At this juncture in my life, fueled by an insatiable curiosity, I find myself drawn towards unexplored territories. Having navigated through marketing, sales, and various entrepreneurial ventures, I now stand in a financially liberated position. However, the current quest extends beyond accumulating wealth; it’s about sharing the knowledge acquired along the journey to inspire others to become self-made.
One realm that has always intrigued me is the share market. Despite having a theoretical understanding and making some investment moves, I never delved into active trading. Oddly, my journey into the share market was hindered during my upbringing. My parents, particularly my mother, dissuaded me from venturing into this domain, perceiving it as a risky and unpredictable field. Interestingly, their cautionary stance was more pronounced compared to other endeavors I pursued, such as network marketing.
Recent events brought this aversion to the forefront. Engaged in a trading conversation with a friend, my mother unexpectedly intervened, demanding the laptop and expressing her disapproval of my involvement in the share market. This incident shed light on the deep-seated taboo surrounding the share market in my family.
The roots of this aversion trace back to a significant loss my father experienced in MCX commodities a few years ago, amounting to ₹10 lakhs in a single day. The financial setback took a toll on him, leading to a period of mental distress. This incident left an indelible mark on my family’s perception of the share market, rendering it a forbidden territory.
Despite the reservations ingrained in my family’s mindset, my curiosity and determination to explore the share market remain undeterred. This push into the uncharted is not just a personal exploration but an opportunity to challenge stereotypes and demystify the complexities of the share market. It’s a journey to unravel the intricacies, learn from experiences, and perhaps reshape perceptions around this often misunderstood financial landscape.
In retrospect, the share market, for my family, was a colossal blunder, a financial misstep that left an indelible mark. My father’s significant loss in MCX commodities led to a passionate aversion towards the share market, branding it as nothing more than a form of gambling. The lack of understanding and a substantial financial setback colored the family’s perception, prompting them to discourage any involvement in the share market vigorously.
However, with financial freedom attained through various ventures, I find myself drawn to explore the very realm that was deemed taboo – the share market. The prevalent notion that the share market is akin to gambling is widespread, even echoed by influential figures like Rakesh Jhunjhunwala. Yet, as I embark on this journey, my intent is to unravel the complexities, debunk myths, and provide a simplified understanding of the share market.
The essence lies in distinguishing between speculation and informed investment. Gambling, as exemplified by my father’s experience, involves blind bets without a fundamental understanding of the market dynamics. In contrast, the share market, at its core, revolves around businesses, ownership, and the exchange of value.
My exploration aims to demystify the share market by simplifying its intricacies. Starting with the basics, I emphasize that shares represent ownership in a company. Understanding the dynamics between shareholders and directors is pivotal. A director without company shares is a servant, whereas a shareholder holds a stake in the ownership. The crux is not who directs the company but who owns shares in it.
Moreover, the distinction between private and public limited companies plays a crucial role. In a private limited company, investment cannot be directly received, while in a public limited company, individuals can invest money and receive shares in return. This fundamental insight challenges the perception of the share market as mere speculation, highlighting its connection to legitimate business transactions.
The foundation of understanding the share market rests on comprehending its intricate processes. To simplify the journey, let’s break down the essence of how companies enter the public domain, get listed on stock exchanges, and eventually engage in trading.
A company, desiring expansion, might seek funding by becoming a public limited entity. This transformation involves a meticulous process, often overseen by chartered accountants, as the company transitions from a private to a public limited one. The motive behind this move is to access capital from the public, and the next step involves getting listed on stock exchanges.
In India, two prominent stock exchanges, BSE (Bombay Stock Exchange) and NSE (National Stock Exchange), serve as the platforms for companies to list their shares. The listing enables companies to exchange shares with interested investors, providing a means to raise capital for future endeavors.
Now, the fundamental question arises: why would a company go public, and what happens when it does? Imagine you own a successful restaurant generating a profit of ₹100,000. To expand to a chain of 100 restaurants, significant capital is required. This is where the share market comes into play. By becoming a public limited company and listing on a stock exchange, the company can offer shares to the public in exchange for investment.
Here’s where the crux lies. The share market is not inherently flawed; it’s the nuances of how stocks are perceived and traded that create misconceptions. The process involves a fair exchange of shares for capital, empowering companies to fulfill ambitious visions. So far, there seems to be no inherent flaw or gambling element.
However, the potential for misinterpretation arises when stock prices are determined not by the company’s intrinsic value but by bidding in the market. This bidding is influenced by people’s perceptions of a stock’s worth, often leading to scenarios where a share’s market value surpasses its initial offering price.
The true challenge lies in distinguishing between genuine investments and speculative trading. The latter comes into play when individuals engage in buying and selling shares purely for short-term gains, often overlooking the fundamental analysis of a company’s performance.
In essence, owning shares of a well-performing company is considered a wise investment. However, the realm of trading, driven by market sentiments and speculation, can deviate into risky territory.
In the journey of demystifying the share market, it’s essential to debunk persistent myths that label it as mere gambling. The essence lies in understanding the profound impact of the share market on the economy, as it is intricately woven into the fabric of the nation’s financial landscape.
Contrary to the notion propagated by skeptics, the share market is not a realm of chance but a thriving ecosystem of businesses. As our blogger pushes against the taboo surrounding the market, he unveils the critical role it plays in the nation’s economic structure. From banks investing money in the share market to mutual funds channeling funds into businesses, the share market emerges as the heartbeat of the economy.
The assertion that the share market is gambling faces rigorous scrutiny. In his compelling narrative, the key distinction lies in acquiring knowledge. The share market metamorphoses from a gamble into a strategic business venture when individuals invest with a profound understanding of the market’s dynamics.
A pivotal revelation surfaces: investing in fundamentally robust companies renders the share market 100% safe. This safety net extends to those adopting a long-term investment approach, shattering the myth that the market is a dangerous gamble.