The Money Language

I would like to share my personal experience before speaking about the Money Language. I went to Shanghai, China in January 2016. Landed in shanghai airport by late evening and managed to check-in to the hotel room around 8pm. I went to a road side fruit shop to buy some banana's. I tried to communicate him that I need banana's through a sign language. It was a great success. Now, the challenge is I don't have Chinese Yuan, I had only US dollars.

The rate conversion for this business looks like a great challenge for both of us. I got an idea. I took the calculator lying on the table and went near him and we both agreed to the numbers which calculator told us. I gave him the US dollars to buy banana's and the shop owner gave me the balance in Chinese Yuan. From this I understood that the calculator (numbers) are the alphabets of the money Language and that is the universal language that everyone understands.

Calculators & School Students:

Calculators are available everywhere. Still at schools, students are not allowed to use calculators while exams and classes. I always wonder why can't a student use a calculator which is available everywhere in all sizes and formats. Once students start using the calculators at earlier ages, they will start liking the numbers. Mathematics will be their friend. Numbers are the alphabets of money language. That's the only reason schools don't want students to use calculators. I wish all students from Grade 1 onwards should carry a calculator in their school bag. Instead of giving Ipad's and Laptops to your kids, give them calculators. Let them play around the numbers for an hour per day. They will make numbers their friend (alphabets of money language). 

Compounding & College Students:

For college going students (most students), money is an instrument to spend and get what they want. Most Indian students (including me) do not read the money language even at collages. College going students should definitely be aware of what is compounding and how that will generate wealth over time. Students here should also learn about how consistent investment and compounding that money can bring wonders to their life.

If above 2 things were given to students at appropriate age, they will make wonders at life. Why don't we try this. This is not going to cost much. I wish every reader of this blog get the importance of learning numbers at early age and get the benefits of compounding for a happy life.

Have a Great Day

B G Nareshkumar.

The Mantra - If Computers can Think

While i was reading various books, i understand and believe that our way of thinking makes us. What we think all day long is what we become sooner or in future. Many big shots even have their Think Week as a break from their normal routine. This is just to think and come up with new ideas and refresh themselves. While successful and wise people give so much importance to their thinking, focus and actions, what will happen is computers are programmed in our brain to think only positive ideas and behaviors. 

That should be great moment and people will stop overthinking / negative thinking and become productive all the time. It also will keep people away from worries, fear, stress and anxiety. Do we need a computer to do this?. why don't we frame our own computer now inside our brain?. I believe if we use a computer to think, it will keep telling something to our brain. Right?. If we tell something to our brain consistently and continuously. It is nothing but a Mantra. One should identify the mantra he/she needed. This is nothing but what he/she wants to achieve in life.

Let us take an example, Floyd Mayweather. He is one of the famous boxer as we all know. We should understand his record of 50-0. Yes, he has a great historical record of not losing even a single time. How many people have this kind of record on the rings?. Definitely a successful person will have failures. May be, Floyd Mayweather would have met failures but not on the rings. This is because he keeps repeating his mantra's all the time. When he walk, when he exercise, when we eat, when he wake-up and all the time. Yes, that's what make him this successful. Can you imagine what is his mantra?.  Hard work, Dedication. He repeats this all the time. This was his mantra all the time. 

It is important for everyone to have their own mantra. We should keep telling to ourself everytime and all the time like a computer can repeat it, if we program it. When we keep telling our mantra all the time, our brain will only think about that all the time. It will hit our sub conscious mind and that will become very powerful. When this first step is achieved, then nothing can stop us from reaching our goal.

Just try this simple step. Think of what you want to become in next 20 years and write it down in a piece of paper in simple words. Try to make it very simple and in easy language. Then, keep telling that to yourself all the time. No matter whatever you are doing. When you eat, when you take bath, when you work out and almost everytime. Do this for 2 months consistently. If you can make note of your progress in this 2 months, you will be surprised to see your growth. This does not cost you anything. This is like defining your computer to think only in a certain way which you want. 

I wish every reader of this blog try this and achieve greater and happier life.

Have a Great Day

B G Nareshkumar

Productivity

Many of us think of being productive all the time but it is not possible to be productive all the time. Inorder to have the maximum productiveness there are simple 9 steps or we can call them as behaviors which can help. Before we get into these steps, let us understand why should we be productive ?. Is it really important ?. Yes, definitely, many people get into stress and worries these days due to lack in productiveness. They might be working most of the time infact around 20 hours a day but still they will not be productive and fall into unnecessary worrying, fear, stress. Being high productive in less time will keep us away from worries, fear, stress.

Don't work too much

I understand many people will argue with me on this topic. Yes, it is really necessary to understand how much effort is needed to perform a specific job. If we put more and more effort unnecessarily, it will lead to less productiveness and cause huge depression. We should understand the purpose of any job and it is more important to understand how much effort required in performing any job. More and more time spend than needed is a form of unproductiveness and will cause depression.

Don't worry too much

Worrying is not a new thing, it was there since humans have been in existence. If a person stops worrying, it itself shows the path to high productivity and success. Worrying too much will end in over thinking and over behaving in any job than it is required. When we keep ourself busy in learning new concepts and strategies, it can stop us from worrying too much. This will definitely be a cause for high productivity. 

Don't be stubborn

When we are dealing with people, most of us would have thought what does he know that i don't know. This is a form of stubbornness. World is very big and definitely one cannot have all the knowledge in this world. Life is a learning process. So, it is important to understand that any person would know something or many thing which we don't know. Avoiding our stubbornness and being open to learn from any person we see in our daily life is very important. This will definitely be a cause for high productivity. 

Don't check things always

How many times you check your Mail, Phone, Facebook, Twitter everyday?. I would recommend to ask yourself if that is really necessary to check frequently. It is ok if we are able to reply a person a bit late or if we are able to reply them within next 24 hours. It is not necessary to reply immediately when we receive an email. Many people are obsessed with checking their phones, computer and ipad's all the time and fall pray for less productivity. Stop this, this will definitely be a cause for high productivity. 

