"Market creates careers, it creates lifestyles, and it creates history," says stock market expert Basant Maheshwari. You may ask, how can one achieve all these through trading? Well, it's a question that every trader is seeking an answer to, except a handful who have actually achieved these three things.
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So what's the answer? In Basant Maheshwari's words, it is "a big stomach as a trader". Yes. According to Maheshwari, author and portfolio manager of BM Wealth Advisors LLP, the success of an investor lies in what he sees as success as a trader.
"It is not a question of success, it is a question of satisfaction and what satisfies you," he says.
"If you are satisfied with Rs 5,000 a day, maybe the stock where you have just sold off thinking you have made your Rs 5,000 for today, if held, could make you Rs 5 crore for the next 5 years or maybe the next 3 years also. So, when you put a mental cap on how much you want to make, you are actually closing yourself to a very long journey," he explained.
To do well in the market, one has to start poor, he says, implying that those who already have it all, don't really need to work hard to achieve something big. "I normally say you have to be financially insulted in life once at least so then you think that 'I have to do something out of it'."
Maheshwari, however, denies the claim that everybody has to be passionate while entering the stock market. He says "greed" comes first for a trader, followed by passion.
"I do not agree. I think you come to the market as a greedy guy who wants to make quick money and everybody starts off like that, at least I started off like that. I wanted to make quick money. Once you start making money, the passion develops and once you have made enough money, then the passion comes in," he recollected.
'Money lies in a new story'
Maheshwari advises investors to never shy away from a stock that is making new highs. According to him, one should avoid the stocks that are making new lows and look at stocks that are making new highs.
"The real pot of gold is in a stock that is making new highs," he says. "A stock that makes new highs is telling you that there is something in the price that you don’t know."
'The biggest money will be made in small caps'
According to Maheshwari, the biggest returns can be made by buying a smallcap, however, a sector leader.
"When we talk about stocks, we will say small caps made money, for example, Eicher Motors, Page Industries, Infosys, Pantaloon Retail, and Sun Pharmaceutical. So, the thesis would be all of them were sector leaders as small caps... Small caps which are not leaders of the sector, normally die prematurely. So, that is my biggest apprehension buying a smallcap.”