How to become a better investor - Introduction

There were three reasons why I started to write an investment blog in June 2008.

First, the stock market was in the throes of a severe bear market after 5 years of euphoria. I remembered the boom and bust during the Harshad Mehta scam in 1992 and how traumatic it was for me. I felt that sharing some of my experiences in the stock market could help young investors to learn and avoid the mistakes I had made.

Second, while there are a plethora of web sites and blogs that offer stock tips, I failed to find a single web site or blog that educated investors by explaining the concepts behind fundamental or technical analysis in simple language, with examples from the Indian stock market.

Third, the blogging platform offers instant reach to an audience, and allows quick two-way communication with readers - thanks to the proliferation of the Internet. That helps in regularly guiding, resolving doubts of, and learning from, investors.

I had to struggle during my early investment days in the 1980s. There was no Internet and no SEBI regulations and no business TV channels and no quarterly reporting by companies. The only way to find out about companies was from brokers or friends. The only way to know what price a stock was trading at was to call your broker and accept whatever he said. Charting had to be done manually on a graph paper after prices were published in the next day’s newspapers.

Things have changed quite a bit since then – mostly for the better. If there is a problem now, it is an overload of information and stock ideas! Investors are better informed and better educated. Still, investment psychology – particularly the extremes of greed and fear during bull and bear phases – remains pretty much the same. At every market peak, a new lot of investors keep jumping into the market without adequate homework, only to lose their hard-earned money.

So, my effort at investor education through my blog continues. Many of my readers have been urging me to prepare an eBook using my blog posts, so that they can easily refer to some of the posts without wading through my entire blog. They have motivated me to produce this eBook, and I hope they would not mind if I don’t thank them individually.

The effort took longer than I had expected, and for reasons of brevity, I have chosen a few posts from the period June 2008 to January 2009. Hope readers of this eBook will learn to become better investors by reading it.