Don't say YES always

Many of us are very bad in saying NO. We are good at saying YES but not with NO. There is nothing wrong in saying NO. Infact, many people who achieved big in their career are good at saying NO. If we say YES, we will be committed to certain things which we might not be required to do. Sometime which will stop our productivity. To increase productivity it is important to say NO, where it is really not mandatory. Make a rating from 1 to 100. If the importance of any work is more than 90, then accept it and say YES. Else say NO, nothing wrong in that. This will definitely be a cause for high productivity. 

Write things down

Many of us will plan things in advance and will perform that very well too but we won't write those down at the end of the day or week. It is really important to write things down and have a look at those every quarter or every month to understand how that specific thing can be don't more effectively. This will also save us more time and increase our productivity.

Don't be hard to yourself

When certain things go wrong, don't be hard to yourself. There is no one in this world called perfect. People learn from their mistakes. It is ok to do some mistakes but with a calculated risk. Instead of being hard to ourself, it is much better to learn from our mistakes and rise again. This will make our work more productive as we learn from our own mistakes.

Don't neglect your personal education

Success is a journey. It needs learning and updating knowledge all the time. Most people think their formal school education is enough to lead a successful life till they live. No, it is not the case, one should learn all the time to be productive. If we need to shine in our work, we should be able to perform the work at ease with less effort and high comfort. This can be achieved with continuous learning and constantly gaining knowledge. This will definitely be a cause for high productivity. 

Don't hate rules

Our system has made us to hate rules since we are born. Rules are very important to perform any action in a sequential manner effectively. Without rules we would still be monkeys. It is very important to understand we are what we are now just because of rules. Inorder to do any work high productively, it is important to follow certain rules it requires. We need to understand those and work accordingly for high productivity.

I hope and believe the reader of this blog will be highly productive, add more value to their job and a happy and healthy life. 

Have a Great Day

B G Nareshkumar

Travel with the Spot Price

Current market price of the stock or the current trading price of the index is called as Spot Price. Many traders and investors are busy in identifying where will the market go the next day. People will always spend more time in analyzing whether the market is bull or bear. Infact, the important thing to identifying is not the bull or bear market. It is important to travel with the spot. Yes, many hedge and fund managers are aware of this concept and they always keep their position unbiased all the time to win the market. Travelling with the spot is nothing but having the unbiased view. Even if the market moves up or down the next day, we should be able to book some profit and come out of it and stay with the spot again for the next day.

There are many hedging concepts like Straddle, Strangle, Strategies like butterfly spread and many more to say. But the important thing is to travel with the spot. If the spot price goes down or up, our positions should be around that price, we should never hold a position far away from the spot price. This adjustment will always help a trader (specially option sellers) to be in profit. I personally feel the best strategy with the automatic hedging is the short straddle. It is also important to be with the spot on short straddle. If the market makes a violent move, there are options to book certain profit and some loss and still stay with spot.

Let's take an example of a stock which is trading around 400. It is wise to have a short straddle at the strike 400 on the nearest expiry. If the trader is wise enough, he can take a short straddle at 390, 400 and 410 on the nearest expiry. This will help to book profit most of the time and to have less adjustments. There can be 3 scenarios on the market

The market moving higher, lower or stable

In the scenario of market moving higher, the 410 & 400 short straddle will be in profit and the PE on 390 straddle will also be on profit. The only position which needs to be looked into will be CE on 390. As an immediately effect, the CE on 400 can be at neutral with no loss / profit or it can be in a minor loss. As the time pass by, this position can also be on profit (provided with no much violent moves).

To stay with the spot in this scenario, when the market moving higher. It is wise to close the 390 strike (both PE and CE) and take the 420 short straddle when the market nears to 410. In an advance level, if we have multiple lots in 390 strike, it is wise to close all the CE positions and hold the PE positions as it will decay further.

When the market is moving lower, the exact opposite of the above can be performed to stay with the spot price. When the market is stable and do not move much, it is better to hold our positions as all the premiums will decay over time. A move of 0.75% or lower either up or down can be considered as stable market and let us not disturb our positions during these times. This will help us to take control over time & premium decay on short straddle. It is always important to have our positions hedged all the time. Short straddle is the best strategy to work on hedged positions.

I hope this blog brings information and importance of trading with hedge and short straddle. There are various strategies and i suggest to learn continuously and understand what will work for every individual and trade on those.

Have a Great Day

B G Nareshkumar

Expenditure Tax

People of India are more used to Income Tax process and major population is used to escape from income tax payments by showing their high expenses. Most of the big companies, show their high expenses and the remaining income is considered for the Income tax payments. Amount spend as an expense is not touched by the income tax department on the business class people. On the other hand, the working class people do not have any escape in paying the income tax. The tax is collected as TDS when the salary is processed, they pay the tax first and spend the remaining.

Now, before the budget 2022, the debate is on, will the expenditure tax be imposed completely eliminating the income tax ?. If that is so, what will happen to the income tax department ?. What is the benefit of bringing expenditure tax ?. Who will be benefited through this Expenditure tax ?. Will people spend more after this ?. Will the savings of people increase ?.

• If this Expenditure Tax process is brought into action, no one need to pay anymore income tax - Many will be feeling good right ?. Yes, most of the working class people (salaried people earning more than exceptional tax slabs) will feel happy. This is because they don't need to pay any TDS in advance and they will pay only on what they spend

• Most of the big companies will try to find a way to reduce their expenses if this expenditure tax is brought into action. This will be a complete game reversal for them. All these days they were playing the game of showing high expenses

• 
  Government may also project that people will try to reduce their expenses and start high saving. Do you think any government will think of their people saving more ?. No, government wants people to spend less to keep the money rotation in place. This will help the economy to grow higher. So, if the government is telling due to this expenditure tax the people saving will be higher, don't believe them. They might have other big plans

• The income tax collection these days are very low as many are not showing their income properly, specially the business class people. But the expenses cannot be hidden. If a person wants to buy a TV, Motorcycle, Fridge, Car, Washing Machine, Grocery, Shoes, Clothes, Toothbrush, Petrol etc. etc... they will need to pay this expenditure tax without escaping. I don't think any person can escape from spending in this world. This will definitely increase the tax collection compared to the income tax

• As per our Prime Minister Narendra Modi on February 2020, only 1.46 Crore individuals are liable to pay income tax, which is less than 1% of the population. By imposing this Expenditure Tax, will this number not be increased ?

