SMART Way To Achieve Financial Goals

Where will you be FINANCIALLY five years from today?

The financial secret of moving from where you are and where you want to be?

Would you like to know the financial secret behind moving from where you are and where you want to be? Try to answer this question. “Where will you be financially five years from now? 10 years from now…? 20 years from now…?”

You may get answers like “I will be financially stronger”, “I want to be financially better”. Are these answers specific? If you don’t know where you want to go exactly, there is no focus. When there is no focus; there will be lot of distraction. Distraction either leads to mediocrity or destruction.

How to refrain yourself heading towards mediocrity or destruction? You need to set Specific, Measurable, Achievable, Realistic and Time bound Financial Goals. That is S.M.A.R.T. Financial goals.

Let me take you through step by step to set SMART Financial goals.

· 1) List down Financial Goals:

Write down all your financial goals like buying a house, kid’s education, Vacation, Retirement and so on. You may wonder why this mechanical act of writing financial goals is so important. You can be thinking something without actually realizing what that something is. It is intangible and so it is not clearly defined in your mind.

When you start putting that thought into words and you try expressing it, an amazing thing begins to happen. By creating it in words, that abstract thought now takes on body, shape, form, substance. It is no longer just a thought. It becomes something which motivates you, or creates a gut feeling inside.

Your dream becomes a goal the moment you write it down. Say one of your dreams is to buy a house. You dream about it a lot. But the moment you started writing it down, your mind will ask yourself “when, where, how many square feet, how many bedrooms?” This writing gives clarity to your goal and it forces your mind to find out the ways and means to achieve the goal.

· 2) Categorize and Prioritize:

You need to categorise your financial goals based on the timeframe. Generally the financial goals less than 3 years are short term financial goals. The goals to be achieved in the next 4 to 7 years are medium term goals and the financial goals to be achieved after 7 years are long term goals. This categorization will help you in building a roadmap to achieve your goals and also in selecting the right investment products.

Your daughter’s wedding would be more important to you than the international vacation. Buying a house is more important than buying a farm house. This prioritization will help you in creating a better financial plan. Suppose if you are in deficit, you know which financial goal need to be compromised and which are all the financial goals you want o achieve irrespective of the deficit.

· 3) Fixing a target date:

Fixing a target date for your financial goals may look like a dump idea. How do I know in advance the date of buying my house, the date of my daughter’s wedding? But if you are not fixing it, then you will not be financially prepared for that. If you are financially prepared and the goal event is not taking place at that time and getting postponed for some reasons, you will not have any financial worries. You will be financially ready from thereafter with on enough money to meet that goal.

Fixing a target date will psychologically influence your thought process to work on that goal. Also the moment you fix the target date your mind starts running a countdown. Only when you know that after how many years from now you want to achieve the goal, you will be able to make a financial plan.

· 4) Estimating the cost:

First you need to estimate the cost as of today. If you are planning to save for your daughter’s wedding which is expected to take place after 10 years, first you need to calculate the cost of the wedding in today’s prices. Then you need to adjust it for inflation of 10 years. Now you will have the future value of your target.

· 5) How much to save?

Once you have found out the future value of the goal, you can easily decide on how much you need to invest in order to reach the targeted future value. Initially you may only be able to contribute less. But year after year you can increase this contribution based on your increment/promotion/income growth.

So you need to take into account the expected growth rate on your salary or business/professional income in calculating how much to save towards each and every financial goal.

· 6) Budget the savings:

As you know by now exactly how much to save towards each and every goal, you need to accommodate these savings in your budget. If you do this year after year, then you can see all your financial goals becoming reality. The difference between a goal and a dream is the written word. I am confident that you will come to find that financial goal setting works and that it will soon become a way of life for you.

Start setting your financial goals today.

STEVE JOBS -passed away

STEVE JOBS -passed away....its very sad.

A man who thought to the world through his products how the product designs is important for any product to succeed in it promotion.He has set and exemplary example of the MP3,i-Pad etc..The other companies/competitor's are still fighting hard to establish their products in market place.As a management guy i knew the hardwork behind planning his business s...trategy to stand alone even now.

Anyway my deepest heart felt condolence to Steve jobs.Let his kindom of business grow as he desired to be.


About 'STEVE JOBS:-

Steve Jobs was the co-founder and CEO of Apple and formerly Pixar.

