Tuesday, November 18, 2014

Speculation v/s Investing

  • In my mind, you become a speculator when you start making decisions outside of a well-defined process or don’t have one to begin with.
  • If you have no plan, you are speculating. If you’re constantly shooting from the hip to make decisions, you’re a speculator.
  • If you’re paralyzed by fear every time the market goes down and you don’t know what to do with your portfolio, that’s a form of speculation.
  • The same thing applies when you have no plan for how to handle a bull market (something many investors are grappling with at the moment).
  • Without a set of guidelines or principles to follow you’ll be constantly second-guessing every move you make after the fact.

This is mostly a summary from Ben Carlson notes here.

Tuesday, July 30, 2013

This country is upto something..

This country, I say INDIA..the *rising star*.

FIIs have been continuously selling in bond markets. No signs to them returning soon..
FIIs have also been cash selling in equity market for quite some time now. No signs of them returning soon..
Currency is stuck at 59.50.  This is in spite of the great-RBI-dance in the recent past.
Interest rate is not so flexible anymore now. 
The rate cut chorus had died...and brokers & corporate mafia are begging not to increase rate if not cut..

Car sales...continue to slide. 










(Source: link)

Gold is no more a safe heaven to park money anymore. People are out of investment options..
No signs of Inflation going down..

YES, we are definitely up to something..just wait and watch.

Monday, September 20, 2010

Positive move from Fund Houses

Next time you are investing in mutual funds, make sure you issue a cheque from your own bank account, as fund houses will soon start rejecting third-party payments.

The move is part of efforts to check fraudulent activities by agents and distributors, some of whom have been found to be collecting cheques from investors and depositing them in their own names.

After receiving several such complaints against agents and distributors, fund houses have decided not to accept thirdparty cheques for mutual fund investments with effect from November 15.

“In order to protect the interest of the investors, AMFI has issued best practice guidelines to all AMCs advising them not to accept third party cheques in respect of Mutual Fund Investments (with a few exceptions) effective from November 15, 2010,“ industry body Association of Mutual Funds in India (AMFI) said in a circular.


Source: Link

Thursday, June 24, 2010

Wednesday, May 12, 2010

Investing and Happiness...

Silence speaks much more than words.  The best way to win an argument is not by arguing, but by action.

 

I see people wasting time arguing about how the stock they are investing is much better than another stock.  This will not make you wealthy and happy.

We invest not to prove someone right or wrong or for the sake of theories, but to create wealth.

Investing should be silent, with actions.

 

Over the years, things have become easier for people who believe in – long term value based investments.

Thanks to the wide reach technology, internet forums, blogs and business news channels…more and more people are being deprived of thinking long term.

As we have seen in recent times, this can lead to sharp falls in stock prices of as much as 25% on a single day, that too, just on the basis of some negative news or court cases… which might be of a temporary nature.

Internet trading enables people to take decisions within seconds – and act on temptations.

 

I believe, because of all this we can take advantages of such situations. J

 

When markets are climbing high, most people feel tempted with a sense of desperation to rush in and put money. They feel left out, and can’t resist temptation to buy. You can suddenly see many providing stock recommendations (free or paid) in a bull market.

 

Money doesn’t come to people who are constantly scared and afraid.

Just be open, happy, large hearted and confident – you will automatically start attracting wealth.

 

The best investors do the least amount of activity.

 

Sitting in front of a screen with numbers and watching CNBC, is not really what a fulfilling life is all about.  This, again, will not make you wealthy and happy.

And this definitely cannot be a great and recommended way to create wealth.

 

Every investor today needs to avoid an army of advisors and watching hundreds of news channels. He just needs to have the power of wisdom and knowledge with him.

Cut out the noise around you … and listen to the silence.

 

Invest silently.. Consistently. Avoid temptations. Don’t waste energy arguing.

 

Soon, when the world panics again, it will be time for a select few to create extraordinary wealth.

Monday, May 10, 2010

Simplest Portfolio Idea...

For most of us (including myself) ... investing is scary. Simply because the world of finance is an ultimate confusopoly.

There are so many options from which to choose that many people are willing to pay perhaps 1-2-3% of their portfolios per year for experts to manage their money. (PMS services. Distributors, etc etc).

