Book Summary: Bulls, Bears and Other Beasts

This book is a story of the Indian stock market written by Santosh Nair

Here, I have written key learnings/points from this book

In the auction, the writer was putting a deal with the knowledge of a broker who will be ready to buy shares from him, that gives surety to the writer
Earlier, big speculators earning money by entering their people in the company and getting insider information about that company, but in 1994, NSE came as an exchange, and illegal activities like insider information, front running would be in control

Jobber is a professional speculator who buys and sell securities for himself
Jobber is the one who provides liquidity in the market and they earn a bid-ask spread
One more category of traders is there in the market called ‘robbers’, who are dishonest personalities, they anyhow want profit.

The company’s promoter worried when a single or group of traders started short-selling his company’s share, but he shouldn’t worry if there is nothing wrong with his company

Harshad Mehta was bullish on 3 stocks – BPL, Videocon, and Sterlite
The whole market was going down except for these 3 stocks, who were increasing due to relentless purchase by Big Bull and his syndicate
But the faster the climb, the harder the fall theory executed on that 3 stocks and fell suddenly
There were 3 theories as a reason for the decrease in price
1st was reached out at one level, Harshad also was not able to buy more and wanted to exit that stock, so the price crashed
2nd was the bear cartel had managed to convince some fund manager to sell the stake in that 3 stocks
3rd was Harshad’s rivals managed to smuggle out shares

In November, SEBI introduced the company act, included clauses for buyback of shares, and market sentiment boost
Sometimes in the slow-moving market, one sentiment booster can lead the market track, which happened when there was the 9/11 attack on the world trade center’s twin towers, in that slow-moving situation, the market got an unexpected sentiment booster by having Maruti Udyog’s IPO, which got an enthusiastic response though the emotionally hurt market and again investing take boost up

At one point in time, the prices were constantly rising, all people were making good money that time, but according to the writer, ease of making money is the indicator of a bubble burst
One sure sign of trouble is when businessmen and traders outside the stock market start heading in the stock market considering this is the place to make good money, nothing wrong till now, but then they start ignoring their business which calls trouble

In 2009, Satyam computer’s promoter B. Ramalinga Raju disclosed that he was cooking the company’s balance sheet, they were showing unrealistic revenues and paying real tax, which put him in the worst situation and suffers from a huge loss

Many promoters hire people to raise their company’s share price instead of focusing on their core business. And that was a recipe for disaster

According to the writer, conventional market wisdom has it that a blockbuster IPO usually signals the peal of the bull run. This was proved in 2008 with Reliance Power’s IPO and would turn out to be true with Coal India IPO

Many companies started issuing FCCB – Foreign Currency Convertible Bond, which has a feature to issue it in another country, and it is convertible into equity shares. Companies give conversion rate 15% to 20% higher than the current market price, so they were relaxed as no one will ask for principal, but when their company’s share price falls, all investors want their principal back and the company don’t have money to repay

Published by Aakash and Meet

I am Aakash Raotole I am currently doing Bcom from Dr. Patel and Rb Patel commerce college I am currently studying at finnacle investment academy Recently done distance internship with windrose capital, Pune - for a period of 14 weeks I am Meet Bhatt Completed HSC in commerce Now studying finbridge program at finnacle investment academy and Bcom externals I had completed CFA institute's investment foundation course and distance internship with Windrose capital, Pune - for a period of 14 weeks

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