Satyam computer services

Got a note from one of my fellow mmb boarder and freind pkak.So lets see what lies with satyam.

Think best teacher is stock market is itself. It teaches us new lessons everyday. It takes exams everyday. One who scored more then 90% yesterday may even fail today. But it watches very carefully. It passes only those students who prepare well before the exams. So prepare well today. Prepare well everyday.Few lesson which we have to learn from Satyam episode:

First I have to admit that Satyam is there in Compact15 list and error of judgment by not exiting around Rs.170 few days back when the list return was 39.8% is misjudgment. Due to 15stock the risk is divided and even after major correction the list gives good return.

Error is human when one is judging stock market he can never be prefect or 100% right, if one is right 50-60% of the time itself returns should be high.
If some one is above average he will not be advising he will be counting M3.
Quote: Man's greatest enemy in speculation is 'hope.' We refuse to face facts, and facts are stubborn things. Hope spurs us on. It may be an anchor to the soul, but it's a very slim anchor in speculation when those facts are against us."- W.D. Gann (1955)
Few things to recollect on 07/01/2009

Many calls which I got "can I buy Satyam"?
This was difficult question to answer- 1) if I say buy and if the stock becomes zero.

2) If I say don't buy and if the stock doubles due to any take-over. Both chances were bright as we have seen both many times and it was hard decision to take during market hours. So I replied I didn't understand buy other stock like Infosys, Wipro or TCS.Data says total 70% of the paid-up capital was traded in both exchange on 07/01/2009 and 43% delivery has been lifted (30% of company stake)

Founder and Chairman B Ramalinga Raju resigned after saying he falsified earnings and assets to the tune of Rs 5,500 crore. Institutional shareholders sold 8.62% of their combined holdings. Abardeen, one of the largest shareholders, sold the entire 5.6% stake it had in Satyam, and Swiss Finance also exited. Stock Exchange data showed huge sales by Morgan Stanley and Fidelity as well.

Then who brought 30% of Company stake in a single day?
Retail investor! This is the big possibility as far as my understanding goes, Many want to take instant decision which is harmful and only retail can take decision even without a 2nd though. And many would have brought in excess of there capacity and now this would create some payment problem for investor and as well as broker.

Then why didn't exchange stop trading in Satyam?
-No Answer-

Does history repeat on a regular basis?
From 1990 till date 2009 I have been seeing the same kind of mistake in stock market in different form many times I have strongly advised many things but on few occasions it becomes too cumbersome or emotional or lack of information to give an opinion. Global trust bank, SquareD, Silverline, PentaMedia are few stocks which eroded value of investor in similar way.

What about Satyam I have invested?
I have no comment on this, as Govt will be more interested in 53,000 employees than the Equity holders at this point of time. Previous many instances like Global trust Bank has showed that Equity investor are least preferred and there are many other priority and that is what Company Act1956 also says.