Investing, Trading & Speculation in India: Three Sides of a Coin

By Onkareshwar Pandey

Indian Observer Post

New Delhi, Nov 22, 2018: ‘Investing, Trading & Speculation in India’ authored by Mr. Raj Chawla is a new and interesting Book on the financial markets! This is description of the journey on the road of financial markets, journey not only of the author but of most of the masses who are in the financial markets—Journey of all those amidst the ups and down of the market.

“This is a very unusual book on the world of Indian financial markets. In this book, my friend speaks of ‘three sides of a coin’ whereas we normally assume that there are two sides to a coin. I like to think that to my friend the author, Raj Krishna – Chartered Accountant, Banker, Financial Entrepreneur, who has now become a Yogi, too – the third side is the unknowable side of money and finance,” writes Dr. Onkar Marwah I.A.S. (Retd.), who has been a professor of Harward University, Cornell University and been an expert in economic matters in his forward.  

Like the ups and downs of the market the life of author too went into roller coaster at times.  Like Sensex went on climbing with all the ups and down the author too went on climbing the stairs of life towards achieving a goal, goal of helping others and living peaceful life amidst the turbulences and by remaining in the financial markets.  He went on going strong mentally and spiritually with the life passing on while being in the financial markets.

The author has compared financial markets with life. Life is supreme like the markets. Life goes on in spite of you make money or losses it at times, in spite of you make fortune or get ruin. Markets remained, market remains. Markets are like Ganga Maiya and gives access to all who take a dip into it and allow one and all to take Gangajal along with them according to their capacities.

One can carry Gangajal in bottle or in bucket or Jar but can’t think of taking Ganga Maiya to his home. Likewise all are welcome by the markets to take money out their home according to their capabilities and capacities. Anyone who tries to thinks oneself supreme and above the market, wishes to take markets for a ride, gets ruined by the markets as only markets are supreme.

Anything one is doing in life is good provided one is doing it rationally. Investing, trading speculation-all is good. People made fortune with Investing-numbers we can’t count. Warren Buffet made fortune by Investing and by staying invested. Rakesh Jhunjhunwala made money by investing and trading combined. There are many brokerage firms I know who are into trading, arbitrage and are doing well since last many many years and since long time. There are many institutions like Adroit in India and  Goldmansach, Citi group, JP Morgan chase, Morgan Stanley  at  world level, who are employing thousands of traders and in turn traders are making money for themselves as well for the firm.

George Soros is the one who made his fortune by speculating in currencies, bonds and equities. Paul Tudor jones that is running $12 billion hedge fund has made his fortune with speculation.

Investors, traders and speculators are complimentary and supplementary to each others. In case there are only investors in the markets there is going to be no liquidity as everyone will hold the share to get their desired profit. Traders and speculators give liquidity to the markets and help in discovering the price of any share/commodity. They all the three are the vital parts of the market and are part of one coin only. Investor, Trader and Speculators though they are different but we can’t view them separately, they all have to be discussed simultaneously. 

Besides giving an appreciation in the book, for regulatory authority i.e. SEBI who has been plugging loopholes in the system they are finding on continuous basis like it has directed stock exchanges, though bit late to initiate action against 331 listed companies that it suspects are shell companies. The exchanges have also been asked to appoint an independent auditor to conduct audit of these listed companies and if necessary, even conduct forensic audit of these companies to verify its credentials/fundamentals.

The author appreciated the move of Sebi and requested and advices SEBI to go through the list of all the companies which has taken money from the public, got them listed and are suspended by the stock exchanges. He further stated that SEBI should initiate the action against them and find out the reasons of their suspension.

Most of these companies which have been suspended have either suffered business losses or closed their operations or are the companies where promoters have mis-utilised and siphoned off funds they raised from the public. If there are real genuine business losses it is fine, they should be then go for winding up and if the promoters had done anything wrong then they should be punished by the law.

The book is beautifully written in simple understandable terms for all investors and traders be it beginners and experts of the complex stock market. Mr. Chawla is a professional of the market and this book fills a huge gap on the bookshelves for the stock market knowledge.

The book covers all the gambits of the Capital Market.  This is an insight into the stock market, how its investors - retail or institutional operate. It is packed with near real life examples of investors, traders and speculators; about their making the money as well losing it to an extent that they come on road. Financial leverage, Capital gearing and financial engineering have been explained in a very lucid manner. How one can accelerate the process of minting the money with leverages?  More realistically, how one gets closer to disaster with the others’ people money (OPM) has been very well elaborated. 

The book is not just another book. A beautifully written book by Mr Raj Chawla! This book is simple to understand, for all participants of stock markets, traders, investors and speculators alike A very easy and entertaining read which delves into the past about how our stock markets have evolved.