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SEBI is right in regulating those offering stock recos on Social Media

SEBI is right in regulating those offering stock recos on Social Media & Emails & SMSs.

SEBI’s latest salvo to brokers is a 29 Page New Compliance Directive issued in September 2016 while to Investment Advisers (IA) is a 30 page Consultation Paper of October 7,2016 for  amendments to IA Regulations 2013 & inviting comments by November 4,2016

This  Consultation Paper plans to ,among several amendments & clarifications,disallow Investment Advisers offering stock recos  on Social Media unless authorised by SEBI.This has been instantly bashed on Social Media itself for this with hash tags like #SEBIkidadagiri & #SEBIGoback

Looks like SEBI is in a Catch 22 ~ Damned if it Did & Damned if it Don’t !

In my Considered View it’s better it Did

The major grouse by those against such strong regulation is impinging on Freedom of Speech & Expression in a Democracy & why is it ok to give advice on TV and not on Social Media & SEBI just wants to get the Fees….but believe me there is a lot of Nonsense going around & make no Nonsense of it !.SEBI is simply endeavouring to stamp it out as much as it can and Fees are incidental to this objective though this is an ammunition for the critics who say that  SEBI operates in creating a Fear Psychosis environment among Capital Market Intermediaries…..let me tell you this….for decades many such Intermediaries had a free untamed and often arrogant run ….often like wolves in pack that run together in nexus that has revealed one scam after another at the cost of retail investor suckers.In the early 1990s SEBI got it’s infancy teeth and as the years rolled by  it’s wisdom teeth….also sadly in the early 1990s lobbying got the Controller of Capital Issues (CCI) body to be abolished allowing Companies to flood the Primary Markets with IPOs at obscene Premiums  in Bullish Times when it was easy to sucker a greedy Investor base.Without Strong Investor Education & Protection base in Place the Investors were left to swim & drown in the Capital Markets Sea full of Sharks

Just penning a few thoughts on the Consultation Paper & may add more as I think them….