• There are several countries such as UAE, Qatar, Oman, Kuwait, Cayman Islands, Bahrain, Bermuda, Saudi Arabia and Brunei where there are no income tax but people pay towards the social security, which is used for the government's budget. These countries are not poor countries by eliminating income tax. May be India can join this. Definitely not my personal wish, because India has very high population that these countries cannot be compared with

• 
  Let's think in a different angle. Will the people of India avoid spending or reduce spending because of this Expenditure tax ? I don't believe this. If the income tax is eliminated, people will have more cash compared to earlier case and they will end up in spending more (except few future millionaires who plan their budget properly). This will increase the tax collection to the government comparatively

• Price of petrol will increase due to this expenditure tax and definitely that will impact on all the raw materials. This will behave like a chain and the inflation will grow higher. Pair of shoes or slipper which costs around Rs. 500 in 2010 now costs more than Rs. 2000. This is almost the increase in price by 4 times in 10 years. Look at the inflation. We are already living in the highly inflated country. This expenditure tax will again make us to pay more on our spending

How can i be benefited on this expenditure tax ?

By imposing this expenditure tax, we know we need to pay tax on all our expenses. Hence we need to avoid spending more or avoid spending unnecessarily. If we are not controlling this earlier, we should start doing it now. It is wise to invest slowly and steadily with patience. Then we need to increase ways of higher income. Whatever we will earn through investing will not attract any tax. This is a good move for investors. This will definitely help to beat the inflation. Investing in a quality stock will help to save tax as well if this expenditure tax is imposed.

The only mantra is, Earn, Spend Less, Save and Invest.

Will the government be benefited on this expenditure tax, definitely yes. How can the common man be happy with this new way of taxes ?. What are the benefits ?. Working class people might think this might be a big relief for them, but they should think. Definitely paying tax on expense will be higher than paying tax on income. This is my personal opinion. Let us wait for the budget and see how this goes.

Have a Great Day

B G Nareshkumar

The Job

I would like to share a real story of a boy named Phil. This boy's father own a laundry in America. The business was doing well. He gave a job to the boy so that he can learn the business and take care of it in future for a happy living. But Phil hated the laundry business. He did not come to the job regularly and he used to be absent many days. The boy's father was much worried about his carelessness and ambitionless on the business. 

One day Phil told his father that he wanted to be a mechanic. He wish to work in a mechanic shop. The boy's father was so shocked and was very restless about the boy's decision. But Phil had is way to work on the mechanic shop. He was very happy and worked very long hours. As he choose the job and he was very passionate about it, he worked very happily. He did not stop there, he took up engineering and learned more about engines. He died at 1944. This man was none but Phil Johnson, when he died he was the president of Boeing Aircraft Company. He was making the flying fortresses that helped the government to win the war. What would have happened if Phil Johnson was taking care of his father's laundry business ?.

It is very important to have a happy life. The job we do will decide that. Our job will also decide the stress level and how long we can live in this beautiful world. Many of us spend so much time in selecting the dress we are going to wear, we spend more time in selecting the car we are going to drive, we spend more time in analyzing various designs on the interiors at our home but we spend very less time in selecting the job which we are going to do. This is very important to decide the job and prepare us well in advance to perform the job effectively with love. This is a simple secret to build happy and successful life.

For the young boys and girls, i have a suggestion. Before you choose your course of study after your 12th grade or high school, fix an appointment with the successful person in that particular field in your town which you are planning to pursue. Ask them few question like how they feel after so many years of experience in their field ?. What are the drawbacks and success mantras ?. How much we can earn in 5 years ?. what is the growth rate in this field ? and so on. This will definitely give you a clarity on what you are planning. This will help you in taking a decision.

Definitely a successful person will give you an appointment and will be available to speak with you when you show enough interest. Infact, you don't even need an appointment. You can directly walk-in and ask for his suggestions. They will feel more priviliged and happy to help you than anyone. Even if you are not successful in getting an idea from one or two person, there will be many to give you their years of experience as suggestions. All you need to find them and get their point of view. In a way, it is a easy process to get a job before getting a degree, How ?.

Yes, when you impress that person by taking his suggestion and being in touch with him, after your degree he can give you a job. Why not you try this. This is a way to get a job you like even before getting a degree. People get less sleep and suffer from various diseases that occur due to lack of sleep these days. The main and foremost reason is worrying and the job which they do might bring more worries if they don't like it. Any person is fit for multiple jobs. He can be good at many areas and he can be bad at certain areas. The important thing is to find out what will work for them and what they are interested about. Choose the job you like and start learning continuously for a happy living.

Don't approach a company and ask "Can i have a job in your company ?"

Instead, tell them you are good at certain field and ask for a job in that field to grow the company and yourself.

Have a Great Day

B G Nareshkumar

No one will kick a Dead Dog

No one will kick a Dead Dog. Edward VIII, when he was the prince of wales during his age fourteen attended Dartmouth College in Devonshire. The college corresponds to the Naval academy at Annapolis. One day, one of the naval officers found him crying. The Naval officer asked him what was wrong. He was so concerned that the prince was crying. At first Edward VIII refused to say, later he admitted the truth he was being kicked by the Naval Cadets. The commodore of the college called all the boys and asked what was the reason that the prince was singled out and for this rough treatment ?.

After lot of hesitation among the boys, at last they confessed, when they become commanders and captains in the King's Navy, they wanted to be able to say that they had kicked the King. So, No one will kick a Dead Dog. They felt proud that they kicked the prince for no reason. This is just because they knew Edward is far above them all. When people around us join together to demotivate us and put us down, that is the sign they are giving us indirectly that we are far above them in all means. When we have the determination to achieve something and work towards it everyday sincerely, it will definitely be noticed by people around us. The very next step will be to demotivate us or they will feel pleasant & privileged by embarrassing us.

When we keep ourself busy in what we are doing and moving atleast a single step forward everyday, none of these actions will harm us. It will harm us only when we take these inside our brain and think about it. Infact these situations will give us information on whom to be ignored while reaching our goal. When starting a journey in stock market, specially in country like India, there will be many criticism which investors might come across. We might even feel that we are doing some kind of crime in entering into the stock market and investing world. This is how our system is designed. This is what many people want us to feel & think. This world will try to break that belief.

