It is eye-opening write-up. It tells us that; even if intentions are good and legislation in place, still beneficiary may be deprived of a benefit due to misinterpretation of things and complexities of a process.
In year 2015, as people tried to flee to better lands amongst middle eastern Syrin war. As many as 4000 refugees drowned in meditarranean sea; as they tried to cross it with inflatable boats.
They paid loafty money to mediators and found themselves with their families; in the middle of no where.
This happened in spite of Geneva convention aggrement; which enables refugees from Syria to seek asylum in Europe.
But, when people tried to reach airports they faced effects of anti illegal immigrants directive, which was designed to stop illegal immigrants. This directive required airlines company to ship back illegal immigrant for free.
Hence, on airport counter every asylum seeker was seen as illegal immigrant. Hence Geneva convention failed to help them due unclear and complex process.
Why didn’t they use good boats.
Because, there is EU policy to confiscate illegal boats. Hence, if people used boats they will be captured and gone
Hence, desperate people used inflatable boats which are very unstable and risky.
Hence inspite of remedy (permission of asylum under Geneva convention); it was really hard for refugees to reach Europe to seek asylum.
Sorry, for the heading of the blog. This was to get your kind attention.
This blog is about stocks, also known as shares, with particular focus on Indian general masses, who want to enter and explore share market.
It is simplified basic knowledge about share markets.
Babies will not need it. But their dads will need it, to secure their future. Hence in a way this blog is for those babies too; who are going to discover in future, that their daddy knew next to nothing about economics and investing.
As uncertainty, looms in the economy with unpredictable future, you need to have knowledge about all the spheres of the investing.
If you have money, it should grow with time and this can be done by wise investing.
So let’s clear our basic doubts about shares.
First let’s clear biggest confusion according to my analysis. It is terminology which blogs use to explain shares. It is confusing.
We must know that ;
equity = share = stock = security
First you should know this fact that they call shares with so many names. As different sources write different names, it can be daunting. They all are interchangeable.
We will use term share in this blog, to avoid confusion.
“Share is a physical or digital certificate that gives buyer partial ownership of a business.”
Let’s imagine a business is worth 100 rupees. Its owner divides this into 100 shares each worth 1 rupee.
Now, he puts them in stock market ( stock exchange) from where people can buy or sell these shares.
So, if someone buys 40 shares of this company, he becomes 40% owner of the company. Any one who invests 1 rupee, he becomes 1% owner.
So shares help businesses in raising money for their operations.
His investments are now dependent on the performance of the business. If it grows, he earns money and if business falters, he looses money.
He can buy or sell shares anytime on the stock exchanges.
There are two main stock exchanges in India –
1. The Bombay stock exchange ( BSE)
2. The National Stock exchange ( NSE).
Companies are listed on stock exchange. And only listed companies can sell their stock in stock market.
These are regulated by SEBI ( Securities and exchange board of India); which is a statutory body responsible for fair working of the exchanges.
It penalises for wrong practices and frauds and formulates rules and regulations for working of stock exchanges.
Hence, one can invest money in stock market without worrying about frauds or cheating, as far as stock companies are concerned. Whole system runs on trust.
These days stocks are available in digital format and can be easily purchased or sold using apps like zerodha, Angelbroking etc. Whole process is very simple.
You need to make a demat account with regulator and after kyc verification (know your customer) verification; you can purchase and sell from comfort of your home.
How does initial price of a stock is decided?
It is random value in decimels decided by the company promoters. After that performance of the business and demand and supply and perceptions about future decide the price of that stock.
Total number of stocks issued is called total shares outstanding.
If we multiply number of shares issued with the price of one share, we get market capitalisation ( market cap) of the company.
All companies listed on stock exchange are divided into groups based on market cap.
1. Large cap –
Top 100 companies in terms of their market capitalisation. These are safer and successful companies. Examples in India are TCS, HDFC, L and T, wipro etc.
2. Mid cap –
101-250 in list of companies based on market capitalisation. Examples are pfizer, emami, bayer etc.
3. Small cap –
Above 250. These are generally lesser known volatile companies.
Now based on performance of the company, its management, brand value, public sentiments and many external factors like war, disaster, competition, fads;there are fluctuations in the price of stock in the market on day to day basis.
But generally in long term ( 10-15 years ); if business of the company is sound, it results in rise in stock price over time in spite of the short term wide fluctuations. Hence stock market investment is for long term.
If you don’t have 10-20 years of time to let your money grow, it can be less fruitful mode of investment.
What happens when stock prizes rises?
Company can give you part of the profit, that is called dividend.
Or it may hold extra cash for liquidity and expansion.
It may invest gains for further expansion of the business.
Why the people worried about Sensex rising or falling. What is this sensex?
Sensex is a metric using which we can guess overall performance of the economy.
We can’t check each and every stock daily. So we have devised a simple measurement number. It simplifies monitoring.
Sensex and nifty are such numbers. They are stock market indices. They tell the direction of the market, whether towards positive or negative.
Sensex belongs to Bombay stock exchange. It is made up of 31 hand picked companies, which are picked by private firms.
For example, sensex companies are picked by Sand P global. Companies are not fixed. Based on performance new companies enter and go.
