Idea of Stock Markets
hello ladies and gentlemen
first of all thank you so much to have
me here to address your audience on the
tedx platform
i am truly honored and the fact
that we are having a on-based online
tedx talk is just
amazing today i want to talk
on the idea of stock markets i won’t
talk about the idea
of stock markets stock
markets now when you hear these words
either you already have a notion about
them
or you have heard a notion about stock
markets today
i’m gonna address the three most common
notions
people have around stock markets the
first one
is that stock markets seems lucrative
it’s good
but i don’t have time for it the second
notion people have
is that stock markets is a gamble it’s
too risky
i don’t want to get into it and third
notion which people have
is that stock markets buddy they are too
complicated
i am not smart enough stock markets is
not for me
today i’m going to address all
of these three notions
my name is goila and i have an
experience in stock markets of 10
years and in my 10 years in stock
markets
i have read several books seen several
interviews
talked to several analysts and stock
brokers
and i know the common mistakes traders
and investors make in stock markets
which
don’t end well what i’m going to share
with you today
is not something which i’ve read from a
book
what i’m going to share with you today
is something
that over all these years i have
observed
discovered and learned
so let’s start by me sharing a story
with you and mind you
this is a real life story
this story is is of a high achieving
individual who is the ex-general manager
sales of a big private organization in
our country
yes ex-general manager sales so you can
imagine his aura he having a fancy car
given by his corporate organization he
having yes men surrounding him in his
office
there are several people there around
him to please him every second time
and he is that person who people always
to come seeking to help
right people used to come to him seeking
for help now all of us have that one
family member in our family
who’s very important and he is the high
achiever in that family
this gentleman is that now this
gentleman
retired in 2010.
now when he retired he retired with a
retirement corpus
of 80 lakhs uh what was his retirement
corpus
basically all his liquid assets his ppfs
his
fixed deposits his accounts his money in
the same accounts
all his liquid deposits were in 80 lakhs
and in 2010 the banks
were offering him interest rate of 9
per annum now as indians traditionally
we always do this
we take our entire retirement corpus put
it into the bank and we get the interest
on it
right this gentleman did that exact
same thing now he took that 80 lakhs
retirement corpus
put it into the bank on which he was
getting nine percent per annum interest
rate
so on a monthly basis he was earning 60
000 rupees
now to tell you about his family
structure he
is a family he has a family of four of a
wife and
two young adults right and again
this is not him this is just a random
picture that i’ve chosen from the
internet
now his family expenses were of
education
travel entertainment basic food expenses
all of them together his family expenses
on a monthly basis
were of 50 000 rupees again this is in
now this is where i want you to focus
see here that when he put his retirement
corpus in the bank
every month he was earning 60 000 rupees
from the bank
and his monthly expenses were only 50
000 per month
can you imagine a better situation than
this when
a person in retirement is gaining 10
000 per month nothing can be better
than this situation now 10 years fast
forward
let’s come to the present day situation
of 2020.
now here i’m going to compare the 2010
and the 2020 situation
of this gentleman itself now
first the retirement copies of 80 lakhs
shrunk to 65 lakhs why because he had to
get his two children married which
costed him about 15 lakh so he had 65
lakhs
in 2010 the bank interest he was getting
was 9 per annum
and in the year 2020 the bank interest
he’s getting
is five percent per annum i want you to
realize that
how the bank interest rates have
decreased
earlier his monthly income in 2010
was 50 000 rupees
and in 2020
his monthly income is only 27
000 rupees how did i calculate 27
000 rupees because in 2020 has he has
retirement purpose of 65 lakhs
on which he’s only getting interested of
5 per annum so on a monthly basis he
will get 27
000 rupees now like i told you earlier
earlier his family expenses were of 50
000 rupees the entire family now
in these 10 years his children like i
told you have gotten married
they have they have they have good jobs
they are self-independent so now
his only expenses are of him and his
wife
of travel health care
food expenses and do you know how much
expense he incurs on a monthly basis for
him and his wife alone in 2020
it is 61
000
61 000 now in 2020
what would you suggest him would you
tell him
to keep continue to continue eating out
of his capital
so that he has no money if there’s any
unforeseen circumstance in the future
what would you advise him
you know this gentleman came to me and
said hearts
i wanted to sponsor my grandchildren’s
education
i can’t i have to take money from my
children
it hurts
i want you to again recall this
gentleman
was the ex-general manager sales he was
the general manager
sales with a fancy car yes men
surrounding him
him being the most important family
member
and today he is financially broken
and you know he’s not only financially
broken because if a person is
financially broken
you can give him money finance can be
re-cooperated and he can stand up again
he can revive
but this gentleman got emotionally broke
he didn’t like the fact that from that
level he had come to this level
and with no fault fault of his because
he was doing the normal thing that
everyone does
and if a person is emotionally broken to
revive him back
is very difficult
what was the disastrous moment in his
life
what ruined his finances was were these
two factors
decreasing bank interest rates and
increasing inflation
if you see the past decades the bank
interest rates have decreased and
decreased and decreased
whereas the inflation in our country has
increased
most of us we keep our money in banks
either we are already facing this kind