Steve Jobs was born in Green Bay, Wisconsin to Joanne Simpson and a Syrian father. Paul and Clara Jobs of Mountain View, California then adopted him. In 1972, Jobs graduated from Homestead High School in Cupertino, California and enrolled in Reed College in Portland, Oregon. One semester later, he had dropped out, later taking up the study of philosophy and foreign cultures.

Steve Jobs had a deep-seated interest in technology, so he took up a job at Atari Inc, then a leading manufacturer of video games. He struck a friendship with fellow designer Steve Wozniak and attended meetings of the “Home brew Computer Club” with him.

After saving up some money, Jobs took off for India in the search of enlightenment. Once he returned, he convinced Wozniak to quit his job at Hewlett Packard to join him in his venture that concerned personal computers. They sold items like scientific calculators to raise the seed capital.

In 1976, Jobs and Wozniak founded Apple Computer in the Jobs family garage. The first personal computer was sold for $666.66. By 1980, Apple had already released three improved versions of the personal computer. It had a wildly successful IPO, which made both founders millionaires many times over.

A tiff with the Apple’s Board of Directors and John Scully led to Jobs’ resignation. Steve Jobs decided that he wanted to change the hardware industry. The company was called NeXTStep, which produced the NeXT Computer. The machine was a commercial washout but helped with future work in object-oriented programming, PostScript, and magneto-optical devices. Jobs returned to his original company after Apple acquired NeXT in 1996.

Steve Jobs also started Pixar, which has produced multiple blockbuster films, including Toy Story (1995); A Bug’s Life (1998); Toy Story 2 (1999); Monsters, Inc. (2001); Finding Nemo (2003); and The Incredibles (2004).

In 2004, Jobs was diagnosed with a malignant tumor in his pancreas, which was successfully treated.

Jobs resigned as CEO of Apple on August 24, 2011 and subsequently assumed the role of Chairman of the Board.

On October 5, 2011, Jobs passed away.

Follow these four rules to get rich!

Follow these four rules to get rich!

Do you want to create wealth? Are you satisfied and happy as you are?

Most of us would answer the first question as Yes, and the second as No, and if you are one of them then you are at the right place at the right time. My Hearty Congratulations! to you. Wallace D. Wattles said, “Every person who gets rich by creation opens a way for thousands to follow - and in...spires them to do so."

Wealth creation is not the privilege of a few, but as Ralph Waldo Emerson pointed, “Man was born to be rich, or inevitably to grow rich, through the use of his faculties."

Here come the 4 maxims to wealth creation as jacks out of the box:

1. When young be a youngster, when old be mature.

"Don't let the opinions of the average man sway you. Dream and he thinks you're crazy. Succeed, and he thinks you're lucky. Acquire wealth, and he thinks you're greedy. Pay no attention. He simply doesn't understand." By Robert Allen

Some youngsters are easily influenced by the ideas, advice and experiences of others, believed in safe and secure investments in good companies scrip, and just created more wealth.

Youngsters in their 20’s should invest in stocks and shares as they can afford to wait and benefit with compounding effect and lower taxes. Likewise an old person should play mature and responsible and invest in safe and secure investments like debt instruments and big cap mutual funds.


2) Know the depth of ocean before stepping in, and your investment risk:

Investment risk calculation of each portfolio helps judge risk. Your age, appetite for risk, and length of investment decides your investment portfolio. M.R. Kopmeyer said, The great road to wealth is to learn useful facts", how true it is that many investors had lost heavily in future stock selling in a bull market without much knowledge. A safer investment would have been multi-cap mutual funds with wealth creation period of 10-15 years. However senior citizens should invest in big cap mutual funds with much lower allocation.

Wealth creation decisions should be long term, for it is futile to be swayed to sell units/shares in a rising market and miss on opportunities for further wealth creation. Follow the market trend and do as J. Paul Getty quotes, "Buy when everyone else is selling and hold until everyone else is buying"


3) Set an optimum leverage between debt for wealth creation and lifestyle assets.

"Abundance is not something we acquire. It is something we tune into." By Wayne Dyer

There is an urgent need for quick wealth creation to meet inflation demands, but we need lifestyle assets like car, TV, furniture and a house to live in. Unplanned debt can be a barrier to your wealth accumulation process. It is true with easy debt options available, there is a choice to borrow for lifestyle assets alone or for also for wealth creation investments like real estate. In addition, payment of EMI leaves youngsters with less capital to invest in wealth creation assets.