Nifty belongs to the national stock exchange. It is made up of 50 stock. Hence, it is called Nifty 50.
Hence, next time you see a news anchor worried about fall in sensex, you will know that, she is talking about the performance of choosen list of companies on that day. Their performance is averaged based on their size and sector.
Few more terms that you hear everyday.
Bull market – when the market is on the rise like horns of a bull.
Bear market – when market is on fall like a crouching bear.
Blue chip companies- companies which are reliable performers.
What is initial public offering?
IPO – Initial public offering –
Each company starts as a small privately owned company. With Time it grows and it needs more money to expand. It then lists itself on Stock exchange, so that anyone in public can buy its shares as IPO. It raises a lot of money for the company.
A board of governors is appointed to oversee working of the company. Its data and performance are public. It is responsible to its shareholders for maintaining good performance.
Hence, IPO is the initial offering stock by a private company, which enlists itself on the stock exchange so that its stock can be bought and sold by general public.
This blog is aimed to provide introduction to the share market to Indian readers.
Personal finance is such a sticky thing. After you grow out if childhood, you come to know about this money thing. Now your dad stops fulfilling your unreasonable demands and starts to expect, that you are going to earn some money now.
Eighteen years of pizza, burgers and your TV recharges needs to be billed to you from that moment.
You were sent to school to learn how to earn. And you scratch your head that school completely forgot to teach you, how to earn money.
You wonder how will arithmetic and algebra and mediveal history, will get food on your plate.
You see towards your friends and they too are under axe of their parents, to earn their living.
In this post let’s discuss few basic concepts, that help in managing personal finance in current scenario.
And that’s the time when one needs to learn about personal finance. Earlier you start, better it is for your lazy body.
Let’s get this stuff.
1. Don’t compare with others. Everyone is running different race with different rules and different rewards. Choose your race correctly, that suits your mindset, skills and personality.
2. Nothing is free. Yes, that free voucher, with that costly phone is indirectly to be paid by you. And, you must also understand that your time and attention are also a form of capital that Marketing people are in pursuit.
3. People, beliefs and culture change with time. So don’t keep your ideas rigid. It was risky to board in car of a stranger, but now it’s fashionable due to UBER.
4. Always leave some room for errors, unexpected events and unknown forces. Don’t be a overconfident. Don’t board Titanic without lifeboats.
5. Past cannot predict future. Experts cannot predict future. No one predicted 2008 or 9/11 or covid.
6. Negatively gets more focus and attention. Try to go beyond all those negative vibes floating in sea of social media.
7. Personal finance is a relatively untouched part of the conventional knowledge. So, start learning about it.
8. Set ceiling of your satisfaction. Don’t keep running. Rest, relax and enjoy. Afterall, that’s why you work.
9. Use power of the compounding. And be aware that it takes time. There are millions of articles and videos that explain compounding to you.
10. Getting rich is easier than staying rich. All those sports stars who retired young can easily slip into poverty.
11. You can do average things and fail multiple times, but you can still become rich.
12. Financial freedom is the biggest success possible.
13. Be rich. Don’t focus on looking rich. Be humble and save money.
14. Dollors saved are equal to dollors earned in value.
15. Go for cash flow instead of capital gains. If you can generate positive cashflow other things will take care of themselves.
16. Try to build assets which put money in your pocket, even when you are not working. That elusive thing is called passive income.
17. Whenever you calculate your gains always keep inflation in mind. It reduces purchasing value of your money. This 100 rupee note will be less useful five years from now.
18. Don’t try to be cheap. Try to be useful to others. Don’t die fighting for pennies. Keep your heart big and vision broad. Don’t be 11 th fruit seller in a row on roadside. Enter business with substantial returns for your efforts.
I am not a big fan of leadership books. They are all little bit skewed in their content. They are either very superficial or they paint too idealistic picture of a leader.
As mankind has progressed, rules have changed. We need new type of leadership for future businesses and organisations. Good old paternistic bosses, who wagged their tongue as a whiplash are useless in a generation of individualism.
Leaders of present times need to carry a smile and graditude on their faces and every employee commands a certain degree of respect and freedom. Time and again different studies have confirmed that happy employees lead to happy customers and hence a happy balancesheet for the company.
Few perks and freedom to feel control over their job; leads to more productive workers. This feeling of control erodes away any feeling of insecurity that is prevelent in present job system, where health benefits and pensions are literally absent.
Employees in small teams who trust each other and are free of interteam competition; is a dream of every manager. After 1980, individualism became an accepted theory and fences started appearing between people. This created a dehumanised society; which focuses on profit before environment or poor people.
Rich pay less taxes. They find all possible loopholes to evade taxes. This leads to ever increasing inequality and rich finally end up in such a strong position that they lobby strongly against any change in tax laws.
Self employed and salaried people pay significant part of their income in taxes; as they do not posses knowledge and resources to use tax system loopholes.
So at the end of the day, employee feels good if he had a decent treatment in office. A respecting boss and cordial working environment that permits few human mistakes will make them forget all the odds stacked against them.
So we need leaders who have respectful way of getting things done by their workers and who are ready to handover some control to their workers; so that they feel that they are driving a part of this company.
We need more of oxytocin surge; which leads to feeling of friendship and generosity and lesser levels of cortisol.