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Stock market has become a major buzz especially in the IT industry in the recent past. Every other person in every other day has their own view of the Indian stock market and the TV channel hosts lot of talks by so called experts in stock market. Sometimes (almost all times) on seeing these would make me feel that nothing is worth. More about stock advices is at this blog. After following Indian stock market for almost 12 years, I am trying to put my thoughts here.


First, lets have an brief introduction on stock price -

There is nothing called "price" for a stock in the secondary share market. Its only the "last traded price" of a stock that would reflect the value of the stock. Hence the value of the stock is decided by buyers/ sellers of the stock. Whenever there is a demand for a stock, the buyers would be ready to pay more than its current value and the sellers would resist selling at the current value, thus the trading would happen at a higher rate and thereby increaseing the stock value. Reverse of this statement is also true.

Next let us see about the stock market -

The stock market doesnot restrict to the buyer, seller, exchange and the stock. Its a very big system with lot of elements in it. Anything that could impact either lightly OR heavily the value of the stock either immediately OR in the near future OR in the far future can be considered as an element of the system. The impact could be either positive OR negative. Also, Elements could affect the value directly OR combination of certain elements could do so. The permutations and combination of all but not restricted to the above mentioned OR factors would increase the complexity of the system. Thus the system in which the stock trading happens is very big and highly dynamic. We can consider each and every activity happening in the world as an element of this system, even a butterfly flapping its wing could be one. (Then, Imagine how big the system could be!).

Now lets move to the main topic -

The tricky question to win stock market is "What is the demand for a particular stock and what could be its demand in future". If every element remains constant in the system, the demand doesnot change. But as the system is highly dynamic, the demand keeps changing. The demand changes only due to the effect of elements in the market and not anything else. So, to determine the future demand of the stock we need to carve out the most important elements of the system and follow its dynamics. Remember that rumor could also be an element of the stock market, and so is the news channel's junk talks :)

From the above, I hope you can believe that the value of a stock is deterministic, meaning that their future dynamics are fully defined by their initial conditions with no random elements involved. Eventhough it is deterministic it is hardly predictable because of the size of the system and its dynamism. One more element of the system is the effect of our effort to evaluate the system which would become recursive and thus becomes unpredictable.

Thus my only suggestion is to dynamically take few important elements of the system related to few stocks and believe in them to invest on them.

Note: The concepts that we have discussed above can be applied for our life aswell. Everything that happens in our life is deterministic (fate), but can hardly be predicted. Some people like true astrologers try to predict it by considering many elements that can greatly affect the system.

[story] Its long time

Its long time since I wrote a story here. As the time increases, I feel pressurised to write a good story to meet the expectations of the encouragers. So keeping apart my grand stories behind in the queue, here I present a simple short story -


Its long time since I did swiming, I used to swim daily when I was in US. I remember reading that you will never forget swimming after learning even though you donot practice it. So, I am resonably confident that I can swim for my life if needed. I am thinking all these as I was riding a raft all alone in the wide spread Indian Ocean. I couldn't see even a square feet of land in all the directions. Getting tired of driving, I stopped in the middle of the ocean and started dreaming.

I thought about many old sindbad stories as the boat moved along with the wind. A big ship appeared and I was happy to see that as I already decided that I have lost my way. As I waved my hand, the ship came near me. I climbed on to the ship and suddenly my boat vanished. oops! I couldnt believe it. Is it because of the black hole? Though I couldnot assure, I was not into the black hole atleast.

As I moved into the ship, one more big surprise awaited - there was no one in the ship other than me. This reminded me one episode of 'alif laila' (will tell you this episode in a seperate blog). Ok. Now I decided to take the driver seat. Just used my experience of Titanic ride and turned the ship 90 degrees and increased the speed. It was getting dark and also I could observe light flashing from behind. On turning behind I was surprised to see a tall light house flashing the light, I could also witness a big land with lot of tall buildings. Hey, that was the place where I lost my boat and got this ship. now its a big land! Not knowing what to do, I tossed a bhat coin within my heads. I should have got heads, thats why I turned the ship by 180 degrees quickly.

I slowed down the ship as I approached the land. The ship hit the shore and luckily not much of damage. The place looked like a beautiful city. I was walking over the shore and I turned back to see the status of the ship. As I expected the ship was not there :) This land was definitely better than the boat or the ship. Though all the buildings were lighted, I could hardly find anyone like me (humans). Actually there were no moving objects. I went inside a building and had a nice dinner which was ready on the dining table. Then slept over the soft water bed.

Next morning, I got up and opened the bedroom window. It was a nice warm day and I could see the clear beach. Excited with the view, I ran out for a bath into the sea. Suddenly the intensity of the waves increased for a few moment and I am not able to touch the ground. Cool, I am doing a good swimming!

Now my mind told me that there will not be any city behind me. I turned around to find that I was partially correct. I could not witness the beautiful city but a very beautiful city with lot of people around. As I waved my hands, a fisherman came to my rescue. After landing I found that it was the chennai marina beach. After relaxing the day in chennai, I took the train to bangalore.
When I explained this to my friend, he told, "Its definetly the blackhole. You are (un)lucky to comeback!"