Roller coaster or an aircraft?

 

In A Roller Coaster, the starting point and ending point is the same.

In Aircraft, your starting point is a different city / country than your destination at end of the journey.

 

In A Roller Coaster, your purpose is to have fun in the ups and downs. You don’t aim to reach anywhere other than from where you started.

In an Aircraft, you are not too bothered about the journey. All that matters to you is to reach your destination (preferably in stipulated time).

 

If you sleep in a roller coaster, you miss the fun as the purpose is to enjoy the ups and downs.

In an aircraft, you can sleep, watch movies, listen to music, talk to your co-passenger. In short, do anything other than worrying about the ups and downs of the journey.

 

Now, lets look at this analogy vis-à-vis intraday trading and long term investing.

Intra-day trading is like a roller coaster ride. People don’t really reach anywhere but do it for a kick. They just keep watching the markets and get thrilled about the ups and downs.

 

Long term investing is like boarding an Aircraft. Someone will board an aircraft because he wants to reach a destination. For him, the ups and downs in the journey are immaterial as long as he reaches his destination. So he will start an investment and then not keep worrying about it. As long as a trained pilot (investment manager) is taking care of his flight (investments), he doesn’t bother about the ups and downs.

(Imagine a hyper passenger who keeps disturbing the pilot about how to drive or about the coming obstacles!! It may result in an unwarranted crash )

Its now upto us to decide. Whether we want to reach a destination (retirement) , or we want to ride for fun. Our investment choice and investment behaviour will depend on this decision.

We look forward to your valuable comments and feedback.

The Author Prof. Saurabh Bajaj (BE, MBA, FRM, CFGP) is CEO with Nidhi Investments, Mumbai. He may be contacted on saurabh@nidhiinvestments.com if you have any questions.

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(The views mentioned in the article are personal opinion of the author)

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Published by professorbajaj

Prof. Saurabh Bajaj is an Author, Mentor, Motivational Speaker and Wealth Planner. He has done his MBA from Narsee Monjee Institute of Management Studies (NMIMS) Mumbai, one of the top 10 management institutes in India. He holds the prestigious FRM (Financial Risk Manager) degree awarded by Global Association of Risk Professionals (GARP), USA. Till date, there are less than 15,000 professionals in the world, who have been honored with this degree. He has also been awarded CFGP (Chartered Financial Goal Planner) Certification by AAFM (American Academy of Financial Management). After his MBA, he joined J P Morgan, the second largest Investment Bank in the world. He has worked with J P Morgan as Risk Analyst for more than two years. Prof. Bajaj also holds an Advisory certification awarded by AMFI (Association of Mutual Funds of India). During his stint at Bombay Stock Exchange, he has handled Investment Management and Treasury operations of the BSE Corpus. He has set up an entrepreneurship venture in the field of Wealth Planning and Investment Consulting under the name “Nidhi Investments” and holds the profile of CEO. Prof. Bajaj sits on the Expert Panel of CAClubindia.com and MBAClubindia.com as Investment Expert. He is actively involved in investor education through his blog www.professorbajaj.com which has a readership from 78 Countries all over the world. His articles are also regularly published in caclubindia.com , mbaclubindia.com , totalca.com , charteredclub.com, bankbazaar.com and lawyersclubindia.com . He has been awarded the title of “Best Article Writer” from caclubIndia.com in Jan 2012 and has been selected amongst “Top 5 Technical Writers” from all over India in Feb 2013. He has been invited by various TV Channels like SPIN TV, CNBC TV18, UTV Bloomberg Etc for programs like "Expert Advice" , "What Markets Want ", "Budget Analysis" etc. He has been invited by Several organisations like Lions Club, Rotary Club, Agrawal Welfare Foundation, Rajasthan Mandal, Agroha Vikas Trust, Union MF, UTI MF, Arthamitra Gurukulam, Vidyalankar Institute of Technology etc for expert lecture on "Smart Investing", "Life is A Celebration", "Financial Freedom", "The Digital IFA" etc. He was ranked 8th Merit at All India level NMAT which got him selected for MBA programme at NMIMS, Mumbai. He did his MBA with Capital Markets as his specialisation. Soft Skills has become an inevitable part of every selection process and teaching learning process these days. The students from small towns and tier II cities, in spite of being talented and well equipped with technical skills, are seen struggling in the selection process. This is because of their lack of exposure to these soft skills. Mr. Bajaj has a zeal for training candidates to develop these skills and has been imparting the same on since last two years. This zeal and passion inspired him to set up his own firm called “Knowledge Circle” which aims to train candidates for soft skills. Till date, he has trained more than 5000 participants from over 220 organizations across various fields of soft skills. He has been associated with MSBTE (Maharashtra State Board of Technical Education) to conduct Soft skills training workshop for the faculties of Polytechnic Colleges in Entire Maharashtra (Mumbai Region, Pune Region, Aurangabad Region and Nagpur Region) since last 8 years. He has also been associated with ICAI (Institute of Chartered Accountants of India) for training CA Students on various topics related to Communications skills, Group Discussions etc. He was invited by Fr. Agnel Polytechnic College, Vashi for a motivational workshop for faculties. He was also invited by Vivekanad Polytechnic College for "Communication Skills and Email Etiquette" training for non-teaching staff. Apart from these, he has conducted “Capacity Building Soft Skills workshop for Faculties” at ITI Gunj, ITI Pusad, ITI Digras and ITI Umarkhed. This was the first ever soft skills workshop for faculties in the history of ITI’s in Vidarbha. He was also invited by Shivaji Education Society to conduct similar Soft skills workshops for the faculties and office staff of Shivaji Junior College Pusad, Shivaji High School Pusad, Shivaji Vidyalaya Belora and Shivaji Vidyalaya Bhojla. He has conducted training workshop on “Effective Presentation Skills” for the relationship managers of HDFC Mutual Fund, Andheri Branch, Mumbai. He has also been invited at College of Management and Computer Science, Yavatmal, College of Dairy Technology, Warud, B N College of Engineering, Pusad, B D College of Engineering, Wardha, College of Engineering and Technology, Akola, Dr.N.P.Hirani Institute of Polytechnic, Pusad etc. for the Guest lecture on “Developing Interview Skills”.

