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’

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.

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.
[Read more…] about The Biggest Risk to Your Investments Might Be Your Neighbour

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.

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.
[Read more…] about This Diwali, Move from Darkness to Light

1. Gold is real money
Everything else is paper, which they can print as much as possible. But they can’t print gold. Also gold is the only currency that has survived more than 100 years. In a world where all returns are fake, and momentary, gold provides the only real return.

2. It’s highly liquid
Apart from the stability gold provides to your portfolio, it is traded around the globe 24 hours a day. With gold, you possess an international currency which can always be sold around the world at any time. Plus, with the coming of Gold ETFs, now you can buy and sell gold on the stock exchanges, as easily as you buy or sell your stocks.

3. Worried about the rising geopolitical tensions?
The deteriorating conditions in the Middle East, revolts in the US and Europe, the nuclear ambitions of North Korea and the growing conflict between the US and China headline the geopolitical issues, which could explode at any time. A fearful public has a tendency to gravitate towards gold. Before they do, why don’t you?

But how much?
“How much gold should I have in my portfolio?” you may ask.

Not more than 5-10% of your financial savings. See, you must definitely have this much gold in your portfolio for the reasons mentioned above. But the fact remains that in a growing economy like India, sound and solid businesses provide a greater opportunity to grow your wealth in the long term.

So, good quality stocks and mutual funds are your best route for wealth creation.

Gold, on the other hand, is an excellent way for wealth preservation.

So if you don’t have gold in your portfolio, buy now…but have a limit to how much you buy of it (and let your wife know that limit :-)).