In addition, leverage requires not investing in same type of assets like land and house, as price fluctuations could adversely affect all in that type of asset. Also investing on lifestyle comforts pay nothing in the long run.


4) No one created wealth by laying all eggs in one basket.

Variety is the spice of investment decisions too, helping in diversifying risks, and making it possible to offset the fall in value of one asset by profits in another. So having a diversified portfolio of real estate, gold, shares, mutual funds and house, and avoiding investment just in one asset class helps. In addition, portfolio diversification proves effective in tax saving, and better wealth creation.

Now finally you too are on the path to being a high networth person. How do you view yourself?

Do you quote George Claso, "Wealth is power. With wealth many things are possible." and end on a final note, with John Emmerling, "Study well what the billionaire does. It may make you a millionaire."

Also vist our> http://seed4wealth.blogspot.com/

Is there a gold bubble now?

22 Aug, 2011, 11.38AM IST, Narendra NathanNarendra Nathan,ET Bureau

After reporting consistent gains for the past 10 years, gold continues to be the best performing asset this year as well. The year-to-date return is a whopping 35% as the price of gold touched an all-time high of Rs 27,840 per 10 gm on 19 August. While new investors and speculators are rushing to benefit from this 'golden harvest', seasoned players have already started raising an alarm.

"Gold is getting into a bubble territory. Though the short-term uptrend may continue due to the ongoing sovereign crisis in the US and Europe, it can burst any time," warns Prithviraj Kothari, president, Bombay Bullion Association. So investors need to be cautious. While it is the 'safe haven' demand that is propping up gold, investors need to keep in mind that this is not a risk-free market. Gold had crashed to $260 an ounce (nearly 69%) after hitting a peak of $850 in 1980.

How long will the current rally continue? "Gold may remain strong for the next 6-9 months, but once things stabilise and other markets start doing well, money will move out of gold. After three years, gold prices may be lower than the current level," says Kishore Narne, head, commodity, Anand Rathi Financial Services

What is triggering the gold rally?

Here's a look at some crises that are driving the gold market now.

US crisis:

One of the causes has been the downgrading of the US sovereign debt to AA+ from AAA, a rating it had held for the past 70 years. The efforts by the US government to support the faltering economy is another reason. For instance, rising interest rates usually lead investors away from gold. However, the decision by the US Federal Reserve to leave interest rates close to zero for two more years will boost the gold market.

Euro crisis:

Several European countries, such as Portugal, Ireland, Greece, Spain and Italy, may be forced to default in the short to medium term. Their efforts to reduce spending and increase taxes are being hampered by a faltering Eurozone economy, which grew by just 0.2% in the second quarter, its worst performance after emerging from the recession in 2009. There are also concerns about the ability and willingness of relatively stronger countries, such as Germany and France, to support the troubled ones.

Currency crisis:

As two major economic blocks (US & Europe) suffer problems, central bankers of several countries have started losing faith in their reserve currencies and have decided to buy gold as an alternative. For instance, in July, Thailand, South Korea and Kazakhstan added gold valued at $2.56 billion to their reserves.

Falling consumption demand

While the investment demand is shooting up (holdings in exchange-traded products backed by gold rose to a new record of 2,217 tonnes on 8 August), the consumption (jewellery) demand is on the wane. According to the recently released World Gold Council report, the global gold demand in the second quarter of 2011 came down by 17% y-o-y to 919.8 tonnes.

Source:-http://economictimes.indiatimes.com/markets/commodities/is-there-a-gold-bubble-now/articleshow/9671836.cms

Why market is bleeding in red?

Reasons for the current melt down!!

Yes, the market is down for the past 2 years.... What are the reasons for the current meltdown? The following reasons may be attributed to the current situation of the market!

1. The inactive Government

2. The 2G and other Scams

3. Higher Inflation

4. Global economy still in doldrums

5. Unfavorable RBI policies towards curbing the inflation

6. Lower GDP growth rate

7. FIIs afraid to invest in the Indian markets

8. Higher Oil price and commodity prices

9. Investors stay away from the Indian market


Whatever may the reason an investor should be happy about the present market condition as nearly 75% of the tradable securities are down by more than 30% from its 52 week peak price. Interestingly among them nearly 425 stocks are down by more than 70% from its 52 week peak price. Though not all the stocks are worth investing some of them may be a great find. As an investor we can make use the opportunity thrown by the market and to borrow the quote of Warren Buffet “we should look at market fluctuations as our friend rather than our enemy; we should profit from folly rather than participate in it.” Tomorrow let us check which stocks have lost the most in the current meltdown….

