A foreword to the weekly column

In order to be a good trader, one must know the craft of technical analysis. In order to be an effective technical analyst, one must not have misguided expectations out of the stock markets. And in order to successfully operate in the stock markets, one must truly understand money.

Money: isn’t that the real reason why one participates in the stock market, why one wants to learn technical analysis or become a trader?

Money is the ultimate goal that drives us; the rest are merely tools that help us achieve our goal. Which is why it is surprising when so many people in the business - be it investors, traders or the millions sitting on the sidelines – continuously display a shockingly dismal understanding of money. And as a result, a rather questionable perspective on the stock markets, technical analysis and life as a trader. If there is no clarity on the destination; there is unlikely to be clarity on the routes either!

Which is perhaps why; only a very small set of people actually succeed in their goal of achieving financial success.

While you may fall into this small set, the lucky set, you will be surprised with the number of people who don’t. Who continue to live in ignorance, who continue to breed strange notions and theories; despite repeated failure. These creatures can be found everywhere, they are in abundance and they never cease to amaze with me the things they say!

"The stock markets are dangerous"

Have you ever noticed that when people get married, they try and coax all their friends into getting married as well. This is human nature at its very best. I have taken a decision and it will get ratified only when others take a similar decision.

I am no different. I too belong to the same species. So when I took a fondness to the stock markets a few years ago, I too wanted everyone I knew to participate in the fun. Fun, as per me; suicide as per several others.

I was literally astonished with the number of people who warned me that the stock markets were dangerous, how they knew of people who had lost all their wealth in the markets, how they too had lost some money and how it was more akin to gambling where very few people actually made money. I must confess my beliefs were shaken; but thankfully, only momentarily.

I have often been rattled to see the human mind at work. Have you ever paid attention to the effort people put in to buy an 800 rupee shirt? They drive to a mall, visit two to three shops, compare prices and designs, investigate the latest fashion trends, discuss and debate and sometimes even wait patiently for a sale. On the other hand, have you noticed how people invest 2 lac rupees in the stock market? It’s more often than not based on a ‘tip’, something they hear over a dinner conversation, a passing remark on a news channel, a recommendation by a broker or merely a hunch!

No wonder people end up wearing great shirts but losing all their money in the stock market.

Trying to make money in the stock markets without education is like trying to scale Mount Everest without the proper gear and equipment. It is dangerous and you will perish.

The scary part is that many investors sincerely believe that they have indeed invested heavily in the gear and equipment – after all they religiously watch a business channel and subscribe to at least one pink paper daily. Yes! So I watch the discovery channel and I am confident that I can fly a spaceship to the moon!

Not so say that media does not help. It does help us familiarize ourselves with the basics, it gives us a peek into the trends, it informs us; but it does not necessarily equip us adequately to invest. Yet! so many people rely completely on the views shared in media to deploy their hard earned money, and believe that they have made an informed decision.

A sound understanding of the fundamental principles, or the technical techniques are a must for success in the stock markets. How do stock markets behave, how does the current slowdown affect the various sectors, which sectors are likely to outperform in the future, how do I decide which companies will be the stars of tomorrow, what is the current on-going trend, how do I know when to buy, when to sell, Is the market over heated right now?

If you have informed answers to these few sample questions, happy investing. You are truly equipped to make a success in the markets. If not, then don’t you think it’s important that you find out? Wouldn’t being able to answer these questions take out the danger from the stock markets?

As William A. Ward says:

“Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.”

Education helps us gain control and control is what differentiates informed investing from reckless gambling. Till the time you do not educate yourself, the stock market will be dangerous.

About the author

Shantanu has done a bachelor’s in Economics from St. Stephen’s College, Delhi; post which he went on to major in Advertising & Communications from MICA. A seven year stint in advertising was followed by a move to Public Relations. Over his long career Shantanu has worked greatly in the realm of understanding consumer behavior - how people think, their attitudes and beliefs, what motivates them, and what can make them change – in the context of consumption. He has worked on the communication strategies of several blue-chip companies such as General Motors, Tata Tea, Sony India, Hyundai, Bharti, Turner, AOL and GSK.

Curiosity about the science behind stock markets got the better of him, and today Shantanu is an independent technical analyst. Over and above this, he also consults with communication companies. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it