9 thoughts on “Roller coaster or an aircraft?

  1. perfect bhaiya!!! reading this article reminds me of the day when u said ki intra-day trading is just for kick’s n its more or less playing with your money whereas invest in long term and let your money be in auto pilot mode…

  2. I hear many people say intra day equity trading is a zero sum game. I.e someone has to lose for someone to gain. Options and futures are a zero sum game but intra day equity is not a zero sum game. Intra day and delivery of stocks are trading in the same day isn’t it ? I mean can a person take delivery of stocks sold by an intra day trader and vice versa ? Yes isna;t it. SO suppose an intra day trader buys 1000 stocks of XYZ company for Rs 1500 from a delivery trader who has bought the shares say 1 month back for Rs 1450, now intra day trader sells the 1500 to 1550 to a delivery buyer who in turn will sell the stocks at 1600 after 2 months. Both of them gained here isn;t it ? Am I right or wrong ?

    1. Your query is good and interesting. However, please understand that the price difference in which the trader operates are very very thin. So taking your example, he might be buying at 1500 and might get a chance to sell at 1507 to 1515 (they usually book profits / loss within a range of 0.5-1% movement).

      Now, for a gain of Rs. 7-15 he is taking an equal downside risk everyday. So this is like a flipping a coin. 50% chances of head and 50% chances of tail. So somedays, he will get +15, other days he will have -15. Net-net, he wont have anything. If at all he manages to pocket some money, the brokerage charges will eat away that as well.

      And even after that, if he manages to earn some small money, will it be worth his time ? A young knowledgeable person, who can use his knowledge for doing something more productive, and earn much better, is wasting his / her time on intra-day trading for some meager profits ?

      Wont it be better that he / she does something more productive and suiting his/ her skills and “invests” for a long term to build a fortune ?

      Purely my personal thoughts. You may or may not agree.

      Regards
      Prof. Saurabh Bajaj

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