Inspite of all these criticism, when a person start to invest in stock market, if he / she found a minor loss in the trades during their initial stages, that will lead to further more criticism. Now, it will be further more heavier than the early one. If someone is trying on something new which they can't do or afford, then people will start criticizing and embarrassing. The abundance wealth will be delivered only when a person cross this initial stage. This is a stage where the emotions will be heavily tested. This will create an inner fear without our concern. We need to build the soft skills to overcome all these to achieve great in stock market.

No one will kick the Dead Dog. Avoiding all the noise in stock market is very important. I don't mean only the unnecessary news in the news channels and social medias to be avoided. I also mean the people around us. It is wise to get into a discussion but nothing should touch our emotion and that should not result in taking any position in stocks or indices. If people knew you are bit ahead of them in stock market, they will try all ways to demotivate you and make you feel embarrassed. This is because stock market deals with money and no one hates it. Everyone needs it and more than everything they don't want you to have more than them. This is a real fact on my personal opinion.

It also does not meant that everyone in stock market makes money. More than 90% of people in stock market who trades very actively lose money. It is very important to gain enough knowledge before entering the stock market else there are many people waiting to laugh at the failures. Stock market is not the platform to make easy money. It is a source to make decent money over time.

I wish every reader of this blog understand that No one will kick the Dead Dog. When you are kicked, feel that you are very active and superior to the one who is trying to kick you and move ahead. Let our results speak. Controlling emotions and overcoming fear is the first step to success in stock market, which is followed by continuous learning and patience.

In Financial World, our conviction can be highly rewarded
before which our patience will be heavily tested.

Have a Great Day

B G Nareshkumar

Why Grass is Green & Sun is Hot ?

Why grass is green ? I read in a book, If we knew how grass is able to transform sunlight, water and carbon dioxide into food sugar, we can transform civilization. When i was trying to find an answer for the above question in my mind, i also understand and read a statement by Santayana, "Man is not made to understand life, but to live it".

Oh yes, that's exactly true. Trying to understand everything, which is exactly not possible in our small life span. General motors research laboratories have spent years of time and millions of dollars trying to find out how and why a spark in cylinders sets off an explosion that makes your car run; and they don't know the answer. Thought they are not able to find out the answer after spending so much money and time, they are one of the biggest companies in the world. So, it is really not necessary to understand everything in life, it is necessary to accept it.

Why Sun so hot ? If we try to understand this, we need to reach sun. Which is considered as the atmost impossible activity in this whole world. This is even understood and accepted by top scientists in this entire globe. May be in future if humans found a solution to reach sun and try to understand why it is so hot (i doubt if it is possible), it might give an simple answer, it is so called nature and it is defined & designed that way. So, spending so much time and energy in understanding everything is merely not necessary but we need to accept and live to it.

Similarly, there are many things and relations in this world are meant to live it and not necessary to understand it. Everything is designed in a way for human to have a comfortable and happy life. The actual problem arises when man tries to understand everything. Taking life as it comes without worries and learning continuously to improve us is the only solution for a happy life. 

This is applicable to financial world as well. Let's take it very simple, can anyone in this world explain exactly why stock market fell or gain today ?. I bet this is not possible by anyone to get all the facts and describe in detail. Even if they try to do so, there will be a controversial facts which will rise to offend their solution. In the due course, stock market will go to the next day and work in its own style. The answer to this question is, stock market is a combined result of all activities in the financial world. That can be a profit / loss by companies, or it can be a manipulation activities by big institutions, or it can be any big government wish to bring the stock market down or up.

So, our aim should not be to understand what happened in the stock market or financial world to bring the price down or up. Instead, our priority is to make money in stock market either the market moves up or down. I have seen many people search in YouTube, why market gained today or why it declined today. Very less will search on, how to make decent profits in all kinds of situation. So the key is to live life not to understand everything in life. 

I believed this small blog will bring more light to your approach on stock market and life on what to concentrate. Let us not try to understand why sun is hot or grass is green. Let us enjoy the warmth given by sun and the green beauty of grass. 

Have a Great Day

B G Nareshkumar

The Star & Mud - Mojave Desert

People these days get into frustration so quickly, lose their patience sooner and make bad decisions. These bad decision taken will get them lot of trouble. It is always better to take a deep breath and understand the situation fully before coming to a conclusion. I would like to bring you a true story of a married women during the war. This lady's husband was working in army. During the war, he was posted in Mojave desert to assist the army. This lady was not able to live without her husband. Hence she decided to move to the small town near the mojave desert. 

Soon after going to the desert, she understood this was the worst place to live on this planet. She did not like the locals and resists herself to mingle with people around there. As it was a desert, she could not have the proper food as everything had certain amount of sand mixed with it. The wind was so heavy that she could breath only sand everywhere. She can't bare that atmosphere anymore. So, she wrote to her father saying, she could not stay there even a minute and she is planning to come back home. Soon after she send the letter, she receives a letter back from her father with only the below 2 lines.

Two men looked out from prison bars,
One saw the mud, the other saw stars.

soon after reading these lines she understood how stupid she was as she did not try to mingle with the local and not able to look at the positive side of life and situation. Immediately, she changed her perception and started to speak with local people who were very friendly with her and even gifted her some art works which they made. This motivated her to look at the positive side of life and she lived there happily with her husband. 

This was a real incident wrote by a women describing all her efforts and lifestyle she faced during her stay in mojave desert. It described how she looked at life at an entirely different angle just by changing her mindset. Nothing changed physically when she just changed her mind but her perception changed, her approach changed. This gave her positive thinking and happy life. 

Similarly, many people in financial world think stock market is a gamble. It is their perception. It is up to everyone what they look at standing behind the prison bars. If they look at the stars, they will see a bright future in investing and trading. Rather if they look at the mud, they will see this as a gamble. Later may be after 20 years, they would think if they would have invested in 2022, they would have been a billionaire by 2042. I wish everyone not to look at things as mud which they don't know anything about. Once we build the knowledge on certain things specially in stock market we will see it as a star. 