The Indian market is bleeding in red...Why it so?

The banknify crossed the 200DMA and the Nifty was about to cross the 200 Dma few days back and today it fell down below 50DMA?? It really fooled many technical players..As every one jumped and bough nifty near 5700 and BN near 11340 levels.today Nifty and Bn opened in deep gap down and ...now Nifty trading near 5480 and Bn near 10890??? i am receiving so many desperate calls from people who caught between hell and deep sea!!

Many of these people had strong faith in technical analysis and that made this huge loss..The technical analysis is good..but trading plan with levels and managing trailing stop loss is necessary in any market.

When every one buying at high...in fact we start selling near11400&5700 levels based on our fundamentals..That is the macro economy of the world.We sold almost in the peak based on these economical facts however the market was showing bullishness.

The facts are..

1.The RBi Repo Rate like of .50Bps was expected by us..There are about 25 tv analyst failed in this expectation and they keep on recommending buy in nifty&bank nifty..!! i was shocked by their analysis..the best thing i could do was... off the TV.

2. Fear of U.S Default

There was no compromise in sight to raise the U.S.'s $14.3 trillion debt ceiling by August to avert a default that could trigger global financial chaos.

3.European sovereign debt crises

European Debt Crises Rising Everyday one county to other country.

More...

Credit rating agencies have threatened to cut America's top-notch AAA bond rating if an increase in the debt limit is not accompanied by a plan for controlling long-term deficits.

A default and downgrade could push the United States back into recession and send shock waves through global markets.

Wall Street banks are preparing for the real possibility that the United States will lose its top credit rating which they say will cost the country $100 billion in additional interest payments and hurt both consumers and the economy.

"That's a negative for growth," Mike Hanson, senior U.S. economist at Bank of America Merrill Lynch, told reporters on a call organized by a Wall Street trade group, the Securities Industry and Financial Markets Association.

"That's an environment where hiring is going to be much less likely than it otherwise would be," he said.

The stalemate in Washington is already having an effect, with investors starting to take cash out of the market and shifting away from some long-term investments.

There was no hint of panic, however, as markets held out hope the stalemate could still be broken.

...Tell me who will remain long in market peaks by knowings these economical crisis going to take place...?

REAL RICHNESS

" Richness is not earning more,spending more or Saving more"
" The real RICHNESS is ; When you need no more"

Every one, out there in the world chasing after money and making all our attempts to gain so much money!! Thinking that one day we will have all richness and enjoy life..That one day is never going to come.

The intention of making money is to enjoy or celebrate life.But we are so much pre-occupied with the money. only the obsession of making money remaining with us and that make us to do, so many works to achieve the richness.We jump from one to another company for better salary...however you jump and how much ever one may get more salary is not enough.As the inflow raises the outflow of money also subsequently raises.Slowly, slowly we become nothing but money making machines and there is no enjoyment in life.

Just remember one thing, there are so many kings came and gone..They had all richness,Still they were unable to conquer life with their richness.Making money and becoming rich is just one part of life..So, don't over do that...Because, you are going to attain nothing but miss the life here&now which is very short and so precious.

The Billgates,Infosys- Narayanmurthy etc they all made all the richness they wanted..in fact beyond their wants...Finally they gave up many of their wealth to charity.It means they want something else than money...!!Just assume that how much effort they made to attain that richness and simply give up that to a charity? Think about it. That is Life.The quality of living is more important than only accumulating wealth.

Richness or Wealth has meaning when you are there to enjoy and celebrate your life.There is a point in everyone's life comes, when you want no more; Then life happens.One will find meaning of richness...' Richness is not just the material wealth but it is more of the 'INNER RICHNESS'.That comes to one when one want no more.

Strong sales power Hero Honda Q1 net up over 13% yoy

Moneycontrol Bureau

Hero Honda Motors ' first quarter net profit rose 13.5% from a year ago to Rs 557.89 crore, boosted by strong growth in sales volumes. Revenue of India’s largest two-wheeler maker accelerated 32% year-on-year to Rs 5,683.33 crore.

Hero Honda’s sales volumes were up 24% in April-June. It sold 15.3 lakh two-wheelers in three-month period, highest sales for any quarter.

