Investing

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!

• An analyst is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today! (I’ve been there, done that!) 🙂
  

• Q: Why did God create stock analysts?
  A: In order to make weather forecasters look good.

• There are primarily 3 different types of investors:
  1. Those who don’t know anything: approx. 10%
  2. Those who know a little: approx. 10%
  3. Those who don’t realize they don’t know anything: approx. 80%

• The market is weird. Every time one guy sells, another one buys, and they both think they’re smart.
  

• My broker and I are working on a retirement plan. Unfortunately, it’s his!

“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

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

“If you spend more than 13 minutes analyzing economic and market forecasts,” the famous investor, Peter Lynch, once remarked, “you’ve wasted 10 minutes.”

I found myself thinking about Lynch over breakfast recently as I was skimming financial headlines in the newspaper.

Lynch was a ‘numbers guy’ who understood the limitations of numbers. And through daily practice, I’m also trying to do that.

By the way, here are some forecasts I read today…
[Read more…] about How Many Minutes Did You Waste Today?

Before the credit crisis struck in 2008, corporate bankruptcy was the last thing on investors’ minds. It was easy for companies to raise cash at will.

However, over the past three years, times have changed considerably. The number of companies announcing downward revisions to their future growth estimates has increased. Those that are seeing rising pressure on their balance sheets can also be found in plenty.

This means that out-of-favour investment measures, such as Edward Altman’s Z scores (or Altman Z-Score), are being dusted down.

What’s Altman Z?
This system was originally devised in 1968 by Edward I. Altman, who was, at the time, an Assistant Professor of Finance at New York University. He framed this score to warn investors about firms at risk of going bankrupt. Over the years, it has also been used to help investors find the companies that are best able to withstand bankruptcy.
[Read more…] about You May Want to ‘Alt-Ctrl-Del’ These Stocks from Your Portfolio