And those experts might invest your money in managed mutual funds (managed by yet other experts) that charge you another 1-2% to pick stocks for you.

 

And all this is despite the fact that on an average, experts can't beat a monkey with a dartboard when it comes to picking stocks…

In theory, no-one can beat markets while being strategic…as far as I know.

 

Worse yet, actively managed investments will generate more tax liability for investors than necessary…because managers need to churn stocks to maintain the appearance of usefulness.

 

It’s never that experts would agree, roughly, in how a typical portfolio should be allocated.

If you are young, you should own mostly stocks. If you are nearing retirement, you should have mostly bonds. But lately, even this assumption is being questioned. Some experts now say you need a healthy percentage of stocks even if you're nearing retirement, because you might live another 30 years or so.

 

Suppose if we could come up with the world's simplest portfolio that is better than what the average money managing expert might suggest. (by better, I mean, it convinces you that it would work).

 

Let’s try out some ideas here, which can be improved upon later, keeping within some simple guidelines.

 

1.        let's assume the hypothetical money is invested entirely for retirement, so we don't need to worry about keeping any of it liquid for college or buying a house. This assumption is just to keep things simple. Also because retirement planning is one of the most difficult financial planning I would ever do for myself.

2.       I will only think about investments that can be made up to 10 years prior to the planned retirement. This is because, when you near retirement, you would typically and gradually want to convert as much of your equity portfolio into bonds as necessary to get the monthly income you need. That's a more complicated scenario, I prefer not to discuss here. It’s easier said than done.

 

As a starting point, a perfectly adequate simple portfolio for young people might involve putting 70% of your money in an index-equity fund. (say NIFTY), which captures the entire market trend. In other words, you can buy one financial instrument and own a little bit of just about every public company in the market.(though technically might not be correct, as NIFTY is just a representation of some 50 odd companies, but that still is well diversified). That's all the diversification you can get within one country. And because these fund managers don't do much buying and selling within the portfolio, it doesn't generate much overhead costs to pass along to investors.

 

I picked 70% to allocate to this investment because I contend that no expert has a good reason for picking a different figure. Some experts might tell you 60% is the right allocation, and some might say 80%.

I contend that most allocation recommendations of that sort are no more defensible than horoscopes.

 

For the remaining 30% of your investments, we can invest in commodities like Gold exchange traded funds. This gives you a play on the commodity side with a hedge against equity, while maintaining growth in the long run.

That too at low cost, with no fund-manager-decisions involved and low taxes.

 

And remember that this suggested portfolio was supposed to be simple enough for the average person to understand and obtain without expert advice and without excess risk.

 

Does it sound good?

 

PS1: This is just a mental exercise I am doing for fun. Not an advice by any means. And if,  you were about to believe all this, you should understand that any roadside financial planner would be able to take you for a ride easily. Be cautious!

PS2: If you are serious about retirement planning, read this: http://wealth.moneycontrol.com/authorarticle.php?id=7061

Wednesday, September 30, 2009

It's far From Over, More Losses on the Way

Source: http://online.wsj.com/article/SB125427067994651171.html?mod=rss_whats_news_us

 

Additional $1.5 Trillion in Write-Downs Forecast by End of 2010 despite Rising Securities Prices

 

Rising global securities prices reduced the International Monetary Fund's estimate of bank losses, but banks around the world -- especially in Europe -- still are likely to face additional write-downs of $1.5 trillion by the end of next year, the IMF said.

Overall, the IMF calculates that the global financial crisis will produce $3.4 trillion in losses for financial institutions, between 2007 and 2010, a chunk of which already has been recognized.

 

Saturday, September 26, 2009

Keep an Eye on your Fixed Deposits

Fixed Deposits have always been an integral part of every individual's portfolio. 
But, it's apperent that some recent changes demand for a review in this strategy.
Investors need to keep a close eye on the interest rate movements so as to get adequately benifited from Fixed Deposits.


Last year (i.e in 2008) we witnessed high rated on fixed deposits. This was partly due to liquidity crunch banks were dealing with. Just see this in light of increasing inflation we have seen.
Banks were easily offering higher interest rates for your deposits, for certain period deposits.
For example, interest rates for period of 365 days (or 780 days and 1000 days) were upto 10% p.a.
It made perfect sense to lock in money, then.