I wish everyone invest a small amount everyday in a quality business and leave it to grow in its own style and time. Do not think stock market as gamble and do not think everyone who invest in stock market will lose money one day. If we see around this globe, many people achieved the height of abundance wealth through investing. I wish the reader of this blog to invest wisely to gain abundance wealth through patience and continuous learning.

Look at the stars not the mud.

Have a Great Day

B G Nareshkumar

The Power of Swing

In financial world, specially in stock market people want the spot price of any business or index to rise consistently without any downward movement. This is technically not possible. The reason being, people will tend to book profits at some point of time. When there is profit booking, stock will come down a bit and reverse back to its original trend. This will happen in any quality business not in a company which is sinking. This swing is factual and traders need to accept this before taking any position. Profit booking may occur for many season. These days, profit bookings happening very sharp due to uncertainties because of covid situation.

Accepting the swing in any quality business is the first step of defining a process of making money. No one should decide that the market will keep rising or it will keep descending. Now, defining the process for this swing means being unbiased. We should never be biased on any business at whatever be the pricing of the company being traded or whatever the news we see on the television. Being unbiased is not an easy step. Let's say when we see the stock or index declined around 10%, our emotions will say it will go down further or it will reverse back. This is the common word which will strike our brain most of the time in any violent move in the market.

A trader to be profitable should never listen these words hitting their brain. At any given point of time, he / she should be unbiased. We should never take a decision that the market will go up or down. We should be neutral and take a position in way we make money either if the stock or index go up or down. This is very expensive lesson a trader will learn in their journey. It is very important that the trader does not lose all their money by the time they understand this concept. Having the expensive lesson learnt without capital is of no use. So the concept is we should make money either the market goes up or down.

How is that possible ?. First, is that possible ?. Definitely yes, there are many ways the financial market gives these kind of opportunity else the big financial companies, businesses and banks will not be in the business of stock trading. One way for a trader in derivatives (FNO) market is selecting the strategy of Short Strangle or Short Straddle. This might require more capital compared to buying strategies in stock market. However selling far OTM on the nearest possible expiry is the best and easiest way of making money. Also this is another way of saving capital (which is more important).

Let's take the concept of short strangle. After taking the position at equal interval or at the same premium on Out Of the Money, if the market remains silent or neutral. The possibility of decay in premium is ok when the expiry is near. Market should stay within the range selected to make profit. Let's say the market is swinging in the range we have selected. In this case, the premium decay will be higher or sooner compared to the previous scenario. 

If the market falls around 2% after taking the position, in this case PE premium price will increase and CE premium price will decrease. Let's say next day, the market gains 2%. Now, the PE premium will decrease faster but the CE premium price will increase slower compared to the fall happened the previous day. If this process continues, then the premium can come down violently sooner. This is the power of swing.

The important thing is the trader should not close the position soon, when the market moves violently on the single side on a day (when the market is within their range). They should wait or should understand how to adjust the position during the swing to make more profit. So, a swing in stock market is healthy and have the capability to give more profits provided it is dealt properly. I wish every reader of this blog to understand the importance of swing in the market and understand how to make adjustments during the swing to make decent money. No quality stock or index will travel in a single direction and be prepared for that before entering.

Have a Great Day

B G Nareshkumar

Pongal

Pongal wishes to everyone. In Tamilnadu, 14th January every year is celebrated as Pongal Festival. This is one of the biggest festival in Tamilnadu, India. This is the first day of the month Thai, celebrated to thank the Sun god, the Mother nature and also celebrated to thank various farm animals which helps to give the great harvest. The world famous Jallikattu is also celebrated during this day in various parts of Tamilnadu.

I wish everyone the great beginning on this pongal day and achieve all success in life. This festival is named after the traditional sweet dish Pongal made with rice boiled in milk and jaggery. It is offered to the gods and goddesses and then enjoyed by the family. The origin of pongal dish can be traced back to the Chola period.

Pongal conveys the notion of letting go of the past and welcoming the new beginnings. It is believed that receiving the Sun's blessings results in good crop as wells as prosperity and happiness. Most people across the globe would have heard about Jallikattu. Bos Indicus bulls are bred specially by people of the village for the event. Bulls that are able to participate successfully in the Jallikattu event are used as studs for breeding. These bulls also fetch higher prices in the markets.

According to Hindu mythology, Lord Shiva once asked Basava (Bull) to visit the earth and ask the human to have an oil massage and bath every day. But Basava announced that eat daily and have an oil bath once a month. This makes lord Shiva furious and he cursed Basava (Bull) to live on the earth forever and said that Basava has to plough the fields and help people produce more food. Hence the people after harvesting celebrates this festival with crops and cattle.

Jallikattu has been known to be practiced during the Tamil classical period (400-100 BCE). It became a platform for displaying bravery, and prize money was introduced for participation encouragement. A seal from the Indus Valley Civilization depicting the practice is preserved in the National Museum, New Delhi. A cave painting in Madurai depicting a lone man trying to control a bull is estimated to be about 1500 years old.

This celebration run for 4 days each with its own importance. The first day is called the Bhogi festival, the second day is called Thai Pongal, the third day is called Maatu Pongal and the fourth day is called Kaanum Pongal. First day bhogi is to throw away the old and get the new, this means throw away all our old worries or bad things in life and start a new one with full of joy and happiness.

Second is the Thai pongal, this is thanks giving to sun god, mother earth and animals helped for better agriculture. Third day is Maatu pongal specially saying thanks to bull's (this does not refer to bull in stock market). Fourth day is the Kaanum pongal, which is meant to meet and be with relatives, friends, elders and get their blessings to have a better life in future. All these four days are very special in Tamil culture and considered as the first and biggest festival of the calendar year of Tamil people across the globe. 

I wish everyone a great success and a new beginning on this occasion.

Have a Great Day

B G Nareshkumar

Have and Lack

What we have and what we lack. Everyone in this world will have certain things and they wish for certain things which can be defined as they lack. It is more important on what we concentrate and focus our energy. There are many people in this world they concentrate more on what they lack. It is not advisable to do so. Though we have little with us, it is important to concentrate on that and stop worrying on what we don't have. In financial world, most people enter with very limited knowledge. Some people gain knowledge on the time and live experience but many stay where they are and tend to lose their capital.

