BSEIndia: All Stock Market News: [sharetrading] FW: In Capital Markets LIQUIDITY is second only to SAVINGS [2 Attachments]

Friday, January 29, 2010

[sharetrading] FW: In Capital Markets LIQUIDITY is second only to SAVINGS [2 Attachments]

[Attachment(s) from A P Abraham included below]

New scheme to loot retailers…………

18.5%.annually wow and with no risk. If one makes it cumulative, am sure it will be near 24%. I will rather give money than trade…

Any takers…………..

NEVER TRADE ON LOANS – is the first rule………….

Abe

From: Loans [mailto:loans@geojit.com]
Sent: Friday, January 29, 2010 5:55 PM
To: Undisclosed-Recipient:;
Subject: In Capital Markets LIQUIDITY is second only to SAVINGS

Dear Sir / Madam,

You have always taken pride in SAVING and have INVESTED wisely, thereby providing financial security to your family while also contributing to the growth of the economy.

As one who has believed in the power of SAVINGS, you have avoided BORROWINGS or resorting to "LOANS" consciously.

In the capital market LIQUIDITY is the second most important resource after CAPITAL (savings).

A growing market, such as we now have, while providing immense opportunities for short term profits, also exposes investors and traders to a higher degree of risk.

LIQUIDITY or ability to 'produce cash on demand' is an absolutely essential supplement to CAPITAL,

a) to make the best of short term opportunities in the market and

b) to meet margin calls in the short run if market moves adversely.

Margin Funding ( MTF) and and Liquidity Against Shares (LAS ) from Geojit are schemes essentially intended to provide our patrons 'LIQUIDITY on TAP'.

They are different from traditional "LOANS". (No Bank can give a "LOAN" for buying shares. Banks may not be willing to extend retail loans for 1 - 15 days and even if they are , the process could take time.)

Invest only as much as you wish to, take only as much risk as you are willing to, BUT remember to keep a certain amount of LIQUID funds as backup , or

at least have a dependable source of short term funds for the purposes mentioned above.

Eg. If you wish to take delivery for Rs.1lac, with a SHORT TERM view with your OWN FUND, since you do not wish to avail LOAN, you may take the same exposure of Rs.1lac under MTF using Rs. 50000 of own funds and drawing Rs.50000 under MTF, at a cost of only 0.05 % or Rs 25 per day.This will leave you Rs. 50000 of own fund as reserve to explore other opportunities or as liquid cover against adverse price movements OR to average costs subsequently.