Now, the trend has completely reversed!
Over the past few months, interest rates offered by most banks on fixed deposits have reduced drastically.
Some of the data below, will prove this:



Term Deposits (Below Rs. 1 Cr.)
Banks
365 to 729 days
730 to 1094 days
State Bank of India
6.50%
7.00%
Bank of India
6.50%
6.50%
HDFC Bank Ltd.
6.00%
6.00%
ICICI Bank Ltd.
6.50%
7.00%
HSBC India
4.75%
5.00%
Axis Bank Ltd.
6.75%
7.30%



(Source: Interest Rates from respective banks' website)

Friday, September 25, 2009

Oil Prices Going Up Again

Everyone knows, last year's "super spike" in oil prices was no joke.

Well, believe me, it’s coming again.

Oil prices could bounce back quickly, according to Dow Jones.

 

Why? Here goes the theory..

Because there's no known cure for the world's 80 million-barrel-a-day oil habit. And OPEC continues to slash production - setting the stage for another oil price shock.

Thursday, September 24, 2009

In Search for best Fixed Deposit


Everyone is in search of the best Fixed Deposits. Questions like "which bank offers best interest rates?" keeps us in doubt .. always.
A nice solution comes from a website www.way2goals.com

Take a look at http://www.way2goals.com/Project2/chooseBank.html . It offers excellent information on Fixed Deposits based on different parameters provided.

So if you want to invest Rs 1,00,000 for 3 yrs in any bank and you happen to belong to 30.9% tax bracket . It would filter out the the list of best Banks for you , that provide best returns, It would also enlighten you with final profit after tax deductions and what will be your gain after adjusting inflation. (obviously, based on your expectation of inflation percentage) .

Screenshot for the above figures. (click to enlarge)



It gives tells you that the best Fixed Deposit will be from "Oriental Bank Of Commerce" which offers 7.75% interest . It gives other information like

  • Maturity amount
  • Interest Earned
  • Interest After Tax
  • Gain After Inflation
Note: Currently information on this website is updated two times in a week.

Wednesday, September 16, 2009

Merchant Banker's IPO

IPOs have been in the news for a while. With the India government considering dis-investments, market seems to have been flooded with IPOs.
We recently had the Government company National Hydro-electric Power Corporation (NHPC) listing its shares with a lot of fanfare.
There was drama when the CMD of that company and the owners of the two Merchant Banks Enam ( Vallabh Bansali ) and Kotak Securities ( Uday Kotak) rang the Bell and the stock started trading.  
And then we saw a lot of grim faces as the issue had one of the flattest of openings and finally the share ended just a bit above the issue price.
This brings us to think, focus why Merchant Bankers again and again bring out issues at prices which are so investor unfriendly.
It’s true that they get paid by the Issuer and not by the investor, and so they are loyal to those who pay them.
But, as market intermediaries, isn’t it also important for them to keep the interests of the market at large and small investors also in mind?
I wonder if the memory is so short that we/they tend to forget the disastrous effect the over pricing of Reliance Power in Jan 08 had on the whole market?

Tuesday, September 15, 2009

Insurance verses Investment

This has been told again and again and can't be emphasised any more.
Thank to insurance agents around us, who always do their best to skew our decisions for their own interests.

Just use this post to remind you always that Insurance is NOT Investment.

Before I go into more details, just remember that these two things are meant for entirely different purposes and should never ever be mixed.

Financial companies usually take common people for a ride. They have floded the market with a plathora of product which can be confused with investments and insurance. Agents cant be more happy with this costly products. After all they get hefty premiums.

Please try to understand basics and realise how bad it is an idea to consider buying insurance policies like ULIPS etc.(with some investing component).

These products are not only costly, but are not viable for long term investments.
Not only that, buying these high premium products would essentially leave you under-insured as well.

Instead one should consider buying a simple term insurance plans, which are not only cheap but effective enough to provide you ample of coverage. Buying these would give you more room to have high life cover (and this is what an life insurance is meant for). and the left over money can be used for prudent investing
 in real investment products that suits you (based on you risk profile etc..).