One of the main reason for this tragedy is they concentrate more on what they don't have. Say for example, if a trader or investor comes in the financial market with 10 Lakhs capital. Initially, he / she would have the plan to rise the capital by having decent profit. On due course by seeing the options available which followed with high risk, they concentrate on what they don't have and lose money. Instead, one should concentrate on the capital they have and take the average return given by the financial markets every year and focus on those returns. 

Let's say if stock market is giving excellent or triple the return as the other financial markets are giving consistently, then no one will be investing on Fixed deposits or Bonds or what so ever. Hence, the financial system will balance to itself. However, holding a stock or business for high amount of time, will lead to exceptional results in stock market. This cannot be seen in the other financial markets. The check point is time or patience one should have. This is the lack in most people. Instead most people concentrate on the immediate gratification and take more positions immediately and looking for profit by end of the day. This will only lead to make more transactions and people make money through this will be brokers and exchanges.

Stock market is not a new concept, it is there for ages. One should always understand and read from the history to gain more knowledge and avoid what should not be done. Most people discuss with people who have limited knowledge and enter the market. They will not be having enough knowledge to handle the situations. Specially when it goes against their positions, they will panic and book losses most of the time. However, the person who has gained knowledge from the past will know how to handle any situation. Life is all about handling the situation, it is not being right all the time. If we can handle situation in the best possible way, it can reward us heavily. To gain this reward, continuously gaining knowledge is more important.

One of the biggest enemy in the financial world is emotion. If a person can control his emotion, he can come out of fear and take calculated risk. One of the biggest mistake is trading all the capital we have without calculating the risk factor. If the risk we take will not affect our way of living, then it is worth to take else it is better to go for a long term investment with huge patience. We should understand, our conviction will be rewards heavily before which our patience will be tested immensely. So, it is very important to avoid emotions in stock market and work with facts and calculated risk.

• 
  Should concentrate on our capital instead of concentrating on getting more leverages 

(Have: Capital , Lack: Leverage)

• Should concentrate on having enough patience instead of immediate gratification

(Have: Patience , Lack: Immediate Gratification)

• Should gain more knowledge as possible through continuous learning instead of being in the perception of we know everything

(Have: Continuous knowledge , Lack: I know everything, this is all it)

• Should avoid emotions, which will avoid fear and take calculated risk

(Have: No Emotions , Lack: Working on extremely risk positions)

I wish the reader of this blog will understand what they have and what they lack. After which concentrate on what we have and make every necessary steps to increase what we have. This will definitely take us to unimaginable success.

Have a Great Day

B G Nareshkumar

The Road I Choose

Many people think the degree which they hold defines their knowledge which is enough to perform any special action. Fact is any person without the degree from the leading business school can perform well compared to the person with the degree from a leading business school, provided they have the skill of continuous learning from books or from other source. A quality book worth Rs.300 can add value more than engineering and management degrees. 

There are many roads in front of us but we choose the road we need to travel. Life is all about which road we choose. It is not merely by accident, may be now or earlier in life we would have opt to choose this road which we are travelling now. The chosen road may be a highway or an muddy off road. Few travel might need a specially equipped vehicle to travel. It is better we build the vehicle appropriately before starting the journey to be a pleasant one.

Few days ago, I was travelling from my hometown to a town called Srimushnam which is 200 kms away. I need to travel during the early morning before the sun is up. There are not more light in the journey but i have headlamps in my car which can give me enough light which covers 100 meter from the car. This light can cover only 100 meters at any single point of time but during the course of the journey, it can cover the entire 200 kilometers. When we start to travel with the limited and consistent resource, it gave more brightness to the journey. similarly, it is not necessary to know the entire finance system how it will work. Instead it is necessary that the resource we carry should be consistent. To make this resource consistent, the only option is continuous learning.

The journey chosen can be as wild or as bad but when we are prepared to learn continuously, all those tough times will lead to unexpected results. I don't think any famous personality would have all the information or knowledge when they started their career. But definitely, they would have thought about getting this famous or even more than this. The secret which make them to come this far is the way they thought and present themselves within and learning continuously to improve everyday. 

Michelangelo, who was an Italian sculpture, painter, architect and a great poet wrote "I am still learning" at his age of 87. He wrote these words by around 16th century. 

Thottanaith Thoorum Manarkeni Maandharkkuk

Katranaith Thoorum Arivu

This was the 396th kural from the famous Thirukkural which was estimated to be written 2300 years ago. This kural means, the water will flow from a well in proportion to the depth to which it is dug, and knowledge will flow from a man in proportion to his learning. I would like to add further more to this, as long as the man is continuously learning and giving away his knowledge to as many as he can, he will get much more knowledge than what he learns.

It is really not a tough job to ready 30 pages a day. When a person builds a habit of reading few pages a day, he / she not only brings better changes to his / her life alone but also the people around him / her. When i started considering stock market and other investments options as a serious concern, i do not have much knowledge about financial markets. I made many mistakes and learned many concepts on the go. When understood the importance of continuous learning, started following a simple step of reading few pages per day, it changed my life. 

When a person understand the importance of continuous learning and start to learn continuously. He will not only be better at the work he is doing but will become wiser. Reading books and gaining knowledge continuously will keep a person busy. This will keep away from unnecessary elements and will avoid 99% of the problem humans face these days. I hope the reader of this blog will enjoy all wealth and health in continuous learning and live life to the fullest. I choose to be a continuous learner and share my knowledge to gain more.

Have a Great Day

B G Nareshkumar

Dynamometer

Dynamometer is device that measures force, torque and power. J A Hadfield had an experiment with this dynamometer on 3 men. This is all about testing the effect of mental suggestion on their strength. All these men's are normal and have great health. He asked those men's to hold the dynamometer with all their strength. He had them to do this under 3 different conditions. He will hypnotise them. First, he did not speak anything to these men when they are hypnotised. When they wake up by holding this dynamometer, their average grip was 101 pounds. 

Second, when they were hypnotised, he told them they were very week. After getting this to their subconscious mind, they became really very week and their strength is almost like a baby. The result is they could hold only 29 pounds. This is less than 30% of what they can hold under normal circumstances. Third, when they were hypnotised, he told them they were very strong and their mind was filled with all positive thoughts and energy. This time they were able to grip an average of 142 pounds. This was around 5 times as high as what they could hold when their mind was filled with negative thoughts.

