From 60 to 60,000: The Market Mantra of Success

Singh was due to retire in September 2000 after a hugely busy life with New India Assurance. “I was worried how he would keep busy after such a hectic life,” his wife Surjit says. But an unlikely allay, the stock market, dissolved her worries. Retirement saw Singh go back to the passion of his youth, the stock market.

Financially independent after retiring, Singh decided to use just 10 per cent, about Rs 2 lakh, of his retirement benefits to begin investing again. His first picks were from sectors he knew well, like banking. He bought into stocks like Andhra Bank and Bank of India for as little as Rs 7 and Rs 8. “The interest rate drop and the debt market boom was a bonus,” he chuckles happily. The other multibagger has been Essar Oil. He picked it when it was Rs 5.

His strategy paid off. Soon he was earning enough to stop relying on his retirement money to run the house. The end-result may look simple and inviting, but there is hours of hard work behind the money that he makes. His day begins with devouring the business newspapers. By 9:30 his wife begins to ask him, “hasn’t your time begun”? Time, here means the market opening and CNBC beginning its market news. He is in touch with his broker through the day, buying and selling. Some days he breaks his routine to go to the bank to complete the paperwork. When the market closes, his trading day is coming to an end. But his day is not over yet! His evening walk finds him swapping tips with his walking buddies, all investing junkies in their own right.

Though he has not read investment gurus like Peter Lynch or Benjamin Graham, Singh knows and practices the lessons they have taught. “I am not attached to any stock,” he says. They are simply things that go up and down and make him money in the bargain. “Once I identify a stock, I start buying. Then I keep buying in lots of maybe a 1,000 or 2,000”. He then decides on a sell price and once that is reached, he begins to sell. This strategy improves his average price, both ways.

A cornerstone of his strategy is to keep his greed in check. “I have capped my greed,” he confesses. He says he has never made more than Rs 50 per share on any one share. “Rs 12 is a huge amount per share for me”, he says. His maximum horizon is usually about three months, while he holds for a minimum of one or two weeks. His best trait as a stock picker? “I decide very fast. And then execute my buying and selling decisions,” he says. His advice to people who want to emulate his: never buy on tips, do your research and never fall in love with a stock.