of financial crisis
or we will face this financial crisis
that’s for certain
if you compare the banks to stock market
if you put your money in banks as of now
in 2020
you get a bank interest rate of five
percent per annum right
now on the other hand if you invest your
money in stock markets
on a simple stock market asset like a
stock market instrument like investing
in
index funds historically we have seen
that stock markets over the longer
period of investment
gives you a return of about 15 to 17
cagr 15 to 17
compared to five percent do you see the
difference
this is what the difference is
i’ll tell you another interesting thing
there are three types of people in any
economy in any economy we have three
kinds of people
in the lower bracket we have the lower
income group
then we have the middle income group
which is also known as the middle class
then we have the high income group which
is at the top of the food chain
top of every chart which is the rich
people which are the rich people
right now in every economy
these three characteristics of people
have
different qualities
now you’ll always see a person who is in
the lower income group
will keep his money in cash and he will
keep that cash
at home or either in a locker room right
he will not put it in a bank and because
of which
the lower income group people are
heavily affected by inflation
and go even down even further down
the table then comes
the category we know too well the middle
class category
now middle class people always prefer to
put their money in banks
earlier when the bank interest rates
were not decreased so much
earlier when the inflation rates were
not this high the middle class people
went through why because when they put
their money in banks at least the bank
interest rate was beating the inflation
now in the current situation and trust
me this situation will keep moving on in
this direction where the bank interest
was reduced
and the inflation increases it’s
difficult for the middle class people to
survive
and if you are in this category of
middle last people you know what i’m
talking about
then comes the rich people the high
income group people do you know
where do they keep their money swiss
banks
that’s a joke don’t take it seriously
the rich people
always put their money in stock markets
they invest their money in stock markets
that is why you will see the difference
between rich
and poor in our economy has been
constantly
increasing
stock markets is that ladder which is
the difference between rich and poor
stock markets is that ladder which will
take you to financial freedom
stock markets is that ladder which you
need to climb
so the notion that stock markets are
good but i don’t have time for it
well if you have learned anything from
the story i’ve told you
and if you learn anything from the
several such stories around the globe
investing in stock markets is essential
for you
start investing right now if you’re 18
it’s never too early if you’re 60 it’s
never too late
irrespective of your age or career
investment in
is mandatory for us not only for a
financial future
but for our emotional well-being
now the second situation
in the second situation the second
notion what people have is that stock
market is a gamble it is too risky
now i’m sure you must have heard horror
stories about stock markets right
wherein your family friends or your
family have lost a fortune
in stock markets and truth be told those
stories are true
that does happen now if stock markets
are so risky
why am i advising you to put your money
in stock markets why am i advising you
to take stock markets seriously
now there are two major reasons why
people
lose money in stock markets reason
number one
why people lose money in stock markets
now the basic principle in stock markets
is that if you want to invest for the
longer period of time the knowledge you
need is zero
but if that period of time shortens the
knowledge you need
increases let me explain okay so suppose
if i ask you
sir give me uh suggest me an investment
for 10 years what would you say you
would say hers
you can buy companies like peter light
you can invest in shares
of itc rice industries hdfc bank
why because both of us know the
probability
of these companies doing well in the
next 10 years is extremely high now on
the other hand i ask you
tell me a good investment for one one
year
tell me a good investment for one month
one week
one day tell me a good investment for
one
hour what is the level of knowledge you
need
extremely high
now the problem what people face is that
especially this happens with newcomers
in stock markets
because we see a couple of videos on the
internet we read one or two books
and we start doing short-term trades for
the thing
you need most knowledge for people start
with nothing
let me tell you it takes years of
practice patience research and study to
become a profitable short-term trader
it is not a time pass but the problem
is that people start with short-term
trades not with long-term investments
the second reason why a lot of people
lose money
is because a lot of people especially in
indian markets
they operate on tips they invest and
they trade on tips
now tips never work now let me logically
explain you
why don’t investment tips work let’s
take this case study shall we
okay now let’s take this case one now
here
as you can see in the stick figure this
is me very comfortable in my house
and in the next picture you can see my
office
now if i want to travel from my house to
my office
the distance between my house and my
office is three kilometers
if i ask you sir please advise me the
travel options
what modes of communication can i use to
go to my office
what would your device mean you would
say hers you can take a car
you can take a metro you can take a bus
you can even walk it
right fair enough now in the case
2 wherein i have to go to mumbai
i live in delhi and i want to travel to
mumbai and the distance between delhi to
mumbai
is 1413 kilometers
now what travel options would you advise
me metro
car you would advise me harsh
in this situation either you can take a
train
or board or flight right
now tell me this in case three
if i ask you i have to go somewhere but
i don’t know where
and i don’t know how long is the
distance
what travel option would you give me
