Sunday, December 2, 2007

The stock market and I

“How do you make a small fortune on the stock market?" goes the old saying, "You have to start with a large fortune”

Stocks and stock markets are a sealed book to me. Some stocks go up. Some go down. Some, like the one’s I buy, go down so fast that you heave a sigh of relief when they reach zero. You see, they can’t go lower.

Still, there was a time when I was a big wheeler dealer on the stock market, way back in the late eighties and the early nineties. This was the Harshad Mehta Bull Market. The said Mehta was known as "the big bull" and was responsible for a heady time circa 1990. Every one regardless of age, sex and financial standing had become a gambler. Could one of my pronounced goofiness be far behind?

Back then, the stock market used to operate on the “outcry” system, where trades were verbal, noted down in little trade books and then settled at the end of the day. Not a computer in sight.

There would be a jobber who would give two way quotes for the stocks he was dealing in, adjusting prices according to demand and supply. For example, if there were too many buyers and too few sellers, he would keep upping the price till there was a match. Sometimes, if he upped the price too much, the buyers would go away, in which case he would have to lower the price.

This used to keep happening continuously and the whole thing had a buzz to it. Very audible. Only card-holding members of the stock exchange could go in and trade. We used to trade through a sub-broker who had a card. This guy was a good friend of ours and while he was a trifle prone to flinging food around when under the influence of alcohol, during trading hours he was the picture of composure.

And composure was sorely needed because when the markets were in turmoil, there could be a lot of shirt grabbing and vest pulling that would go on in the ring. He would regularly emerge from the trading floor with only a small percentage of his clothing intact, often to our great amusement. We once discovered, for example, that he had worn his wife’s underwear to work because he couldn’t find his own (he said), a fact that was revealed when he tragically lost his pant buttons in the process of purchasing shares of ACC.

The market those days operated on “tips”. The moves were made by the great Harshad Mehta and the rest of the herd tried to follow as nimbly and rapidly as possible. Everyone had a tip. Mine was “Radhakrishna Cement”. Someone, very possible the elevator boy in office, had told me about it and my information was to buy it as surreptitiously as possible so as not to tip off the jobber in the stock, because he would immediately up the prices and try to corner the stock himself.

The ruling price was 7 rupees a share. I formed a syndicate with three other friends and raised a corpus of the then incredibly large sum of 50,000 rupees. Five minutes before trading, we were at the exchange, striding purposefully to the entrance of the ring which was humming with activity. It took a minute to locate our broker friend and the need for discretion was explained to him. We told him to buy shares not more than 500 at a time. Play it cool, we told him, because this was BIG. He went in.

Hearts pounding, the four of us stood outside the ring. This was the pre-cell-phone-o-zoic era and there was nothing we would do but bite our nails. After about an hour, he came out for a smoke break. We rushed towards him. He told us that he was a little doubtful about the quality of the scrip. Apparently he went to the jobber for Radhakrishna Cement and asked for a quote. Selling seven rupees. Give me 500, he said. After about 15 minutes he went to him again and asked for a quote. Selling seven rupees. Give me 500, he said.
When he went for the third time, the jobber told him to take the whole damned company for seven rupees and stop hassling him. This should have told us something, but as the poet said, we were one and twenty and proud as peacocks. Do your job, we told him, and leave the thinking to us.

Well, we got our 50,000 worth of Radhakrishna shares and while I would not write it off as a dud investment, miracles happen, our little syndicate has often wished they had been printed on softer and more absorbent paper.

But we never fell out, the members of our syndicate, in spite of one dud investment after another. The fun of the whole thing kept our camaraderie up. Only after I was respectably married did my wife point out that I could do the whole thing faster by just burning up currency notes. And the little old helpmeet was right. What with one thing and another, the whole stockmarket experience began to lose its magnetism. Other than the occasional IPO or mutual fund, I ceased my endeavours to rock the economy.

Which is why the Ambani brothers are where they are.


Ok said...


That was really funny. I am currently contemplating investing on stocks.


Anonymous said...

And jus read some of yuor other ones. You are really really funny! And you dont look 42.


Bhel Puri & Seekh Kabab said...

LOL @ "often wished they had been printed on softer and more absorbent paper."
- Alas these days, at least in the US, most transactions are electronic and you never see paper stock certificates. So even that one remaining use is not there. :D


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narendra shenoy said...

@ok - You have a large fortune? ;-)

@bpsk - India is totally paperless too, alas and alack

@crescenet - What with one thing and another, I could never find the time to attend those Learn Portuguese in Thirty Days classes, but I have no doubt what you have written is dripping with wit and wisdom. Thanks anyway.

B K Hiriyur said...

psst! Put all your dough on HDFC if you want a quick and easy fortune...and shhhh! use the vault - keep this tip to yourself. You never heard this from me.

Maddy said...

playing the market is a class act meant for people who never took any classes. pure instinct - that is what the bombay boys used to say. then it became a science in itself with all kinds of programs etc...Harshad bhai's techniques were different I guess..

nevertheless, narendra - that was how the early 90's duped a lot of us.

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It's a love - hate relationship :)

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:) there's a lot of truth to that saying.