Bonus Question: Do you know how much percentage of your premium goes to insurance agent if you buy a policy (specifically a ULIP)?
I am sure the answer would surprise you and would explain why they run after you to sell these products.

Friday, September 11, 2009

Pre Market - 11-Sep-09: SELL Oriental Bank of Commerce

Oriental Bank of Commerce
SELL ORIENTBANK 
Stop-Loss: 220.5.
Support Zones: 202.54 196.16
Resistance Zones: 224.50 237.4
Notes: Yesterday the stock was up(1.15%) at 216.20 on volumes of 2548990.
Looks like it's going to be a bearish day toady. 
Short-sells this script today is suggested.

Post Market - 10-Sep-09 : MANGCHEFER

Mangalore Chemicals & Fertilizers Limited


Post Market trading analysis for MANGCHEFER
The stock was suggested for day-trading here.


As suggested, it was not suitable to enter the stock once it was below 24.0 levels.








Open25.10
High25.50
Low23.55
Last Price23.75



Thursday, September 10, 2009

Post Market - 10-Sep-09 : RAJESHEXPO

Rajesh Exports Ltd.

Post Market trading analysis for RAJESHEXPO.
It was recomended to trade this today here
Stock opened at 61.8 and went upto 65.45 reaching our target.




Open61.80
High65.45
Low59.00
Last Price60.55

Trading Using Candle Charts

Anyone new to day trading will have these basic questions in mind:
Buy or Sell? What to do?
How many shares?
Where to put the stop-loss?
Where do I book the profits?

Well if you understand Candle Charts, it's not that difficult to answer these.

I believe the following basic rules can help a lot..

  • Set the chart settings to 5-min candlestick charts.
(Now, If you do not know what candlesticks are, please take time to learn them first. Google search for 'candlestick charts' will help. Candlesticks are very simple and uncomplicated, so please take some time and study them first. You need not know all the patterns. Just have an idea of how they are constructed and how to set them up in your trading software.)
  • Spot the most recent candle with the highest volume. Let’s call it 1st candle.
  • Wait till the NEXT candle, say 2nd (to the 1st candle) is fully complete.
  • If the body of the 2nd candle is clearly above the body of 1st candle, the momentum is likely to be continued. Make sure that the second candle is fully complete before you check this. Have patience...give it some time to complete.
  • Buy on a decline. A stop-loss must be placed below the low of the 1st candle.
  • If the 2nd candle fails to maintain above the body of the 1st candle, it is likely to be a blow-off pattern which is a termination pattern. EXIT.
  • SELL(short) the stock on a rally and keep a stop-loss above the high of the 1st candle. Remember, in this case…we are going against the trend and hence a stop-loss is compulsory.
  • When the stock is in a downward momentum, the same rules apply but in the opposite direction.
  • Keep booking profits continuously in small chunks. This is IMPORTANT.
  • Assume that the stop-loss will be hit while calculating what quantity is to be traded.
Always ask yourself, "How much loss is comfortable to me if my stop-loss gets hit in this trade? So, how many shares should I trade?" This is very important to keep volumes under control and for an objective trading approach. Once placed, the stop-loss should NEVER be modified.
  • Always UnderTrade. UnderTrade. UnderTrade. Trade only 50 shares when you feel like trading a 100. This is the secret to Long term profitability in trading.
  • Never regret missed opportunities. Never chase a stock. In the stock market, when one door of happiness closes another opens. Don't keep looking at the closed door. Move on. Continue your search for new opportunities.   
  • This also means, DO NOT GET ATTACHED TO ANY SINGLE STOCK. If you like any company, this should not mean you keep chasing it. Move ON.

Keep trading...

Wednesday, September 9, 2009

Day Trading Rules

Following are the trading rules I suggest everyone to follow for day trading:
  1. Place all trades at market prices between 10:20AM and 10:40AM.
  2. Place stop-loss orders immediately for each trade.
  3. If the given stop-loss is very near to the existing market price then place a stop-loss at a distance of 2% from your trade execution price.
  4. Square-off all trades between 3:00PM and 3:10PM. Don't use limit orders. Square-off at market prices.
  5. Do not trade if you are not 100% comfortable with the script.
  6. For SELL recommendations, place a short sell order in the beginning(at high price)…and then a buy order(at lower price)..during later part of the day.
  7. Be extra cautious while placing short-sell orders.
  8. Never ever take your trade home. Square off everything at 3:10PM.
  9. Prefer trading at NSE

