Wit. Wisdom. Value Investing.
Here is how the Indian stock markets have behaved over the past four months.
To say the past few months have been dreadful for investors is an understatement.
But it is times like these that test your conviction in your stock picks or whether you want to sell it off and run for the hills.
[Read more…] about Now is the time to PANIC
One event that catches attention of the investor community every three months is the monetary policy that is announced by the Indian central bank, the RBI…
…like it did today when the RBI announced its quarterly review for the monetary policy for 2011-12.
Every move the RBI makes, even if it is irrelevant to the long term performance of the Indian economy or financial markets, is dissected and discussed threadbare.
Leave the RBI Governor aside, expert opinions flood the newswires from brokers, analysts, and fund managers. Even the Finance Minister shares the limelight in giving his opinion on the RBI’s policy.
Amidst all this, the RBI Governor is either made a hero or a villain, depending on how well he’s taken care of the market’s expectations.
Now the question is – why is monetary policy such a widely followed event in the investor community? What impact does it have on stock prices?
Let’s try to answer these questions.
[Read more…] about Does Monetary Policy Really Impact Stock Prices?
“You should always buy the stock of a good company.” In isolation, this seems a very valid statement.
But look at this – “You should always buy the stock of a good company, whatever the price.”
Now, this is a highly dangerous advice to give to someone.
A great company can translate into a great investment. But all great companies do not translate into great investments.
Confused? Well let me clarify.
There is a business behind a company. And there is a great business behind a great company – one that has all the ingredients of success, enjoys pricing power, generates a lot of free cash flow, is not much troubled by competition, and has a very good management team at helm.
So this business has a great value. But it will make a great investment only if it is bought at a reasonable price.
“But how do you know what is a reasonable price?” you may ask.
[Read more…] about Intrinsic Value: The Holy Grail of Value Investing
The reason that pain hurts is because it should.
Pain is nature’s way of telling us to get out of harm’s way. Like fever tells us that something’s not right inside of us and that we must take the necessary medication to avoid doing a greater harm to our body.
This is also true when it comes to investing in stock markets. When the market moves and I’m losing money, I know it hurts.
But more often than not, unlike in life, I would continue to bear that pain (keep holding my losing stocks) instead of taking the medication (cutting the losses) to avoid a greater harm in the future.
No one is right all the time and I don’t have to be.
But this wasn’t something I believed a few years back, till the time I took my first major loss in a leading textile stock.
[Read more…] about My First Stock Market Loss…and the Lesson I Learnt
The BSE-Sensex is down almost 1,000 points over the past 3 days alone. Newspapers have started shouting out – “India, tottering and sputtering”.
Some are calling this crash a “tragedy”, while there are others who are describing it as a “disaster” for investors.
And then, of course, there are many who are predicting that the future is going to get worse and that investors must stay on the sidelines till the dark clouds disperse.
Anyways, before we move further, here is a snapshot of the 4 major falls – the tragedies and disasters – the Sensex has seen over the past 15 years.
This first major drop came after the dot com boom bust in early 2000. The Sensex dropped 56% in a matter of 19 months. [Read more…] about Sometime You Can’t Help But Make Money from Stocks. Is That Time Now?
The results are in, and let me tell you…this was tough.
Just to review, the idea behind the “I love Safal Niveshak” Contest was simple…just send me one reason you like Safal Niveshak, or one suggestion for improving this initiative.
I want to thank everyone who participated!
If there’s one thing I must tell you, it’s that there were way too many great submissions for this to be an easy exercise. So the choice of the winners was incredibly tight.
I could have easily had 10 or more winners, but instead chose to expand the winner pool to 4, instead of the originally announced 2.
So, there remains the first place for both these entries…
…plus 2 honourable mentions that will also receive special prizes.
So here we go.
[Read more…] about Winners of the “I Love Safal Niveshak” Contest Are…
Here’s something light for you on a bright Saturday morning – 5 jokes that I read some years back and that have taught me some serious lessons on stock market investing. Enjoy!
“You talked about the importance of taking small losses before they magnify into bigger losses,” a reader of The Safal Niveshak Post asked me yesterday. “But how do I know which stocks to sell to takes such losses? Is that so simple?”
“No, it isn’t,” I must say.
Knowing when to sell a stock or which stock to sell isn’t as easy a decision as knowing when to buy a stock.
In fact, most discussions on investing revolve only around when to buy a stock.
“Which stock should I buy?” is the first question that comes to your mind when you think about your investment.
But as we discussed yesterday, an equally important question is – “Which stock should I sell?”
[Read more…] about The Most Important Decision to Make After You Buy a Stock
I’ve learnt several lessons in my lifetime as a stock market analyst and investor.
One of the most enduring of them has been – taking small losses is often better than taking small gains.
The sad part is that it took time for me to learn this important lesson.
I’d read it many times that investors must try to “cut their losses short and let their winners run”.
Sage advice, but I did not follow till about the fourth year of my career. So I was…
You see, no one will deliberately buy a stock they believe will go down in price and be worth less than what they paid for it.
[Read more…] about A Big Lesson I Wish I’d Learned Early in My Investing Life
A reader of The Safal Niveshak Post recently asked me about my background and experience, and about the story of my life.
I thought today is a good day to share that, given that my story started exactly 33 years ago. 🙂
However, being an analyst and investor, here is a different way I will tell you the story.
Hope you’ll be interested to read it because the most important takeaway from my story is something that I’ve reserved for the end of this post.
So here I go.
[Read more…] about The Story of My Life…and Yours