would you tell me to try to buy a car
bus plane train what would you tell me
would you be in any situation of
advising me what mode of commutation
should i use
what mode of transportation should i use
nahi
why is that
because you don’t know where that end
journey where that journey ends
same situations in stock markets if
i don’t know your financial goals if i
don’t know your financial capabilities
if i don’t know your financial
liabilities your financial dreams
how can i advise you a mode of
investment on what basis
can i give you a tip not only me anyone
every person is different every person’s
needs are different
every person’s financial goal is
completely different
that is why tips don’t work
because on a general basis
if a person is giving tips he does not
know all these details
about you and because of which whatever
tips he gives
will never work for the longer period of
time
so coming to the notion that is
stock markets a gamble well if you’re
making long-term investments if you’re
indulging in long-term investments then
certainly it’s not a gamble on the other
hand
if you’re doing short-term trades
without
getting professionally trained and if
you are taking tips and you’re operating
on tips without
understanding the stock markets then
you have made stock markets into a
campbell and this is what people
end up doing it’s unfortunate but it’s
the truth
now coming to my third notion and this
is my favorite
notion what people have about stock
markets is people think
that stock markets is too complicated
her stock market’s too complicated
now i’m very fortunate because i meet a
lot of new people on a daily basis
and i always have this one question to
ask people i ask them do you invest in
stock markets
generally the answer i get is no then i
ask them why
you know what people tell me hers stock
market is too difficult
ours i’m not from commerce background i
don’t think i can understand this
harsh i’m not smart enough to crunch
those numbers
you know this industry because of the
media
books and professionals because everyone
uses such
heavy words heavy terminologies flowery
languages
people easily get scared of stock
markets but in reality
let me tell you stock markets is the
easiest thing to understand
the best things in life are always
simple and stock markets
is the simplest out of the lot
let me explain you this by an example
let’s take the case of warren buffett
now i’m sure you have heard about warren
buffett and if not then warren buffett
is one of the greatest investors of all
time now one of the best investments of
warren buffett
proved to be his investments in
coca-cola
right now he warren buffett invested in
the coca-cola company
in 1988. now in 1988 the coca-cola
company
was relatively very small to what
coca-cola is right now
now let’s logically analyze this what is
coca-cola
coke the drink of coca-cola is nothing
but aerated flavored sugar
water right aerated flavor sugar water
now on the streets of delhi you also
get a aerated flavored sugar water which
is a locally made drink in delhi
and that drink is called banta
right now just imagine if i took you
to a small company which is
manufacturing panta
and ask you sir please invest in this
company
what would you tell me have you lost it
right why because you would be doubtful
of that company’s profit
you would be doubtful of that company
sales you would be doubtful of that
company on
overall that it can ever do well am i
right
now let’s take the case of warren
buffett again when he made the iconic
decision
of wanting to invest in coca-cola he
didn’t only look at the balance sheets
he saw that people liked the taste of
coke
and he saw no reason why people
would not buy it on a larger scale and
he invest in coca-cola
if balance sheets and number crunching
was the answer to stock markets
then every commerce graduate would have
been a millionaire today
some of the biggest investments are made
on the simplest
reasons in stock markets you do not you
do not
need a high intellect all you need my
friend is common sense that’s it
it’s just pure common sense
think about this for the past 20 years
all of us knew that internet technology
is the future
and it has done great but did we invest
in it
no standing here today
you know that artificial intelligence
electrical vehicles
a renewable energy is the future are you
investing in it
no
you know all of us have these
conversations in our households
we say that i wish my grandfather had
invested in that
had not sold that had bought that look
where we would have been today
am i right or am i right
what i’m here to tell you is that
i don’t want that your grandchildren
should say this about you
i don’t want that your grandchildren
should say this about you
even today you have several
opportunities around you you have
several companies
and industries with massive potential
and you just need to choose one and what
you need for that
simple common sense that’s it that’s it
i am here to tell you is that the notion
number three which people have
stock marks is too complicated it’s not
all you need is common sense
you know this is the reason why me and
aditya my brother
both of us started training people in
stock markets because there’s such
a lack of awareness about it
let me tell you about myself i am
someone who as a kid
fell in love with stock markets my
father was always in
invest in stock markets him being a
charter accountant so i remember him
looking at the closing price of every
shelf with the magnifying glass in
economic times
i remember him taking me to the
stockbroker’s office i fell in love with
the stock markets
i am someone who after school did not
even go to college
i am not a college dropout i did not go
to college
for my love and passion for stock
markets
i am someone who has achieved financial
freedom
with stock markets
and i am here to tell you as is that
whether you want to make this your
career
or not
whether you are earning very handsomely
or not
investing in stock markets is mandatory
for you
and if i a person who did not even go to
college can reach this level
trust me you’re in a much better
position to go
even higher take stock market seriously
stock markets is the ladder between rich
and poor and i want to make sure
that you climb that ladder
thank you
you