Mistakes you have made while investing on the NSE

[hispy99]

[quote=BLUEMONEY;27165]

Originally Posted by hispy99

Companies/banks all over the world will forever be looking for ways to beat the system in order to show good results. It is the responsibilty of regulators to ensure that sharp practices are curtailed. Can you please tell me why this policy is the wrong one (I am not saying that I support it)? The only argument that I might buy is that auditors might be overwhelmed at year-end (maybe). However, what do auditors and the jump in interest rates have in common? To me, it shows there's something fundamentally wrong somewhere. Yes, maybe there might be a better way to ensure that the books of banks are clean, but I do not see why this policy is so bad.[/QUOTE]



First of all, I am Glad you are not in support of this Policy.
Since you want to know why this policy is wrong, i dont realy need to beat around the Bush but i will like to point out some of the Damages the Policy have caused.

First of all, The Market (CAPITAL & MONEY MARKET) : one of SOLUDO'S Reasons for introducing this Policy was to prepare the financial sector for FSS 2020 (there is nothing wrong with that) but he forgot that the Financial Sector is a major Driver of The Market. (So He realy did not take into Account the Negative impact the Policy will have on the market or if He did, He did not Envision an impact of this Magnitude.)

THE MARKET CAN NEVER OPERATE IN ISOLATION FROM AN ECONOMY THAT IS BEEN PREPARED FOR FSS 2020.

Someone was asking me earlier that since the Policy have been Postponed why has the market not recovered ?????
But He failed to realize that the effects of the policy on the market did not happened suddenly but gradually. so market recovery will also happen gradually. (AND AT A FASTER PACE IF THIS POLICY IS CANCELED).

Then there is the Issue of the Banks and thier Unusual Interest they have been given to Depositors. Before this Policy was introduced, this nonsense was not as rampant as it is today. and unless the Policy is canceled, every Bank in the Nation will be given this Unusual interest to depositors and it will definately not be good for Businesses in thesame Economy that is been prepared for FSS 2020.

If this is how SOLUDO thinks he wants to Navigate the Economy towards FSS 2020, then i am afraid he has to think twice or Step down from his Office.

that is my point...why should this policy lead to increased interest rates? Why?

[zainabusman]

[quote=hispy99;27213]

Originally Posted by BLUEMONEY

that is my point...why should this policy lead to increased interest rates? Why?

My thoughts also.

The reality is competition is intensifying and some banks went over board. This is because they have been reporting over bloated balance sheets. CBN cant seem to find a way of piercing through the accounts for obvious manipulation.

I have suggested ways this can be improved by calculating NDIC premium on the basis of year end accounts.

Another thing is for CBN to do a variance analysis of banks accounts month on month and query banks on sudden movements. CBN gets monthly accounts from each bank. All they have to do is to compare the balance sheet of January, Feb and March for a bank with March year end. If there is a huge movement, they should get to the bottom of it. If it is caused by interbank borrowing that is obviously not needed, they ask why the bank did it. etc.

In my view, the CBN Banking supervision department needs to step up its monitoring if they want to sanitise the sytem. There are many ways they can do it.

The US has the Uniform Bank Performance Report. It is a quarterly report showing the quarterly performance, ratios etc of the bank. It also has a data for the banks in the state etc. This report is available to the public. If CBN does this how will banks inflate their balance sheets for the purpose of looking big? It will be qtrly and the banks wont be able to keep up with this level of scrutiny.

Some countries already have best practice in place. Lets copy them. We dont even need to re invent the wheel. It is all out there to be copied.

[BLUEMONEY]

[quote=XXCASH;27199]

Originally Posted by BLUEMONEY

Well you have made your point

I wait to see how this would impact on the economy at large.

Its only a matter of time.

[hispy99]

From The WSJ



Psyching Yourself Up to Let Losers Go

Selling Can Hurt; Here Are Some Ways To Ease the Pain

August 23, 2008; Page B1

When you buy and hold, you don't have to use a death grip.

Of course, you never should sell a stock or fund purely because its price has gone down. If your original reasons for buying turn out to be wrong, however, you should consider selling.

Yet letting go is much easier said than done. Sell a stock or fund at a loss and your pride goes with it, trailing in its wake a stream of regrets about what might have been.


If you've ever found it difficult to let go of a lousy investment, WSJ's personal finance columnist Jason Zweig has some tips for you. He tells Cybele Weisser why it's hard to part ways and what you can do to break that attachment. (Aug. 23)
Individual and professional investors alike struggle with selling. Berkeley finance professor Terrance Odean has found that investors are at least 50% more likely to sell their winners than their losers. Among the money managers surveyed by Cabot Research, a Boston consulting firm, fewer than 30% base their sell decisions on "extensive research." The rest concede they basically sell by the seat of their pants.

All too often, investors are prisoners of the past. Did you buy General Motors last year at 42? Dump it now, around 10, and you abandon all hope that it will recover its former glory. Hold on, however, and you can tell yourself that you weren't wrong; you just haven't yet been proved right.

The longer you've owned a stock and the more you've lost on it, the harder it can be to sell. "Once you start thinking about how much pain a stock has caused you," says Columbia University psychologist Eric Johnson, "that emotion blocks you from thinking about the advantages you could get from selling." You may think you own a stock, but the stock may own you.

Then there's the haunting belief that your portfolio is ruled by a version of Murphy's Law: Whatever can go up will go up, but only after you sell it. Cornell University psychologist Thomas Gilovich explains, "People tell themselves, 'If I sell, and it goes up, I know I'll kick myself,' because it's so easy to imagine having hung on to it instead." Over the years, I've heard dozens of fund managers say they made a stock go up just by selling it.

Fortunately, there are techniques that can take some of the emotion out of selling at a loss.


