Your Broker As A Cheat (Part 12)

There is a joke…

A long time ago, a visitor from out of town came to a tour in Mumbai.

At the end of the tour, they took him to the financial district. When they arrived to the Gateway of India, the guide showed him some nice yachts anchoring there, and said, "Here are the yachts of our bankers and stockbrokers."

"And where are the yachts of the investors?" asked the naive visitor.

All those concerned with regulating the markets are taking the Indian Investor for a ride.  Here is a typical pattern –

A company’s stock is usually in the hands of Foreign Institutional Investors and the Domestic Institutional Investors and the Promoters.  There are very little shares in the hand of the retail investor.

The price of this stock is then jockeyed into stratosphere.  Specific targets are given to the jockeys and market operators.  The main broker then gives a signal to his sub-brokers.  This is the time when the broker will issue a “Stock Analysis Report”.  This report is an advertisement and a gimmick.

At this stage, your broker or sub-broker may furnish you this report.  As a prudent investor, you must keep checking the shareholding pattern of the company’s equity (www.bseindia.com).  Here is what will happen if there is a game going on.

You will see a steady decline in the quantum of shares held by the Foreign Institutional Investors (FII), the Domestic Institutional Investors (DII) and the PROMOTERS!!  Guess who is now holding the stock – the other category, which are essentially the retail investors.

Grapevine has it that the FII is actually the Indian Politicians who route their transactions from countries like Mauritius etc.  The DII are Indian Mutual Funds.  The point here is that, if the grapevine is true, one must never be impressed by the amount of stock held by the FII as it is just and illusion of "foreign" investment.  The stock will be transferred to the retail investors at a high price – come what may.

I suggest to you readers to surf the Bombay Stock Exchange website and look for all stocks have lost more than 70% value in terms of their lifetime high price.  You will observe the pattern of “stiffing the retail investor” as mentioned above.

If your broker has recommended any stock to you that has this pattern, then know your broker to be a cheat.

Happy Investing!

© Nitesh Kotecha

Your Broker As A Cheat (Part 11)

There is a joke…

Two stockbrokers are in a bank, when, suddenly, armed robbers burst in, waving guns and yelling for everyone to freeze.

While several of the robbers take the money from the tellers, others line the customers, including the two stockbrokers, up against a wall, and proceed to take their wallets, watches, and other valuables.

While this is going on, one of the stockbrokers jams something into the other stockbroker's hand. Without looking down, the second stockbroker whispers: "What is this?"

 The first stockbroker: "It's the $100 I owe you!"

Today I would like to write about one of the worst sub-broker I have ever seen.  This lady is Satan roaming as a human on earth.

The con began with the Global Financial Crises of 2008.  One of India’s top broker went belly up during the last quarter of 2008.  The broker called up one of India’s Top Businessman and the businessman willingly put the funds to save the broker.  The broker now had a financial obligation right?

Wrong.  The Broker’s sub-brokers and clients had the financial obligation.  The target set was to generate as much brokerage as possible for the broker so that the businessperson could be paid off.

The sub-broker, or Satan as I refer to, was given an agenda in the following stocks

Mox Limited
Resurgere Mines and Minerals
Future Capital Holdings Limited
Reliance InfoComm
Reliance Capital

A pretentious marketing campaign was put out glorifying the above junk.  The sub-broker ensured that her clients pile up millions of these shares.  The result was predictable – 95% reduction in portfolio value.  

Below are statements that the sub-broker used to enhance her credibility about the junk investments, which were bound to deplete share holder wealth:

-“ I just had a word with a top executive at Reliance/Motilal/Similar Big Name etc.  This is his stock of the year.”

-“I have distilled many stocks so as to finalize on these stocks.  These are the most undervalued and fundamentally strong stocks.”

-“A top Mumbai broker is holding a position in this stock.  He needs an exit price and so is planning to jockey this stock up so as to cover his losses and ensure gain for the pain he bore.”

The truth of the matter was that the Broker wanted to offload his positions in these stocks.  Readers of this blog should check the charts of these above stocks and you will see what SEBI will never see – FRAUD.

We, overall, underestimate a sub-broker’s need for continuous brokerage.  This is the one and only reason why these people end up recommending junk.

