Safal Niveshak

Wit. Wisdom. Value Investing.

Launching…Safal Niveshak StockTalk

Ever since I launched the Safal Niveshak movement in July 2011, I’ve received innumerable requests from readers for my views on specific stocks.

Someone asked, “I hold 50 shares of Tata Motors. What should I do?”

And then, someone else wanted to know, “I want to buy shares of Coal India. Should I buy or wait?”

I’ve resisted giving my views so far, but have now found an alternative to help you, my dear reader.

Here’s presenting Safal Niveshak StockTalk, wherein I will research and write a simple-to-understand report on one company every fortnight, but without giving any specific buy/hold/sell recommendations.
[Read more…] about Launching…Safal Niveshak StockTalk

Who Else Wants to Get Rich?

“No one wants to die. Even people who want to go to heaven don’t want to die to get there…your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma — which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

I consider these words of Steve Jobs from his famous 2005 speech at Stanford University as one of my guiding lights in whatever I pursue in life, including investing.

In not investing the way someone else does, and having the courage to follow my independent thinking and act on the same, I try to put in the hard work whenever and wherever it is required.

Anyways, let’s leave out the heaven and death part from the above statements of Steve Jobs, and concentrate on wealth building.

Everyone wants to get rich someday. Even I do.

But the biggest question is – how many of us ‘prepare’ to become rich, if we weren’t born with a silver spoon?
[Read more…] about Who Else Wants to Get Rich?

10 Dangerous Stocks in a Bad Market

I still remember that period in early 2009 when not a day passed when a listed Indian company did not came out in the open to disclose the pledging of shares by its promoters.

Ultimately, the debate wasn’t centered around which promoter had pledged his shares to raise funds, but rather on who hadn’t disclosed this information to the stock exchanges.

Also, as the count of companies disclosing pledging increased, so did the number of investor queries that I handled.

People got so worried hearing reports of pledging from the promoters of companies whose shares they held, that many sold off their entire holdings just out of fear.

After all, but for a handful of them, virtually every promoter of India Inc.’s leading companies was admitting to pledging shares for many years in the past.
[Read more…] about 10 Dangerous Stocks in a Bad Market

3 Lessons from the Rise and Fall of SKS Microfinance

“A Microlending Star Moves On” read a headline in today’s issue of The Wall Street Journal.

The report talked about the resignation of Vikram Akula, one of the best-known figures in microfinance, from the company he founded – SKS Microfinance.

Akula founded SKS in 1998 and guided it to a stock-market listing in August last year that raised Rs 16.5 billion.

As per the latest available data, SKS has 7.7 million clients in over 2,400 branches in 19 states across India (with a large proportion coming from Andhra Pradesh). SKS charges an annual effective interest rate between 26% and 31% for core loan products.

Well, those were some data points about the business of the company. Talking about the stock’s performance since its listing, here is a chart that bares it all. [Read more…] about 3 Lessons from the Rise and Fall of SKS Microfinance

Sensex at 16,000! Great Time to Buy Stocks?

“The market may be bad, but I slept like a baby last night. I woke up every hour and cried.” Thus goes an old stock market joke.

I’m sure this is what most business channel anchors and experts also imply when they ask you, the investor, to hold your nerves while stock prices are falling.

“Use the crash to invest for the long term,” I heard the analyst say in an interview yesterday.

“The Sensex has crashed. Stocks are hitting new lows,” he said. “The overall mood is that of extreme pessimism. Great! This is just the opportunity that long term investors must look out for!”

“Wow! What a smart man he is,” I would’ve said if I didn’t know the real intention behind his positive outlook.

“But isn’t he really smart?” asked my friend Ravi who came to my house because his cable service provider had stopped showing business channels.
[Read more…] about Sensex at 16,000! Great Time to Buy Stocks?

5 Mid-Size Companies That Prove How Nothing Succeeds Like Growth

The phrase “nothing succeeds like success” might be a cliché.

But when it comes to demonstrating corporate success, nothing quite succeeds like growth – not revenue growth, but profit growth.

After all, a long-term growth in profit validates the correctness of a business strategy or the robustness of a business model.

While a company can grow its sales by compromising on prices and margins, the real winner is one that works with a consistent focus on profit.

This is simply because profit is what determines how much goes back to the shareholders and how much can be reinvested into the business for faster growth in the future.
[Read more…] about 5 Mid-Size Companies That Prove How Nothing Succeeds Like Growth

This Small Book Can Make a Big Difference in Your Investing Life

“When in Rome, do as the Romans do,” goes the famous saying.

What this saying suggests is that you need to know the language and customs of people when you visit an unknown society. Doing so is polite, and also advantageous.

The same holds true when you enter the ‘investing society’. Before you enter, your gate pass must show that you understand the language of business.

And what’s the language of business? The answer – Numbers.
[Read more…] about This Small Book Can Make a Big Difference in Your Investing Life

The Best Strategy for a New Investor

There is great excitement in watching your baby take her first steps.

Slowly…carefully…she gets up…walks a step…then falls down…then again she gets up…takes a step…then again falls down.

The process repeats till the time she learns how to balance her body while taking her second step, and her third step.

As a parent, you would love to hold her hand while she’s learning to take her first steps, but then you want her to do it herself so that she gets some confidence on her own.

This process of learning happens in whatever we do in our lives.

We first learn to take baby steps, before we cross bigger hurdles.

There’s no reason the cycle should be any different when it comes to investing in stock markets.
[Read more…] about The Best Strategy for a New Investor

3 Stocks I Wouldn’t Touch With a 10-Foot Pole

As a long-term investor and independent analyst, I’m always on the hunt for great businesses that are available for cheap prices.

After all, there is no other way I know of that can help my wealth (whatever little I have currently) compound over the years.

Anyways, my search for such companies involves a lot of hard work. I screen for companies that have had very good past track record. I look for businesses that are easy to understand. And I look for stocks that combine these strengths and are still available for cheap.

But then, as I search for the best businesses, I come across a lot of bad businesses – some that are difficult to understand, and some that are…just bad.

Here are three companies that I believe are really bad businesses to own for investors.
[Read more…] about 3 Stocks I Wouldn’t Touch With a 10-Foot Pole

If You Are 45 or Older, You Won’t Like To Read This

An article in The Wall Street Journal caught my attention recently. It talked about how Americans, regardless of gender or education, become considerably less literate about all things money after age 60.

You see, humans are all the same everywhere. So what applies to Americans, also applies to Indians.

Anyways, the above conclusion was based on a test conducted by Michael Finke, an associate professor from Texas University.

The scores on a test measuring knowledge of investments, insurance, and money basics fell about 2% each year starting after age 60, falling from about 59% correct for those in their 60s to a dismal 30% for those 80 and older.

What was even a worse output of the study was that our confidence in our financial decision-making abilities rises with age. [Read more…] about If You Are 45 or Older, You Won’t Like To Read This