The results were almost in-line with analysts estimates. A CNBC-TV18 poll had expected net profit at Rs 543 crore on revenue of Rs 5,660 crore.

Hero Honda shares rose over 1.7% at Rs 1,786.90 on NSE in afternoon trade after the company saw profits rise after four quarters of decline.

Hero Honda said it sold over five lakh two-wheelers in each month of the first quarter, thus demonstrating its sustained top-line performance and further strengthening its market leadership.

"Our Q1 performance has set the outlook for coming quarters, and we are confident of achieving our initial guidance for FY12 to sell over six million units," said managing director and chief executive officer Pawan Munjal.

This strong growth in sales helped offset pressure from rising commodity costs and a surge in depreciation costs. Hero Honda’s raw material costs surged 37.5% year-on-year to over Rs 4,241 crore in the quarter. Depreciation costs in the first quarter were up almost five fold to Rs 239.8 crore.

Munjal said the company’s strategic initiatives of developing new brand identity post breakup with Japan’s Honda Motor, exploring international opportunities, enhancing research and development capabilities and finalizing its fourth plant were pacing ahead.

However, the thrust presently was to maintain operational excellence amid volatile cost of commodities like steel, aluminium and rubber, he added.

Last December, the Hero Group and Honda had agreed to end their 26-year-old joint venture, with the Indian partner agreeing to buy out Honda’s 26% stake in Hero Honda.

Munjal said Hero Honda will now explore markets to grow around the world, especially in Latin America, Africa and South East Asia.

It also plans to "aggressively" expand distribution network in India and will cross 5,000 customer touch points by end of this year.

Nachiket Kelkar
nachiket.kelkar@network18online.com

Article source- MONEY CONTROL

JUST FOR FUN SHAKE...

joke of the day

It is a conversation between a STOCK TRADER&GOD
...
A trader and God are speaking. The trader asks God,

“What is a million years like to you?”
“Like one second,” answers God.

The trader then asks,
“What is a million dollars like to you?”

God answers,
“Like one penny.”

The trader then asks, “Can you spare a penny?”
“Sure,” says God, “give me a second.”

All About "SAR", Late Mr W.D. Gann's 'Stop And Reverse' Concept

Definition:

A stop and reverse (often known as SAR ) is a type of stop loss order that exits the current trade, and either simultaneously or immediately after wards, enters a new trade in the opposite direction. Stop and reverse orders combine elements of trade management and risk management, and are used in place of regular stop loss orders.

When Are Stop And Reverse Orders Used?

Stop and reverse orders are used when a trader wants to reverse their position (hence the name stop and reverse). For example, if a trader is in a long trade, and wants to exit the long trade and enter a short trade at the same price, they would use a stop and reverse order. The same task could be accomplished manually (i.e. placing an exit order, followed by an entry order), but stop and reverse orders are more efficient as they can combine the entry and exit into a single order.

How Do Stop And Reverse Orders Work?

Stop and reverse orders not a standard order type, and are not offered by many brokerages or any exchanges (that I am aware of). Therefore, stop and reverse orders are usually implemented by the trader's trading software (order entry software), and therefore their implementation can vary significantly, but with the same end result (a new trade in the opposite direction). If a trader's trading software does not offer stop and reverse orders (many do not), the trader can create a stop and reverse order by doubling the number of contracts (or shares, or lots, etc.) in their stop loss orders. For example, if a trader is in a long trade with one contract, a stop loss order that is placed for two contracts will function exactly like a stop and reverse order. Note that stop and reverse orders are not related to the Parabolic SAR indicator, however, a trader that is trading using the Parabolic SAR indicator may use stop and reverse orders in their trading.

Also Known As: SAR

(Courtesy: about.com) Mr Gann calculated SAR from the previous two trading days data. If Downtrend, he would use the Highest High of previous two trading days as SAR, if Uptrend he would use previous two trading days' Lowest Low as SAR.

All About Stock Market.

This Write up is to meant for the new BEE's, who like to learn something about stock market.

What is meant by stock market?

A stock market is a private / public market where securities of companies and their derivatives are traded at a predefined / agreed price. Usually these securities are listed on stock exchanges. A stock market consists of few stock exchanges where the listing and trading takes place. All stock markets are regulated by some organization designated by the Govt.

How does a stock market function?