This is what a man can achieve when he is filled with positive thoughts. The famous roman empire Marcus Aurelius has stated "Our life is what our thoughts make it". When we have the positive thoughts in achieving all materialistic needs, we would definitely achieve it. First it is very important to have that in our thoughts and we can definitely control our thoughts. Actually, we need to do a surgery to our thoughts. It is like a plastic surgery. We might be in a different or bad situation but all we need is to think what we need is actually achieved. This is the first step of achieving what we need. Why don't we try ?. Is that really tough to think in our mind, what we need is actually achieved ?.

Consistently thinking on what we need is achieved will make us to believe that we are capable of achieving all those. Then we will automatically build our habits inorder to achieve those. When habits are formed towards achieving our goals, no one has the power to stop it. This is the Law of Universe.

If we have the wish of building the empire worth multi-billion dollars. It is first necessary to think that we are a multi billionaire. This might sound stupid for most people, let it be. If they can imagine, many people in this world who are multi billionaires now are not worth even single million many years ago. The first and foremost reason for what they are now is what they thought many years ago. Rest everything followed after that. What is wrong in thinking we are a multi billionaire or even more than that ?.

Let's first think we are going to make multi billion dollars in diversified consistent investment. If we thought about that now, 20 years from now, we are one of those multi-billionaire. Who knows, our net worth may be even more than that. Now, after thinking we are a multi billionaire by diversified consistent investment, we should focus and gain knowledge on stocks which are going to give us great returns year on year. Let this multi-billion dollar net worth be our goal for 20 years and now for the next year, let our focus be on getting the maximum return on quality investment while we are sleeping. We can call this even as passive income. Let's start small and build an empire.

I wish every reader of this blog, start the first step this year on the concept of thinking big and moving towards the big goal in coming years.

Have a Great Day

B G Nareshkumar

The Budget

How important is a Budget?. Definitely a person who's Net worth grows on time will know how important is a budget. It is very important to understand each and every move of our government. Though it is not realistically possible to track all the moves of our government, we could possible concentrate on those which might benefit us and our family. Many people may like the current government and many may not, but it is very important to make use of the options available. To understand this, it is very important to know what budget says.

The total expense estimated on our last budget (2020 - 2021) was Rs.34,83,236 Crores. Out of which, the major allocations is for Defense (as usual), this is around Rs.4,78,196 Crores. Followed by the Ministry of Consumer Affairs, Food and Public Distribution which is around Rs.2,56,948 Crores and so on. We should also note, our government has planned to spend Rs.1,31,531 Crores on Agriculture and Farmer's welfare. Combining these two, our government has planned to spend Rs.3,88,479 Crores on Food and Food making business. This is the next highest to the budget estimate for defense.

Now, it was very evident that our government planned to invest or spend more on Food and Food making business. In March 2021, the union cabinet approved for PLI (Production Linked Incentive) Scheme for food processing sector, entailing an outlay of Rs.10,900 Crores. This scheme was estimated to create 2.5 Lakhs jobs as per government. Why not we concentrate on these businesses or invest on these business who would get the benefits from the government to make more profits.

Most of the working class professional will look forward for the exemptions given on the tax slab. Though it will help few percentage of the working class to get exemption. Most of the working class in cities and many of the rural population will fall on the higher tax slabs and will end up in paying higher taxes. There are many ways to reduce the tax payment. The primary and foremost of those would be investment planning like FD for 5 years and paying interest on medical / health insurance and home loans. 

Apart from tax slabs, there are few things to concentrate on the budget regards to taxes on stock investment. If we are holding shares more than 1 year, then the profit / gains arising out of such shares will be considered as a long term capital gains. If we are holding shares less than 1 month, then the profit or gain arising from those are considered as short term capital gains. Tax on long term capital gains are paid at 10% (only for the gains exceeding Rs.1,00,000) and the tax on short term capital gains are paid at 15%. 

So, the point is when we hold the share for long term, we straight away reduce the 5% tax paid, Rs.1,00,000 straight exemption from the gain and the excess of transactional fees paid to the brokers and exchanges when we perform short term investments. It is also important to note, we pay the long term capital gain tax only when we sell the equity shares which we hold. Till we hold the share, we don't need to pay tax except the dividend tax if applicable.

Taxes on dividend are applicable at 10% (If the dividend income exceeds Rs.5,000). For example, if we hold 1000 shares of a company and the company declares Rs.20 per share as a dividend. Then we are entitled for a dividend of Rs.20,000. This is more than Rs.5,000. So, the TDS of 10% (Rs.2,000 for Rs.20,000) is deducted and the remaining Rs.18,000 will be credited to the bank account. These are few important announcements which we can hear from the budget. 

As a long term investor to generate wealth, one should focus on how tax can be reduced and invested on other revenue generation medium. Focusing and understanding the budget on taxes will help to achieve this. I believe the reader of this blog get the idea on importance of reducing the tax and increase the investment span for wealth generation.

Have a Great Day

B G Nareshkumar

Law of Average & Diversified Consistent Investment

We all might be facing some kind of issues / problem in day today life. This might be either in business, professional, financial or personal life. If there is no issues or problem to someone in this world (Except kids), it is a great day for them and i wish them to have more similar days in future. Also, one should not stop taking calculated risks to avoid issues or problems. When we face these issues, sometime we might take wrong decisions. To avoid this, it is always better to consider the law of average before taking any decision.

Law of averages is nothing but considering the previous facts and current situations and deriving to a mid point. When analyzed this mid point, the decision making will be easy and simple. To understand this better, let us consider the below incident. There was a transport company owner who owned around 10 trucks and delivers apples everyday to the other part of the country. On the way, there were many bridges and mountains to pass by. The owner was always in a worry that, what if the bridge broke down or the trucks broke down in the middle of the mountains. If so, he could not deliver apples on time.

