Kishore-da): "Hey hey…haha…hmmmm... hmm…hmmm… Kora kagaz tha yeh man mera….likh liyaa naam is pe 13, 13, 13, 13……"

• Most of the day-traders were short on Nifty/other stock futures & had to cut losses. The song played today in the dealing room was: "Seene mein jalan, aankho mein toofan sa kyu hain? Is room mein har shakhs pareshan sa kyu hain?"
• The other Mungerilal (who missed the TV18 train) modified this song slightly...instead of "seene mein..." he replaced that body part with an unmentionable but important part....! 

Ha Ha Ha Ha .........Wah Tigershark! Kya baat hain!!!

You mean Brisbane Cricket Ground!

Bubble Vision - How do you find so many links? As they say one should keep a close eye on the competitor but then the "Gabba" is a TAU and you are a TA (without a "U").

 By the way the son seems to have a nice positive structure.I could just see the head and shoulder with the neckline there

WonderfulBubbleVision!

So Kulmanji being a value investor you do not want to buy at the bottom....... Strange

Excellent Kulmanji !!