A stock market has many members who co ordinate for various activities in the process of placing orders, their execution and settlement etc. A person who desires to buy / sell shares in the stock market, can place his order through the broker either in the traditional manner or can place an online order himself through the terminal provided by the broker.
When an order is placed, the order is sent to the exchange and then the order resides in the Exchange system till all conditions of the order have been met with. When the conditions of the order are fulfilled, the order is executed and the shares purchased / sold are delivered to the buyer / obtained from seller through the broker. The whole settlement process takes place through NSCCL (National Securities Clearing Corporation limited), the official clearing agent for the stock market in India.

Who regulates the stock market?

In India, the stock markets are regulated by SEBI (Securities and Exchange Board of India). There are several stock exchanges in the country out of which the two most prominent exchanges are BSE (Bombay Stock Exchange) and NSE (National Stock Exchange). The signature index for BSE is Sensex while for NSE, it is NIFTY.

What is Rolling Settlement?

Rolling Settlement is the mechanism adapted by the Indian Stock markets for faster settlement of trades. In Rolling Settlement, trades executed during the day are settled on net obligations basis. In India, settlement of trades executed is done on T+2 basis where T stands for Trading day and +2 stands for two working days excluding the trade day. Net the effect of shares bought or sold is on the third day from trade day.
In this kind of settlement, two trading days are considered for settlement where Saturday, Sunday, Bank Holidays and trading holidays are not considered as working days for settlement. Hence, a trade done on Monday will get settled on Wednesday.

What is dematerialization?

Dematerialization is the process by which an investor can get the physical share certificates converted into electronic shares of equivalent number and value. Dematerialization takes place though a depository participant who assists an investor to get the shares dematerialized.
In this process, once the physical shares have been converted into electronic shares, they are credited to the client’s demat account which is with the depository participant. An investor can get those shares dematerialized into his / her account only if those share certificates are registered on his / her name.

Why invest in shares?

Investing in shares is like investing into ownership of a company which no other investment instrument can give you. Unlike any other investment instrument which either give you fixed income or meager returns and no owned share in the same, equity investment gives you an opportunity to become a part of the company ownership and also gives you regular returns on your investment as dividend income or through price changes.
Investing in equity also allows you to enjoy the flexibility of staying invested as long as you wish to, take advantage of the price movements and thus utilize the liquidity. In an overall view, equity investment is better than any other investment.

Can I invest in any share?

By the virtue of investing in shares, you can invest into any share but since investing in equity is like owning a part of the company, you should be careful about which share are you investing your money. The profits that you earn from such investment, will largely depend on the shares that you have purchased. If you have invested in a low earning share, no matter much you invest, it is not going to fetch you the same kind of return as a high earning share.

How do I buy / sell shares?

In order to buy / sell a share, you need to first become a client of one of the stock market members who are commonly known as stock brokers. But before you sign up with a stock broker / financial services provider, you need to understand the importance and sensitivity of the relationship between the stock broker and yourself so that you are familiar with the rules and regulations abiding in the relationship.

Once you have chosen your stock broker / financial services provider, you need to open an account with the same, get quotes for the share that you wish to buy and place orders either by calling up or online.

When am I ready to buy shares?

Before you put your money into shares, you need to be aware that investing in shares is not only rewarding but also risky so you need to make sure that the surplus money available with you at hand may not be required in near future. This is so because to reap the benefits of investing in shares, you need to stay invested for a considerable time period.
Once you are clear about the above mentioned facts, you are ready to buy your first share.

How much does a share cost?

The price of a share is preset by the exchange. The demand and supply factors of the market determine the price at which a share is bought or sold. A share can cost anywhere from less than Rs. 10 to an amount even above Rs. 2000.
If you are keen on buying a share of a company, you can either refer to any of the news papers that provide such information or find it online thorough online trading platforms provided by your broker or even calling up to your broker in order to assist you in the same.

Can I put all my surplus money in shares?

The answer to this is all dependent on your age, your financial requirements and future goals.
If you are young, surplus money at hand that is not likely to be required in near future, can stay invested for few years, then you can invest all that in shares.
But if you are retired / likely to retire soon / old, have no other source of income or earn meager income, surplus money at hand that is not likely to be required in near future, you should not resort to investing all that in shares, instead you can diversify your investments into bonds, fixed deposits, Govt. securities etc. and a lesser exposure in equity investment.