10-Sep-09 BUY MANGCHEFER

BUY MANGCHEFER
Outlook: BULLISH
Stop-Loss: 24.1
Support Zones: 23.19 23.10 23.08 22.30
Resistance Zones: 26.80
Notes:  Today the stock was up(2.07%) and closed at 24.65.
This is going to be a bit risky script, but anyways should give have a bull run in tomorrow’s trading session.
Do not consider buying if it goes below 24.0.
Exit as soon as stop loss triggers and do not enter again.

Day Traders Outlook for 10-Sep-09 : BUY RAJESHEXPO



BUY RAJESHEXPO
Outlook: BULLISH
Stop-Loss: 58.8
Support Zones: 59.1
Resistance Zones: 61.15
Notes:  Today the stock was up (8.10%) and closed at 60.05.
Looks like it’s going to have a bull run tomorrow. Be prepared…

Traders Outlook: 9-Sep-09

Outlook: BULLISH
BUY OPTOCIRCUI
Stop-Loss: 184.0
Support Zones: 186.82 186.78 185.87 182.06 181.45 173.86 171.57
Resistance: 205.00
Note: The stock was down(-2.29%) at 187.80 on volumes of 1350984

Post Trading Update:
Stock closed at 206.00. (+18.20, +9.69%)

Charts for the Day:


I suggest exit at current levels.

Friday, December 8, 2006

Nirlon Ltd.

This is yet another real estate take...

Nirlon Ltd.
CMP: Rs. 50 / per share
Expected : Rs 150+ /per share

Mind you..it could just turn out to be a risky one.

..mainly in textiles, fibers & Nylon. Hd been showing loss for long.
But the reason why this is tempting is...it now plans to move to develop Real Estate on the vast land holdings in Goregaon Mumbai.

<---snip---
The K. Raheja Developers group is said to be developing the Real Estate, and they have picked up 4% stake in the company though the stock market route during the May crash at throwaway prices. Also Videocon International has already bought 3.35 per cent stake in the company.

According to the corporate announcements of the company, the company has confirmed that it is no longer a sick company as per the provision of the Sick Company as per the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). Also it has confirmed media reports that it is developing real Estate on the company's land banks.

The value of these developments comes around Rs 1000 crores which suggests a target of around Rs 200/Share in the months to come.
---snip--->

the stock is showing movements and is rising now... from 20s to.. 30s and into the 50s now.

Also read.

Friday, November 24, 2006

Real Estate

The latest Buzz in the markets are the Real Estate stocks...hence my first pick would be a Real Estate stock, which, *I think*... can give good returns....without making purists (read Fundamental Analysts) uncomfortable...

Stocks like Mahindra Gesco and Unitech have shown dizzy valuations....which would make any Fundamental analyst go dizzy...

My pick for the sector is: Ansal Housing and Construction Limited
*** Current Market Price: 340
*** EPS for the First Half'07 : 11
*** Last Quarter on Quarter growth in EPS: 22%.
*** Current P/E Ratio: 17.

Notes:
>> The profits have doubled when compared to the same quarter of the last year.
>> One Year Price target for it going forward based purely on earning : 22*22= 484.
(and this target shouldnot make anyone uncomfortable given that the PEG ratio remains 1).
>> Just to add...it plans to invest over 2000 crores in the Real Estate projects in times to come...the valuations can only go up.

More about it: here
>> Value of Land Bank as per Kushagra Ansal, President at Ansal Housing and Constructions : 900 Crore
>> No. Of Outstanding shares : 1.492 crores.
>> The value of land bank works out to be around Rs 600/share.

If one considers the value of the landbank, the price target could work out to be around 1000 with a year's time frame in mind.

Why this blog?

Its been over an year now since I have been following the Stock Markets. Its very easy to sit on the fences and make calls where the prices should go in the times to come but its a different thing to put it in ink and let the markets decide your fate.

So, this is what i came up with: have a blog which would serve the purpose of listing out my picks from the market and to put it in ink so that over a period of time I may be able to evaluate how much I have been able to fathom the moods of the market.