Let us jog down the memory lane a little and remember those advertisements on Doordarshan of “Jago Grahak Jago”. I am sure you remember the image of a proactive and aware consumer telling how to check the MRP of the product. That advertisement went a long way in making us aware as consumers! Let us see how. Suppose you intend to buy the latest fully loaded Nokia Mobile (think touch screen, 3Gs, latest camera technology etc). How do you go about getting your dream phone? Surely, you would look up on Nokia’s site, search on net for the best offer, ask a few friends etc. Right… You would actually undertake a mini thesis research to get the right product and the right price!!!
Now, you are well armed with the real worth of the product i.e. it’s MRP. It actually protects you from paying more than the actual worth of the product, and if you are lucky you might get a cool discount on the MRP too!!!
But are we equally aware as investors too?
When we are so particular about knowing the real worth of a product before buying it, then why are stocks any different. You won’t be able to get the best deal on the Nokia phone if you didn’t know its MRP; the same is the case with stocks. When you look to buy a stock, you look for its price on sites like bseindia.com, nseindia.com, moneycontrol.com etc. I am sure you have heard about the volatility in stock prices but when you actually see it changing every second then it leaves you quite confused about what is the Right Price of the stock?
Your confusion has a simple solution: Know the real worth of the stocks, i.e. its MRP. If you don’t have any idea of MRP of a company’s stock, you’ll end up buying at a price currently quoted in the stock market! This may most likely be much more than MRP. The end result– You end up with huge losses and end up saying, “Damn, stock investing is nothing but gambling.” But the fault is not entirely yours; you don’t ask for the MRP of a stock from your broker, friends etc. because you are not sure about the existence of such information.
But like the commodities it is also possible to find the MRP or the fair value of a stock!! This would not only help you get better returns by investing in stocks, but also minimize your risk to a great extent. All you need to do is make sure you buy stocks at a hefty discount to their MRP– something which we do regularly in our everyday life- and sell your stocks when the price goes above the MRP. Following this principle will definitely help you to become a better and more aware investor. Remember the need of the hour is “JAGO INVESTOR JAGO”.
To know more about the concept of MRP and learn about stock investing in a manner that takes the jargon and intricacies out and make investing simpler, log on to Moneyworks4me.com