As a stock market for beginners guide I am sure this scam makes what is the most common thing that investors generally do not do is that check the balance sheets.

There are indications that the balance sheet if browsed properly would shave should what Mr. Ramalinga Raju was up to and also if you see the cash flow statement and the balanace sheet it should have given enough indications about the scam.

But those were the good times and hence there was no way people would have done that given that PriceWater House Coopers was also hand in glove with the promoters.

The lesson for people who are trying to understand how to build your stock portfolio that never put your eggs in one basket. Diversification is the name of the game.

Imagine somebody putting all his money in Satyam stock or Satyam ADR. The price went down from 170 to 6 in just tow days. In fact even before that the price was 300 and then went down to 170.

It would have wiped away your entire earnings had you put everything in the Satyam stock.

The resulting action by the government has been that they have put three independent directors on the board and that these are people of repute which are Mr. Deepak Parekh, Kiran Karnik and C. Achuttam.

People are talking about good corporate governance models from the companies but I am sure we have not seen the end of it as there are scamsters and fraudesters in every society who think of loopholes and then eventually will be caught making the common man lose money.

Now hopefully they will be able to salvage something out of this 7000 crore scam.

Simply put the lesson for investors is that they should diversify as well make sure that they know the company inside out.

Another scandal where people were in search of the good returns without wondering about the risks involved is the Madoff scandal.

Details and lessons in the next post.

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