Heath Hinegardner
Use stop-look orders. I am not a fan of stop-loss orders, which automatically sell you out of a stock when it drops below a preset limit -- and tend to fill both your portfolio, and your broker's pocket, with cash. But I do believe in what I call "stop look" orders: Whenever a stock drops, say, 25% below what you paid, automatically review your original top three reasons for buying to see whether they are still valid. That will prevent you from selling without thinking first.

Don't go far afield. Minimize your risk of future regret by replacing what you sell with something similar. If, for instance, you want to unload Beazer Homes because you underestimated how risky its inventory was, you could move the proceeds into SPDR S&P Homebuilders ETF or iShares Dow Jones U.S. Home Construction Index Fund.

Shop before you drop. Ask yourself: Which stock or fund would I most like to own? Then view your losers as a source of funding to reduce the amount of cash you would otherwise need to raise. "Thinking about possibilities instead of pain," says Prof. Johnson of Columbia, "will make selling a lot easier." (Remember, too, that once you sell, you can deduct up to $3,000 of your losses from your taxable income.)

Get over it. Robin Hogarth, a management professor at Pompeu Fabra University in Barcelona, advises changing the log-on for your brokerage account to something like "dumpmylosers." Repeatedly typing such a phrase will soften your resistance to selling.

Reprice it. Let's say you bought Citigroup three years ago for 43.50. Divide your original purchase price by 10. Imagining that you paid 4.35 should help you see today's price (around 17) in a new light. If you can't justify why Citigroup is still cheap after quadrupling from what you "paid" for it, you should sell.

Follow your sales. Using an online portfolio tracker, monitor the returns of all the stocks you sell after you sell them. Studying the aftermath of your mistakes will enable you to learn which you sold too soon and which too late. You cannot improve what you do not measure.

[zubychyle]

Originally Posted by hispy99

From The WSJ



Psyching Yourself Up to Let Losers Go

Selling Can Hurt; Here Are Some Ways To Ease the Pain

August 23, 2008; Page B1

When you buy and hold, you don't have to use a death grip.

Of course, you never should sell a stock or fund purely because its price has gone down. If your original reasons for buying turn out to be wrong, however, you should consider selling.

Yet letting go is much easier said than done. Sell a stock or fund at a loss and your pride goes with it, trailing in its wake a stream of regrets about what might have been.


If you've ever found it difficult to let go of a lousy investment, WSJ's personal finance columnist Jason Zweig has some tips for you. He tells Cybele Weisser why it's hard to part ways and what you can do to break that attachment. (Aug. 23)
Individual and professional investors alike struggle with selling. Berkeley finance professor Terrance Odean has found that investors are at least 50% more likely to sell their winners than their losers. Among the money managers surveyed by Cabot Research, a Boston consulting firm, fewer than 30% base their sell decisions on "extensive research." The rest concede they basically sell by the seat of their pants.

All too often, investors are prisoners of the past. Did you buy General Motors last year at 42? Dump it now, around 10, and you abandon all hope that it will recover its former glory. Hold on, however, and you can tell yourself that you weren't wrong; you just haven't yet been proved right.

The longer you've owned a stock and the more you've lost on it, the harder it can be to sell. "Once you start thinking about how much pain a stock has caused you," says Columbia University psychologist Eric Johnson, "that emotion blocks you from thinking about the advantages you could get from selling." You may think you own a stock, but the stock may own you.

Then there's the haunting belief that your portfolio is ruled by a version of Murphy's Law: Whatever can go up will go up, but only after you sell it. Cornell University psychologist Thomas Gilovich explains, "People tell themselves, 'If I sell, and it goes up, I know I'll kick myself,' because it's so easy to imagine having hung on to it instead." Over the years, I've heard dozens of fund managers say they made a stock go up just by selling it.

Fortunately, there are techniques that can take some of the emotion out of selling at a loss.


Heath Hinegardner
Use stop-look orders. I am not a fan of stop-loss orders, which automatically sell you out of a stock when it drops below a preset limit -- and tend to fill both your portfolio, and your broker's pocket, with cash. But I do believe in what I call "stop look" orders: Whenever a stock drops, say, 25% below what you paid, automatically review your original top three reasons for buying to see whether they are still valid. That will prevent you from selling without thinking first.

Don't go far afield. Minimize your risk of future regret by replacing what you sell with something similar. If, for instance, you want to unload Beazer Homes because you underestimated how risky its inventory was, you could move the proceeds into SPDR S&P Homebuilders ETF or iShares Dow Jones U.S. Home Construction Index Fund.

Shop before you drop. Ask yourself: Which stock or fund would I most like to own? Then view your losers as a source of funding to reduce the amount of cash you would otherwise need to raise. "Thinking about possibilities instead of pain," says Prof. Johnson of Columbia, "will make selling a lot easier." (Remember, too, that once you sell, you can deduct up to $3,000 of your losses from your taxable income.)

Get over it. Robin Hogarth, a management professor at Pompeu Fabra University in Barcelona, advises changing the log-on for your brokerage account to something like "dumpmylosers." Repeatedly typing such a phrase will soften your resistance to selling.

Reprice it. Let's say you bought Citigroup three years ago for 43.50. Divide your original purchase price by 10. Imagining that you paid 4.35 should help you see today's price (around 17) in a new light. If you can't justify why Citigroup is still cheap after quadrupling from what you "paid" for it, you should sell.

Follow your sales. Using an online portfolio tracker, monitor the returns of all the stocks you sell after you sell them. Studying the aftermath of your mistakes will enable you to learn which you sold too soon and which too late. You cannot improve what you do not measure.

this is a very useful post especially at this time of the bears, though it's a bit late for me to implement it now.