As prudent investors, we must ask our brokers and sub-brokers the wrong questions and see if you can see greed in their eyes.  And greed you will see….

Happy Investing!

Disclaimer – I don’t own any of the junk stocks mentioned above.

© Nitesh Kotecha

An Anecdote about J Krishnamurti

A man had listened to J. Krishnamurti for at least twenty years.   He was an intellectual, a philosophical man, and by and by he got fed up with the constant repetition of the importance of awareness and the way Krishnamurti goes round and round, and hints at the same thing - because there is nothing else to hint at.

One day he stood up and said, “Stop! It is just as they used to say about philosophy – that philosophy is like searching on a dark night without any lamp or light, in a dark room for a black cat which is not there.”

Krishnamurti hit him on the head with his fist and said, “But Sir, it is there!”

“The black cat exists; if you search long enough you will find it. The very search ultimately becomes the light.  Searching creates light – there is no other light; the search alone makes you aflame.”

An Anecdote about Picasso

Somebody asked Picasso, ”What is the utility of your paintings?”

Picasso hit his forehead. He said, ”You don’t ask flowers what their utility is. And the cuckoo sings and you don’t ask her what her utility is. And when the sky is filled with stars you don’t ask them what their utility is. Why ask only me?”

Detachment from Attachment

Infants need to develop a relationship with at least one person for social and emotional development to occur normally. We see that during growth, the infant explores the world by crawling to and from a person (usually the mother), who, psychologically, is a safe and protected anchor.  The separation from such a person, even temporarily, is followed by grief.

We, as adults, then carry over these patterns of attachment, even though they were healthy for us when we were infants.  These attachments are now in the form of people, thoughts and beliefs, inanimate egocentric objects, and sensation inducing substances – including gormandizing!

The loss of people and the purgation of our thoughts and beliefs (in the light of new and challenging evidence) cause the maximum amount of grief and challenges for us.  The loss of the near ones is understandable and does not require explanation.  Let us look at our attachment to thoughts and beliefs.

Our attachments to our perceptions, thoughts, beliefs about our relationships with people, expectations about how our country must conduct itself create resistance and do not permit us to change.  Therefore, the very attachment, which, during our infancy, promoted growth and development, now brings us resistance, grief, agony and heartache.  The problem lies in the carry-over of this habit into adulthood mostly because of our need for safety, security and protection.

Understanding death and dying is the primary step that provides redemption.  Our religious and spiritual texts healthily promote the insignificance of the material body and everlasting nature of our soul.  This understanding helps us reframe the way we understand the people, situations and the material possessions in our life.

Holding on to our existing thoughts and beliefs, in spite of challenging counterviews as feedback, is nothing but our attachment to our desire to be right.

How about being attached to love and forgiveness?  To quote Rumi, “Love is a perfect muzzle of evil; without love who ever succeeded in stopping evil?”

© Nitesh Kotecha

Shut the Shoulda and Cut the Coulda

If you pay a little attention to your words, you may find that the words  “should”,  “should not”, “could”, “could not”, “must”, “must not” etc., come up often.

These words rob us of our freedom to choose.  Life is never like that. It is important to use such words with great caution because of the way they occur to our brain.  They essential imply that there is/was no choice.

If we suggest to our brains about the paucity of choice, the subconscious will accept that suggestion and show us the red flag as and when such words are used.  This can severely impair our ability of moving away from conventional intelligence areas.  The idea that there exists one single solution will then creep in while simultaneously limiting our ability to deal with people unlike us.

A possible solution is to use words like “choose”, “chose not” in your communication.  This apparent change in our language brings us closer to the situation in an empowering sort of way.  We do choices and essentially we do choose from our options.

©Nitesh Kotecha

No Mountain Too Great

‘m scribbling a thought on this page

“Keep walking even if it’s steep”

In case you read this a little late

Just remember, that there is no mountain too great

There is this old adage

 “Miles to go before you sleep”

Now life is a dish and not an empty plate

So remember, that there is no mountain too great

We all soon learn

“Life has its twists and turns”

Don’t you waver; just keep your faith

And remember, that there is no mountain too great

Well my dear son

“Keep smiling and don’t ever weep”

We never know what lies in our fate

But remember, that there is no mountain too great

© Nitesh Kotecha