  • Wish SEBI had invited me to be on their Committee or even as an Advisor when Planning the Regulations….sure would have added serious & fair value without bias
  • Where there is Money there will be Stink!…and with Sensex nearing 30000 again with Market Cap at Rs 11230121 crs or US $ 1.7 Trillion and expected to climb into 2017 you can imagine the Stink!…call it ‘Nexus’ if you want !….The Stakes are getting Higher in the Game !
  • It has removed some exceptions & rightly got MF Distributors who offer advice too ,IFAs & those where advisory was incidental to business & those utilising automated tools for advisory (robot advisory) within the purview
  • It’s Luck more than Skills that often determines Success & Luck gets Luckier in Bullish Times .Like worms out of  woodwork,advisors proliferate giving specific trading and investment and even speculative equity and derivative calls without much fundamental depth or basis & its easy for small investors to get swayed and seduced and influenced in the lure to make some quick monies in stocks.They often entice with free trials(this is planned to go) & play the 50/50 probability game where those who lose drop out and those who win continue till they lose while referring more suckers
  • SEBI may ban equity advice on Social Media but how would they pursue those who flout this as its difficult to trace those who use Bulk SMS & hide behind Servers & IP walls
  • Thankfully SEBI has not included Training in Capital Markets Services requires Registration.However for incisive Training I have to fundamentally analyse & value listed companies & opine on the Value Vs Share Price.I have been doing this for over 30 years .Can this Opinion for Educating & not Commercial or Investment or Disinvestment Recommendation Purposes in my Training Sessions &  on my blog linked to Social Media too,construe as Advice and which requires SEBI Registration ?…this is the reason many good analysts have stopped Blogging all together.In my view this a great disservice to small retail investors.Where would they get reliable & good reasoning advice from ? from Brokers &  Experts on Bubble TV Stock Channels?.They have their own axe to grind & I daresay are not part of the Human Race in this context!…so far for years I have turned down sponsored & paid blogger invite meets & offers of  guest & paid blogs and advertisements from many finance institutions and individuals,many of them well known to avoid any blog bias and conflict of interest.
  • Does Registration with SEBI guarantee the quality of the Advice of registered advisors and research analysts?~any individual with just a lakh of networth and who can attain at least 60% in the NISM Certification examination can register to be one stating some unverifiable experience in this field
  • Let SEBI Be a Watchdog not a Bloodhound….we are taught this the first thing when studying to be a Chartered Accountant….it cannot be a mindset for “Guilty till proven Innocent”
  • Would this be protecting the vagabond listed companies rather than Investors as no one can air an opinion or view on the company’s doings unless they are registered with SEBI!?….read many of my blogposts on such errant companies & you shall know what I mean…In the past I have fundamentally warned with reasoning ,without charging any fee, on Satyam,Geodesic,Arshiya International,Cranes Software,Karuturi etc that went on do become duds  ….now to do so I may have to seek  SEBI Registration !
  • There is a growing argument that SEBI is just frying the small…Not True….it’s got Sahara too
  • Doctors,Lawyers ,Chartered Accountants all need to be qualified and registered to practice…so should Equity Advisors….self regulation does not work as they will protect their own….we saw this with ICAI in the Satyam Matter & even AMFI in many MF matters.Having said this,just like CA’s are licking their lips on incremental work on GST roll out,Lawyers specialising in SEBI Matters too will increase & flourish as additional litigation work should flow to them
  • SEBI Registration requires a minimum Academic or Professional Qualification~Why should Politicians who stand for Elections not be qualified too !?….ah perhaps that’s what leading to faking degrees!…to register to be an Investment Adviser,one has to pass the Investor Advisers Certification Exams by NISM.To be a designated as a Research Analyst one has to have passed the NISM Research Analyst examination.This is also a requisite for registering with SEBI as a Research Analyst.After 30 years I gave an exam again!~ In July 2016 scored over 90% ,attempting 98 of the 100 questions and getting 92 right! in the online NISM Research Analyst Certification Test…This allows me legally now to be designated as a Research Analyst but I have to seek SEBI Registration to practice as one for Consideration!
  • SEBI should regulate but not over regulate or else there is danger in killing the goose that lays the egg.It must remember that Investment in Equities are inherently risky in that there is no guarantee of any return.While it protects Investors through stringent advisory regulations ,it cannot lay the ground for litigation option for these investors against the advisors and research analysts every time when their specific advice leads to a loss.Stocks are traded in real time and can go up and down.That’s the essence of Equity markets in that there is a Buyer & Seller of a specific stock at a given time and price & Prices are a factor of Liquidity,Sentiment,Momentum,Valuation & Demand & Supply & Vested Interests.Advisors can be pitted against Advisors on specific selections & thus one has to come out on the other side of the road
  • Only 515 registered Investment Advisers registered with SEBI as on September 28, 2016 ? come on !
  • Is it best left to Institutionalise the Markets and force retail investors to route through MFs?
  • SEBI clarifies the distinction between Investment Advisor & Research Analyst and that many register as latter to avoid higher compliance in the former.It now will direct even Research Analysts to make no distinction between Class of Clients in timing and comprehensivness of the Research Report being communicated.They will also have to comply with Chapter III of the Investment Advisers Regulations 2013 in that such advice has to be suitable for the client’s financial position and investment objectives.This would mean engaging in KYC and not  merely offering subscriber research reports
  • Many perceive SEBI  stands for ‘Systematic Elimination of Brokers & Investors’ ! ~ such measures reinforce this perception
  • One of SEBI’s planned measures is to ban all schemes,games,leagues & competition relating to Securities.It does not specify whether any consideration is received or not for such.I understand this was specifically aimed at all those Trading Competitions & Leagues initiated by zero discount broking houses.This was a great legally allowed Scam in itself in my view as the Broking House made lots of Crores while seducing Traders to enroll with Performance Prizes in just a few Crores.One even has legendary Cricketer Kapil Dev as it’s Brand Ambassador ! He better watch out as there are now strict accountability for Celebrities endorsing Products & Services.The trap was they had to trade a minimum number of transactions in a week that too in only the Specified Group of Scrips or else they would not qualify for the Prizes on offer.In my fundamental concept view this went against the very tenets of  making Equity Investments for Wealth Creation over the Long Term as it encouraged Quickies in Trading leading to overtrading just so they achieve the minimum transactions per week.The Mathematics were great for the Broking House !.Imagine this with just 10000 (& there are more)registered traders for such schemes ~ Five Transactions a Week a Must & Rs 20 brokerage/transaction for 52 Weeks is a cool Rs 5.2 crs!~ that’s Rs 10 lakhs Brokerage a week at just Rs 100 per trader !~ Now imagine the Maths at 1 lakh participants!…a whopping Rs 52 crs at Rs One Cr a week….Now Imagine even more than One Lakh Traders participating !…It’s literally & figuratively a Steal for the Broking House
  • For a few years on this Blog I have been successfully offering a TAP GAP Poser to all blog readers without charging any fees and instead awarding the gauravblog hampers to answers I decide are winning ones.One such Poser is an annual one at the end of the year for any participant from the public who reads my blog to suggest up to three specific equity picks that in their view will perform the best in the coming year.I may have to stop this even though there is no consideration involved.Will take SEBI’s guidance on this as their Consultation paper has even defined what construes as ‘Consideration’