Ø Concepts & Terms you should familiarize with

Ø Margin trading

Margins are collected to safeguard against any adverse price movement and it is usually a percentage of the transaction value. In share trading, you can buy shares only up to the margin amount existing in your account. i.e. you cannot exceed your margin limit to place an order.
I order to take advantage of price movements, even though you don’t have enough margin in your account, Margin trading has been introduced for the facility of investors. Margin Trading is a facility provided by a broker to the client where a client can place orders for a value exceeding the margin amount available in the account. In margin trading, a part of the required margin is given by the client while the rest is funded by the broker.

Ø Different types of orders that can be placed

There are various types of orders that can be placed in equity investment; such orders have been listed below:

• Delivery order: An order where shares are delivered into the client’s demat account for settlement and they cannot be sold on the same day of order placement. Once can only sell such shares once their delivery has been received.
• Intra day order: An order where shares are bought and sold on the same trading day and there is not delivery of shares into the client’s demat account for settlement. For such orders, settlement is done on net payment basis where only monetary effect are given to the client’s account.

• Market Order: An order placed at current market price of a share in order to get instant execution of the order. This order is placed when an investor expects the share price to rise sharply and is thus keen on buying it. Such orders may get executed at market price when your order is placed but their can be some difference in the price at which your order was executed as there could be a price change while you placed your order.

• After Market Order: An order that can be placed to buy or sell a share even when the market session is over. Such orders are executed when the next market session opens for trading. After Market orders can be placed within a specific time period which varies between different brokers.

o Limit Order: An order that is placed to buy or sell a share with a price limit in it so that your order gets executed at a price level favorable to you. In a Buy order, limit has to be lesser than the current price and in sell order, it has to be more than the current price.
For example, you wish to place an order for a share whose current price is Rs.125 and you want to buy it at any price lower than the current price, then the limit for your order should be Rs.124 at least so that your order gets executed only after the limit has been achieved and gets executed at Rs. 124 or any lower price.
But if you wish to sell the same share, you would always prefer to get the best price for it to make maximum possible profit out of it. So, in the sell order, your limit should be Rs.126 at least so that your order gets executed only after the limit has been achieved and gets executed at Rs. 126 or any higher price.

o Stop Loss Order: An order that allows you to decide the maximum loss that you are ready to bear in intra day trading. As in intra day trading, you enter and exit the position within the same trading session, Stop Loss order is placed to safe guard against potential losses that may occur once your order is executed.
Suppose you place a buy order at Rs.125 and it gets executed, in order to minimize the losses if any adverse price movement takes place; you need to place a reverse stop loss order. This order will be a sell order with the same quantity of stock that you have received as a result of the buy order. Now you need to specify the price at which you think you would like to exit the position which can be Rs. 120 and also the price at which your order should enter the market which can be Rs.123. This price (Rs.123) is called trigger price. If you think that the price may fall, from the current market price, then you can put this trigger in stop loss order to make sure that it enters the market only after the trigger price has been reached.

Ø Circuit Filters

A circuit filter is a measure introduced by SEBI to determine fixed price bands for different securities within which they can move in a day. If there’s any breach beyond / below these price bands, it will result in temporary halt in trading for those securities.
Circuit filters are based on the previous close price of the security and as previous close price of the same can be different on BSE and NSE; so can be the circuit filters.

Ø Short selling:

The concept of short selling simply means selling a share that you don’t own. In short selling, an investor sells a share that he / she doesn’t own but is expecting the price of the same to decline.
It is generally practiced in intra day trading & FNO trading where the sell position is covered by buying a stock so that the net monetary benefit gets affected in the account and no delivery of shares is required.

Ø Auction of shares:

Auction of shares is a methodology adapted by the exchanges to make sure that the buyers get delivery of the shares due to them as a result of short delivery. Short delivery of shares generally takes place due to short selling by seller’s who don’t possess the required number of shares.
In this process, the exchange buys shares from the seller’s broker who lends such shares to the seller and delivers it at an agreed price to the buyer. The seller in such case has to bear the monetary loss / expenses incurred in the auction.

Ø Insider Trading:

Insider Trading is basically trading / investing in any particular security based on unpublished information which is price sensitive for that security. Usually such information comes from people who are associated with the source of such information and want to make profit from such information.

Insider trading is prohibited and an offense punishable by law.

WHAT IS 2+2...

WHAT IS 2+2 ?

A business man was interviewing applicants for the position of divisional manager. He devised a test to select the most suitable person for the job.

