Safal Niveshak

Wit. Wisdom. Value Investing.

India’s Greatest Companies: But Should You Buy Them?

You know what’s the most asked question in India?

It is – “What’s the score?”

And the second most?

How about – “How much did the Sensex close at?”

If you live in the financial capital of Mumbai, every business paper you read, every business channel you see, most people you meet in the local train…you will always get to hear someone uttering the ‘Sensex’ word.

There is no doubt that India’s benchmark stock market index (that’s what the Sensex is) can claim to have the largest mindshare among people who invest in stocks, or who are at least interested in reading about stocks.
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A Huge Investing Advantage You Can Easily Achieve Over Most Investors

I’m often asked how an investor can behave calmly when the stock markets rise and fall 1%…2%…even 5% in a single day, day after day.

Well, if you see the trend over the past 3-4 years in the chart below, the volatility (sharp rises and falls) has really been on a higher side, except in 2010 when people were on the sidelines after the gains made in 2009 and 2010.


Data Source: Ace Equity, Safal Niveshak Research

Anyways, when the markets rise and fall 1%… 2%… even 5% in a single day, day after day, you need to remember one thing – that it means nothing.
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Groupon and the Great Stock Market Insanity called ‘IPOs’

If you follow global financial news, you must have come across reports of the recent IPO of Groupon. Well, for those who haven’t heard of it, Groupon is an online seller of discount coupons, and acts like a ‘deal of the day’ website.

The company’s shares listed on the US exchanges on 4th November, and jumped 31% by the end of the first day of trading. This brought the company’s valuation to more than US$ 16 billion.

How much is US$ 16 billion? Well, that’s more than the respective market capitalization of 14 of India’s top 30 companies on the Sensex.

Now that’s not amazing. What’s amazing is that US investors have paid a high price for a company, which… [Read more…] about Groupon and the Great Stock Market Insanity called ‘IPOs’

My Presentation on Stock Market Investing at TBSS

I recently got the opportunity to lecture on the subject most close to my heart – the art of sensible stock market investing – at Tata Business Support Services (TBSS), Pune.

It was a great first experience. The audience consisted of 30 young and middle-aged executives who were great listeners, going by the questions they asked me after the lecture was over.

Here is my presentation from the lecture. I hope you get the value that you expect of it.

I also take this opportunity to thank Mr. Pradeep Bahuguna, Sr. Manager, Corporate HR at TBSS and an avid reader of The Safal Niveshak Post, without whose support this lecture wouldn’t have happened.

Here’s your presentation. Enjoy it, and please share it with your friends and colleagues who might be interested in learning the art of sensible, independent stock market investing.


If you are not able to view the presentation above, click here to view.

Click here to view the photographs from the lecture.

India’s 7 Most Consistent Cash Generating Companies

Do you remember the story of the three little pigs?

The first little pig built his house with straw, only to see the wolf blow it down. The second pig built his house with sticks and suffered the same fate.

The third pig built his house with bricks. The big, bad wolf huffed and puffed, but he couldn’t blow it down.

So what’s the lesson investors can draw from this story?

Well, it is that in corporate finance, cash is the equivalent of bricks. In fact, smart investors lay a lot of emphasis on companies that generate a plenty of cash as these are in the best position to withstand the huffing and puffing of a slowing economy and competition.
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The Biggest Risk to Your Investments Might Be Your Neighbour

I am talking about the unemployed Indian youth, who has the potential to create big trouble for the country in the future, if his aspirations are not met.

Of course, the choice of bad investments, rising inflation, rising interest rates, or a weak economy also pose as big risks to your investments.

But then, these are some of the risks that you can see now. And over that, these are risks that are manageable to a great extent.

But who can manage or control a youngster, without a job for months and years, with himself and family to feed, and not knowing what to do to meet his basic needs?

Now imagine millions and millions of such youngsters and what their combined force can do to bring a country down to its knees, and with the it entire economic and financial system.
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The 7 Eternal Laws of Stock Market Investing

James Montier, a long-time favourite among the readers of value investing, produced a white paper in March 2011, entitled “The Seven Immutable Laws of investing”.

In the paper, the investment strategist at the leading global investment management firm, GMO, presented a set of laws to guide investors towards investing sensibly in stock markets.

These laws are:

  1. Always insist on a margin of safety
  2. This time is never different
  3. Be patient and wait for the fat pitch
  4. Be contrarian
  5. Risk is the permanent loss of capital, never a number
  6. Be leery of leverage
  7. Never invest in something you don’t understand

These seven laws capture everything you need to become a smarter and successful investor.

I hope these help you to avoid some of the worst mistakes, which, when made, tend to lead investors down the path of permanent loss of capital.

Click here to read the white paper.

The Only Shortcut to Making Money from Stock Markets

As I was sifting through the books on finance in a local book store yesterday, I came across some titles that read…

  • Ride on the Millionaire Fastlane
  • Learn the Magic Formula
  • Become a Stock Market Genius
  • The One Minute Millionaire
  • Become the Automatic Millionaire

Well, these were just some of the messages on stock market investing that I read about in the bookstore.

For lack of a better phrase, it seemed as if their authors have discovered the magic formula for investing.

Well, I don’t think so.
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10 Stocks I Would Want to Leave for My Grandchildren

“A good man leaves an inheritance to his children’s children.” ~ Proverbs 13:22a, Bible

What kind of gifts would you consider giving your children and grandchildren when you retire from active work?

In the days of my grandfather, leaving the next generations with cash, gold, and property was a good idea. Of course, this is a good idea even now.

But if you ask me if there’s anything still better than these assets that I’d love to leave for my children and grandchildren*, it would be a portfolio of ‘double compounding’ stocks.
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This Diwali, Move from Darkness to Light

As a father of a daughter who’s growing up fast (well, that’s the way all daughters grow), I am often confused how to teach her about festivals so that she can make a personal connection with them.

I try to relate it to concepts that she already knows about.

From my experience, I have found that children often seem to get confused with the traditions that surround festivals such as Diwali, and miss the moral of the story.

Before taking them to the temple or having them light the candles, I think it is important to talk to them about the festival and the significance.
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