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

“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?

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

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

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

“Europe’s debt crisis is threatening to push large parts of the world into recession,” read a headline in The Telegraph.

The Greeks, the Italians, the French…the Europeans are seemingly all set to bring the entire world economy down to its knees, as if to prove a point to the Americans that they aren’t the only ones to be controlling the ‘recession’ lever.

Anyways, if the woes in Europe and the US aren’t enough, weakening economic growth and corporate profits in India are also playing spoilsport for the stock markets.

Note: Country names represent their respective stock market indices; Source: Yahoo Finance
One company here is asking the government to bail it out because it can’t pay off its debts that it had taken to fund an aggressive growth in the past.
[Read more…] about Fasten Your Seat Belt…Air Pocket Ahead