Story of a Friend of mine whose Portfolio went to Almost-Zero Last Week!

Then came the Phone Call, and the News:

Yesterday, out of nowhere I got a call from a friend of mine who I had lost touch with for quite some time. He seemed quite worried and was asking me if I had any contact in a particular Brokerage Firm (Which I will not name because they are not at fault in this story.) I understood something must have deeply gone wrong from his voice. I calmed him down and tried to understand from him what was going on. He said, “two of my stocks have vanished from my portfolio display page of the brokerage account. What should I DO?” I asked him “what are the stock names?” He answered, “One is Puzzle. It is not showing in the demat. It has got delisted I know, but what to do about it now?” I had not heard about any such stock so I searched. He was obviously right about the name, I only heard it wrongly as “Puzzle”. The stock was Pazel International. I found out the stock was suspended due to non-disclosure/non-compliance. Nothing much could be done about it! Once such a thing happens one has to take that investment as a write-off! (Gone to Zero.)

A 50-50 Scenario:

So I told Him about this. He was saddened but gathered himself back which I thought was natural because he must have major investments in proper businesses. Then he added, “Another stock named 3i Infotech, I had bought 10X stocks of it but it was showing only X (One tenth of his holdings). And recently it is not showing at all!! What is going on please explain!” I had info about this company. This company was doing better in terms of fundamentals when I checked six months back but the high proportion of banker holding and little to no promoter holding was red flag which made the stock risky to the extent that I would recommend very limited exposure to it! They were restructuring and capital was to shrink by 90% which means an investor holding 100 shares will now be left with 10 shares. That in turn meant that share price had to increase 10 times for the holdings to break even. I saw the fundamentals that it is possible that another Ruchi Soya stunt can be pulled off by 3i infotech, but chances had to be weighed in and for now nothing was certain. I thought to my self ‘ well if the stock grows 50 times then the holding go up 5 times which is possible. many of my stocks have done the same. But this is a stock where allocation should be only that much which you are okay to loose.’ So all the details were communicated. Of course he had little information while he invested which is the sad scenario Us investors. But here we had some hope!

Then came, An absolute Shock!

Then I asked him not to worry and told him to share all his holdings if he felt like so that I could share my complete opinion on what to keep, how much allocation etc. and stabilize his investment-to-cash proportion according to the current markets. This I do for every person who approaches me. (NO charges though!) But it was after this proposal of mine that I got the shock! He abrasively uttered – “I had only these two stocks majorly speaking.” I realized why he was so irate and what he was going through. But now nothing much could be done other than wait!

A Baffling Yet True Situation of Us Investors:

When I asked this friend who was his “Portfolio Advisor” he said – “A good friend of mine.” In India there is a saying, “Agar Free mein hai to Zahar bhi pee lenge.” Which means – “If it is for free we will drink poison too!” May be it is the colonial hangover of low resources & prudence! Or “Jugaad” mindset. I am not sure. But the fact is despite there being so many affordable and even FREE resources to get your investments done in a healthy way, yet people prefer either “intraday make 2000 bucks” or “friend told me” or “neighbor bought it” tips!!! Simply because they have to spend neither money nor time!!! But things don’t work that way. Brokerages give out dozens of calls everyday and all them them taken indiscriminately will not be good for you. And the terminal guy who is posing as the “advisor” many times does not know a thing about finance but he cant tell you that because then you will stop listening to him. But if you trade he will make money irrespective of you loosing or gaining. Stock market has grown 20 times in last 20 years. If we are not able to make money from it who do You think needs to change? Worry-Less Experience of Investing in Stock Markets will surely come once we take responsible action!

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