From 7,000-mark, the sentiment turned distinctly firm following good liquidity that played a significant role to determine the market direction and Sensex crossed 8,000-mark in just 55 trading sessions at 8,060.26 on September 8, 2005 and 54 trading days to cross 9,000-mark at 9,005.63 on November 28, 2005.
From 9K to 10K, it took just 48 trading sessions. The index crossed 10,000-mark on February 6, 2006 at 10,002.83.
From 10K to 11K, it only took 29 trading sessions.
This is the kind of sentiment that makes people think: WOW! And when it drops 400 points in one day, everyone is unhappy and calls it a scam and all that.
This is absolutely ridiculous. What's the point of noting that there is more volatility in the market in terms of points now? Everyone needs to understand this: The stock market is all about percentages. Not about points. All movements are in percentages, not stock values.
Let me give you an example. Let's say Sunil invests Rs. 10,000 and gets a profit of Rs. 1,000, and Rajeev invests Rs. 50,000 and gets the same, Rs. 1,000 profit.
They both earn the same amount, but Sunil's gain is 10% while Rajeev's is 2%. Meaning, Sunil's gains are superior; if Rajeev had invested in the same way as Sunil, he would have earned Rs. 5,000!
Similarly, all gains in the stock market are valued by percentages, not by values, or points. That means a stock like Reliance moving from Rs.1,000 to Rs.1,100 is less valuable (to an investor) than Bata moving from Rs. 240 to Rs. 310.So a sensex will move faster between 11,000 and 12,000 than it did between 7,000 and 8,000. Obviously, since the percentages movement is only 9% in the former and 14% in the latter! And more importantly, a fall of 100 points is only 1% (today). That is very normal - when the Sensex was 6,000 we would see a 60 point rise or dip daily, and that is also 1%.
Concentrate on percentages, not on absolute numbers. All gains and losses are percentages, nothing more.
Matthew Easow – Should we trust him?
Categories: Commentary
SEBI had, in it's order dated 19/01/2006, noted that Matthew Easow had given certain recommendations on moneycontrol.com and then, had done exactly the OPPOSITE for himself!
For instance, he recommended "Kalpana Industries" on September 13, 2005 at Rs. 78.9. He had bought a net of 28,644 shares of Kalpana Industries between 2nd and 12th September, 2005. Then, between 13th and 19th September 2005, Matthew Easow SOLD 25200 shares of this company!
Note: Kalpana Industries is now trading at around Rs. 40.5.
He has also done this with CESC, Ahlcon Parent, and Albert David Ltd.
SEBI then had ordered Matthew Easow to cease and desist from giving any recommendations about any investment in the securities market in any public media which amounts to violation of regulation 4(2)(f) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003.
This means Matthew Easow is not allowed to give recommendations. See the SEBI Order and Press Release.
The order further says, "moneycontrol.com being a website with a wide reach, has a responsibility cast on them for exercising due care and diligence to ensure that persons with proven credentials of giving fair and truthful information and analysis alone are allowed to give advise on the portal so that the portal is not misused by persons giving advice purely on considerations of personal gains"
I hope that MoneyControl.com will remove Matthew Easow from it's panel immediately, and not restore him until the order is taken back or rescinded.
Meanwhile, as investors, you must note that Mr. Easow's recommendations may have an element of personal gain in them, and therefore, he is not to be trusted.
Posted in Commentary