Me and My Stock Market Habit

I could have been a racing driver

I grew up in a stock exchange oriented house. The family owned a large furniture business and they floated a company on the exchange. I don’t remember much of those days but there were always uncles and older cousins in deep discussions about the ‘market.’ I think I thought they were into vegetables. One day grandfather patiently explained what it was all about. The part of his talk I remember to this day was when he said “I will never disappoint my shareholders. As soon as the shares drop below their issue price, I buy them to keep the price up.” That made sense to me and opened all sorts of possibilities.

I was in business

I found a friend whose father was a broker and allowed his son to ‘dabble’ and I was in business. Whenever I saw the price dip below the datum level, I would hastily borrow all the money I could lay my hands on – Payday Loans and Personal Loans weren’t in business in those days – and buy shares through my friend. I had to pay him off, of course, but as soon as grandfather moved in to correct things, I made enough money for everyone.

Things change

Then grandfather departed and things changed. But I was hooked on the exchange and started reading the papers and looking for clues and tips. I also started looking at things around me and thinking that they influenced the market. For instance I counted the number of cars passing through an intersection on one light change: if the number exceeded 100, it means that the auto industry was up – buy GM or Ford. If there were many skips and cranes in town it meant the building industry was up and I bought shares in the construction sector.

More pointers

If the stores in the mall were full of women buying clothes, then I bought clothing shares; no shoppers, sell the shares. There is a quite well-known indicator – the ‘lipstick indicator.’ This is a theory that says that even when feeling gloomy or economizing on the big-budget spending, it’s still possible to get a little psychological lift at a modest price by buying a tube of lipstick. It is the net effect of replacing big indulgences with small luxuries is an overall contraction in total spending, i.e. the lipstick indicator is predicting a recession. Lipstick sales reportedly soared following the attack on the World Trade Centre.

Does my system work?

When I am playing on a rising market, it works, as does every other system. On a falling market it fails and I lose. But I have a lot of fun. I’ll stand at an intersection counting the cars like a farmer counting his sheep going through a gate, rush home, get into the broker’s website and give the instruction with a great sense of urgency as though I have been tipped off by the ‘Master of the Market’ himself. An hour later when I see the stock going in the other direction I will curse myself for being stupid and acting like a child.

It’s not all like that. Sometimes I will sit clapping my hands for being a stock market guru able to predict anything, as I watch the stock going exactly where I thought it would go.

All in all it’s a bit of harmless fun, the amounts are small and it’s probably a lot safer that gambling online.