As far as SEBI’s September salvo to Brokers for more compliance,it’s been a mixed reaction from brokers….some feel compliance costs will rise on account of more manpower required and new software with high annual maintenance charges & in fact it will be difficult to comply and this would lead to selling out or consolidating with other brokers….dwindling broking fees and rising costs will sound the death knell to small brokers.Who then will serve Retail Investors,if at all they are not scared away again from markets?…while some Brokers feel it will cleanse the system of manipulative & dishonest brokers & even those who cannot cope with servicing clients under stricter compliance.“kachro saaf thayi jashey” is their assertion read more

Falling into the Technical Charting Trap in Stock Markets ! Stop Loss or Stop or Loss!

Why do Most  Market Traders and Speculators always fall into the Technical Charting Trap !?

To be kind to Technical Chartists,it’s probably for the same reason we fundamentalists may fall into a Value Trap even when Investing !

Because we believe !

Yet I’m pained and at a loss to see the game of feeding on each other continues to flourish for decades between Brokers & Technical Chartists & Market Media,especially Stock Channels !….and all seriously with a poker face  that serves to portray  some wisdom and credibility which is really lacking….sadly they believe in what they’re doing and new suckers are born every minute or old ones have short memories…the whole approach is horrendously incorrect as it seduces those who come looking for quick monies in Equities! ………inevitably and it’s always a foregone conclusion that the victim is always the Broker’s Clients who act out zillions of intraday and few days ideas largely fed by Technical Chartists

In Bullish Market one does not needs Skills to make Money…everyone is making Money…An Advisor is tested in Bad & Bearish markets

Yesterday  the Sensex corrected by nearly 500 points & nearly 2% in the day on a meltdown in Chinese Stocks earlier yesterday morning

Stop Loss was triggered across the Trading Platform .

Surely most of the technical chartists must be avoiding client calls ! as till day before they were crooning on stock channels to stay and buy long and looking forward to Sensex & Nifty rising on the basis of Market shrugging off, in their view, the Greece problem after the ‘No’ referendum came in for agreeing to strict IMF Measures for more Loans…they yet come on the Channels justifying yesterday  and Stop Loss being triggered !

This throws up a major Risk,even with Stop Loss in place, in Speculating using the Technical Analysis Approach….Yes,even on a Fundamental Basis stocks may drop,but at least Investors don’t risk losing all principal !

The way I see “Stop Loss” in the Technical Approach is ” Stop or Loss !” 

As a Fundamental Guy, Contrarion at times,expect me to hold such a view on the Technical Analysis Approach.I have always held it

Can only warn those Investing Monies in Equities to know the full risks of Operating & Investment Approaches before indulging in them

For me it’s always been Fundamental as it should be for all

Outperformed Sensex more than twice over in Client Portfolios in two years to give 100%+ gains

Indian Equities have been very kind the last two years…and we feel the momentum will sustain into the longer term

Clients are our best ambassadors..Mumbai,Pune,Hyderabad,Bengaluru,Patiala,Sangli,Indore,Jaipur,Jalandhar….USA,Tanzania,Dubai…they are based all over……Small to Big….IT Professionals in Oracle,Cognizant,CapGemini and others,Top CAs, Leading Doctors ,Well Known Businessmen,Employees in leading Industrial Groups and Top Banks,Professionals in Broking Firms too,Real Estate Developers…across the Spectrum

When we first review the Clients Existing Portfolios we often find two basic flaws staring at us

  1. Monies Invested thinly over way too many Holdings
  2. Improper Stock Selections
Clients reveal that they make these selections based on Ideas,often on the Technical Analysis Approach , expressed on Stock Channels on TV and by Broker recommendations  …very rarely do we find them having done even minimal fundamental analysis on such selections….more importantly often the momentum,sentiment and liquidity factors override the all important valuation factor in the assessment

Sometime ago I had conveyed a Testimonial Received from a Retail Client from Sangli with an Equity Portfolio of under Rs 10 lakhs stating he had never made so much money in his life before in Equity in just two years !…he’s on Personal Plan D for Rs 25000 a year and has introduced an other client too in Plan D

Now have a look at how we have performed on a High Networth Couple’s Equity Portfolio...both began under Personal Plan B for Rs 100000 a year and are now on a customised arrangement with minimum Annual fee at Rs 100000 each

They are both highly educated working Professionals in Mumbai  in their late 50’s with the Wife having a Conservative to Moderate Risk Profile and the Husband having a Moderate to Aggressive Risk Profile…one post graduate daughter who is employed

They had a very simple mandate to give us…Protect our Wealth while Growing it

We have done just that  with Fundamental  Stock Selections and no Derivative Play and  no Insider Trading !