These worries gave him sleepless nights almost everyday. Once there was a discussion and the transport company owner was asked, How many years was he running this business?. He said, he was running it for around 25 years. Well. Now, the question is the how many round trips the trucks have made in these 25 years?. He said, it was around 1,00,000 times. Now, how many times the trucks broke down in middle of the mountains?. He replied, it was hardly 5 time a year. He also added that he maintains the trucks well. Now, the next question asked was, how many times the bridges on the road broke down?. He replied, Not even once.

By hearing this, it was understood the trucks made a trip of around 4000 times a year and the break down was recorded 5 times. This is very negligible. Also the next worry was not even a single time the bridges were broken. So, the law of average here is one in 800 trips the trucks have faced the break down and there is nothing to be worried on this. Even if that happens, the transport owner had the necessary insurance to overcome the situation. So, before taking any decision, it is mandatory or better to arrive at the average point by considering the facts. This will eliminate all worries and give us a clear mind to take decisions.

Diversified Consistent Investment

In financial world, it is very important to diversify our investment. As Warren Buffet said, don't put all your eggs in a single basket. It is always better to have more than 1 form of investment segments or invest in more than 1 equities. There can also be an argument that it is also better to concentrate on a single business and take care of it. Yes, it is good to consider the ONE THING but being an investor, we might not have the control on the particular business until we are one the board of directors.

Being an investor of stock market or mutual fund gives the flexibility to own multiple quality businesses. This way, the law of Average will work better. The key point is we need to invest consistently in all segments. When we have money, it is not wise to put all the money in one go on a particular company. Even though the company gives better rate to enter, it is always wise to invest consistently day by day. I have even noticed, when a person buys everyday a small quantity of business, he gets emotionally highly satisfied and he continues the habit.

When bought everyday, the price of the business purchased will average and the profit will grow steadily with the quantity of the stock. This we need to do with all the stocks in the portfolio. This will give great returns in long term. It is always wise to average our portfolio by diversifying and consistently investing.

Have a Great Day

B G Nareshkumar

CDSL - Central Depository Services Limited

Before getting into Central Depository Services Limited (CDSL), let us understand the stock market is not gambling. It's a serious business. For those who still argue it is gambling, let us take it that way. Who makes money in gambling?. Casino Owner or the gambler?. It is very well known, it is Casino owner. If you believe stock market is gambling, then why not invest on casino owner for long term?. 

We need to invest in companies which makes money irrespective of market moves to win this finance game. One such company is Central Depository Services Limited. No matter the stock market moves up or down, the investors and traders will participate. As long as they participate, Central Depository Services Limited will make money. The other side of the beauty is the companies and brokers who participate also pays money to Central Depository Services Limited.

Let us understand how does Central Depository Services Limited works. Central Depository Services Limited operates as a financial securities depository in India. It is responsible for holding securities such as shares, debentures and mutual funds in electronic form and facilitating securities transactions. However, CDSL does not interact directly with investors. It offers its services through Depository Participants (DP). DP is an agent of the depository who acts as an intermediate person / company between the investor and the depository. In most cases, it is stockbrokers.

Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL) are both government authorized securities depositories in India. Both depositories hold shares in electronic form. CDSL works for the Bombay Stock Exchange (BSE) while NSDL works for National Stock Exchange (NSE). 

• Total number of Demat accounts held by CDSL is 4.19 Crores as of 31st July 2021

• Number of authorised depository participants are 599 as of 31st July 2021

Central Depository Services Limited charges fees for transaction made by customers in their Demat accounts. These charges are collected by stockbrokers and passed on to CDSL. There are many forms of revenue for CDSL

• Annual Maintenance Charges: 

Each listed securities is required to pay an annual maintenance fee to the depository. This is fixed by the regulator SEBI. Currently is it charged at the rate of Rs. 11 per folio (ISIN position) depending on the face value of the paid-up capital.

• Transaction Charges:
  

Investors and traders should pay a fixed amount to CDSL for every transactions they make. This is processed through the stock brokers during the transaction. Zerodha charges are as follows: DP charges are levied by the Depository (CDSL) and the Depository Participant (Zerodha Broking Limited) at Rs. 13.50 + 18% GST per day per scrip (stock) for the stock sold on investors holdings. 

If an investor sell 50 shares of X in the morning and 50 shares of X in the afternoon, the total applicable DP charges will be Rs. 13.50 + 18% GST. If an investor sell 50 shares of X in the morning and 50 shares of Y in the afternoon, the total applicable DP charges for the day will be Rs. 13.50 + Rs. 13.50 = Rs. 27 + 18% GST.

• KYC Services: 

CDSL offers KYC services through its subsidiary CDSL Ventures limited (CVL). CVL is the largest KYC registration agency in India. This contributes to the 60% of the market share. The main revenue in this segment includes the one time fees for KYC creation and additional fees for retrieval of data.

• IPO and Corporate Actions: 

For corporate actions like stock splits, payment of dividends, bonus and so on, CDSL charges the issuing company a fixed amount based on the number of unique identities. CDSL also also facilitates the crediting of securities in IPO.

• Other Sources: 

Apart from the above sources, CDSL also earns through Account maintenance fees, e-voting fees, ECAS fees and others.

The majority of income comes in the Annual maintenance charges from the listed entities. These days there are many investors and traders participate in Indian stock market. Hence there are more number of transactions every day. Infact it is increasing every day and it will lead to increase in revenue for CDSL and stock brokers. Whether the investor and trader making profit or not, they need to pay this fees for every transaction. Also the listed companies pay the fees for their processes. This way CDSL will continue to make profits irrespective of market moves.

52 week high of the company share is 1734.40. The current market price of the company is 1499.80. This means the company is trading at a discount of 13.53% from its all time high / 52 week high. Book value of CDSL is 88.04. Market capital is Rs.15,672 crores as of 01.01.2022.

Revenue, Net Profit, Earnings Per Share (EPS) and Book Value (BV) are consistently increasing inspite of corona pandemic or any other issues. Promotors (Government of India) is holding 20% of the share and FIIs are increasing their share holding percentage every year consistently and their holding now is 8.57%. General public is holding 41.92% of share in CDSL. It is every individuals decision to think over and invest appropriately in a company which behaves like casino owner.

I am not a SEBI registered advisor and this blog is not an investment / trading advice. This is only for informational / educational purpose. Please consider your financial advisor before investing.

Have a Great Day

B G Nareshkumar