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The Greatest Game in the World - Views on News from Equitymaster
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The Greatest Game in the World
Oct 14, 2014

What makes a game great to play?

Well, it's pretty much a case of different strokes for different folks. Some may like the physicality involved. Some may like the mental exercise involved. Some may even like the thrill of competition.

But if there's a game that probably everyone would want to play, it would surely be one that offers players the chance to make a lot of money.

If that is the metric you too would go by, then the greatest game in the world can be just one - the stock market.

Why is that so?

For starters, the Indian stock market offers a banquet of over 5,400 listed businesses, one of the largest in the world. Of these, about 4,000 are eligible for regular trading. Indeed, there are businesses of all kinds of shapes and sizes, management strength, business strength, profitability, prospects etc. And the implications of having available such a vast variety on offer are truly amazing.

Every day, when the markets open at 9:15 in the morning, you get offered to become a part owner of any of these businesses. You can be most picky and choosy about what kind of a business you want to become co-owner of, and still expect to find something that satisfies you. Doing the same thing minus the stock market would be next to impossible. Imagine going around your neighbourhood or your city in search for a business in which you can buy a stake. Picture such a scenario in your mind, and you will quickly realize the tremendous amount of advantages you enjoy when doing a similar thing through the Indian stock market.

And your advantages as an investor do not end there.

It gets better. There's a proverbial icing on the cake, and takes the potential advantages you enjoy to a whole new level. What is that? It is that you can name the price you are willing to pay for the business, no matter how shrewd, and still get away with it.

This is seldom possible in the real world. Negotiated transactions between two parties are less volatile, and usually fluctuate in a narrow price band. But in the stock market's world, rife as it is with speculation and silliness, you will often find that even a business with more or less stable economic characteristics can have the most unstable prices. It may trade for example, at Rs 100 in one year, Rs 25 in the next, and Rs 150 in the third.

All you have to decide, after a thorough analysis of the business, is at what price you think the business will make for a shrewd investment. And then patiently wait for the market to offer you that price. Just keep doing this, and only this, over a period of time, and you can make a lot of money in the market.

Taha Merchant

Taha Merchant (Research Analyst), is extremely passionate about investing. Sharpening his approach to stocks for over a decade now, he hates forecasts and stock market chatter, and cherishes independent, logical thinking. Conservative to the bone, his biggest attraction to the market is the opportunities it offers to jack up returns while decreasing risk. Whenever the market crashes, you'll likely find him grinning from ear to ear. Buy cheap and sell dear is his mantra. He's constantly on the prowl for deep bargains. Nothing makes him happier.

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