The Portfolios have  outperformed the Sensex & Nifty  more than twice over in just over two years from mid September 2012 to end October 3014 to give over 100% absolute gains before Tax and even after our Fees…we have not even considered hefty Tax Exempt Dividends received in the Portfolio!

Amt in Rs Lacs

From Sept, 2012 to Oct, 2014




Equity Performance




Sensex Performance 51 %   Nifty Performance 49%



Opening Value (14/9/2012)

Closing Value (31/10/2014)


% Up
















Sensex Closing

Nifty Closing


September 14, 2012



October 31, 2013



October 31, 2014



Performance in 1 year (2012-13)



Performance in 1 year (2013-14)



Performance in 2 years



Most of the Gains have been realised and we are now on an asset allocation  rebalancing exercise to protect the wealth made 

Some major reasons that helped us achieve this performance is

  1. Clients unflinching Faith in us and our Fundamental Selections and the timely execution of the advice ,especially agreeing to sell even some big names like Wockhardt,which they were wedded to in their portfolio when they had joined, before it crashed in June 2013 from Rs 2000+ levels to below Rs 1000…in fact way down to below Rs 350 levels in December 2013 before recovering to levels of Rs 750 currently
  2. Good Equity Markets
  3. Concentration of Stocks in Specific Selections at an early stage of their multibagger rise with appropriate exposure and weightage…some of these were NBCC,Firstsource,HOV Services,Tata Sponge,Tata Elxsi,Pennar Ind,VIP,HSIL  & Sterlite Tech

Any Regrets we had in advising on the above?…well yes !..we exited a few earlier and then saw them soar away some more !…but we needed funds to switch to other fundamental ideas and targets had been reached or we thought we could come back later to them …they say once you sell you’ll never re-enter ! …we did not get a chance !…but we did good in other ideas switched to too read more

Technical & Fundamental Guys are on the same Wavelength for once! ~ The MODI Wave !

Technical & Fundamental Guys on the same Wavelength for once !…and it’s not the Dow or Elliot !

With the Sensex zooming  today 2.91% and up 650 points  to 22994 and the Nifty up 2.99% up 199 points to 6859  both the Technical Chartists and the Fundamental Guys are calling it the MODI WAVE !

Do you Speculate ? ~ Here is some chuckling advice from a Commodity Dealer ~ Do Not wear Jeans without Underwear !

Do you Speculate ? ~ Here is some chuckling advice from a Dealer !

This is from a Dealer in Commodities today after Menthol hit upper and lower circuits on trading

“Mentha First Hit 4% UC after that 4% LC

😆 Dont wear Jeans without Underwear
Dont do Trade without Stoploss”

😉 My Interpretation is that Stop Loss means you’ll be wetting only your Underwear ~ without Stop Loss you’ll be wetting your Jeans !

Methinks Whichever ! You’ll be Wetting anyway ! 😥

Wet Wednesday for Menthol !

What will Psychologists say for those who Speculate too much !?

What will Psychologists say for those who Speculate too much in our Markets  !?

Psychologists relate Behaviour to Emotion

So what would Psychologists Say for those who Speculate in our Markets too much ! ?

  1. They are too Liberal with Other People’s Monies !
  2. They cannot be trusted !
  3. They are unreliable !
  4. They are unfaithful !
  5. They need Counselling !
  6. They need to attend De-addiction Clinics !
  7. They are Top of the League in engaging in both the 4 letter words RISK and F–K ! ~ Aces in both !
  8. They believe in more you Speculate the Luckier you will get,especially with a mindset of Double or Quits !
  9. They have a Phd in  Cursing and Foul Language and are Great Mentors for this ! ~ too much of F & O !
  10. All of the above

After All Derivatives are both Deleterious & Delinquent ~ Don’t be under any Delusion otherwise !

Hey ! I’m not saying it ! ~ just speculating what the Psychologists would be saying for those who speculate a lot !

What’s your Guess they would say for those who F & O too much !?

FO perhaps !

Cheers !


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