He asked each applicant, “What is two and two?”

The first interviewee was a journalist.
His answer was “Twenty-two.”


The second applicant was an engineer.
He pulled out a slide rule and showed the answer to be between 3.999 and 4.001.

The next person was a lawyer.
He stated that in the case of Jenkins v Brown, two and two was proven to be four.

The moral is....
We conceive so many idea's/prejudice inside of our mind and that hinders/filter to see the reality as it is.

We takes things granted and presume things as per our convenience and refuse to accept the reality as it is.This is the problem with knowledge.We always tend to think in our own terms and De-align with reality and finally face so many consequences.Just give up this and just be ordinary.

Being ordinary is the extraordinary thing in life.

One of the famous scientist, who was so much involved in his research and almost spend 24 hrs in the lab.He had only one hobby of playing with his pet animal cat.

There were two Cat's. one was big and other was a small one.
So,He made hut for the cats.So both can stay together.But he made two separate doors for the cats.One door was small one for the small cat and another one was big door for the big cat.

The logic here is, the big & small cat can enter through the big door and there was no need for a small door???.

A Great scientist's too fail in life because of their complex thinking pattern.The simple logic will not appeal to them as their minds are too much occupied and refuse too think simple.The ordinary person can have greater wisdom many time because, of their simple thinking.Hence they could see the reality as it is and get along with life easily without much worries.

SCULPTURE

"A Stone is broken by the last stroke,This does not mean first stroke was useless."

Success is a result of consistent /continuous effort.It only comes to those who has the will to see the end.

Just imagine a Sculpture, who make sculpture out of the raw stone need to put so much efforts to break the hard stone.He/She has to give hard st...roke to the axe by the hammer... than only , he/she can remove the un-wanted parts of the stone and finally he/she brings out the sculpture as per the desired objects.But, in the process...so much consistent effort is needed to bring out the best out of the raw stone.

The sculpture is no where, but within the stone itself.
The ordinary eye can not see that.Only the sculpture can penetrate and see the sculpture within it..He just do nothing but removing the unwanted parts of the stone and that make the stone to worshiping idols in our temple.This is what makes things ordinary to ex ordinary.

What ever work one may do, is not so important.But the involvement and the consistent effort only make one to underline their presence in their field.They may set a trend for others to follow.Just remove the hurdles out, that hinders your path of success.Just adapt the skills from a sculpture,how he identify and remove the unwanted stone and make it adorable one.

Have a good day.Good Night.

The Indian Market Now?

Here are the excerpts from Rakesh Jhunjhunwala’s latest Interview given to a Business Channel on 14th June 2011.

Golden Period For Indian Stocks Has Not Even Started -Rakesh Jhunjhunwala

What is your view on the markets?

The next three months are going to be a very difficult period for the markets. The chances to break down to me seem to be greater than the chances to break up, at least in the next three months.

Do you see 5000 acting as a base for this market?
That is difficult to say, but I would think so, 4800-5000 is a level where markets will
surely find a base, strong support which goes there.

So what is the biggest risk for Indian markets currently?
The headwinds are on Indian markets, the most important thing is inflation. Because
inflation controls everything, interest rates, growth and the second headwind is the
government inaction. Although we have very good people at the helm of government
and they know what needs to be done, but politically they are not able to give any
consensus at all.

There was hopes of some big reform after the elections, but nothing has happened up until now. And unless we get some kind of a reform in the subsidies and some kind of a clear road map for the DTC and goods and sales tax, GST, the markets are waiting for that.

But would you bang the table and say that or predict rather that in next 3 years, Sensex will be at least 50% higher than where it is?

I am extremely bullish in the longer period. Three months unless and until we get clarity on the monsoons which we will get by August end, and we will see what kind of
government action comes through. Until then, the markets are going to have a downward bias. Three years, 5 years, 10 years, I am extremely bullish.

Do you think the golden period for Indian equities is not over?
It has not even started.Let me get this right and this is one point I do not want to get it wrong for our viewers, near term you are not bullish, but your long-term outlook is still intact.

Absolutely and near term I mean until things clarify and it depends how events turn
out. If the monsoon is good and commodity prices ease which I personally expect, oil
prices should be at $80-85 and some government action comes through and inflation
may not have come down, but it becomes apparent that in future months, inflation is
going to come down, then the Indian markets will have a very strong ride after that.
So I am saying that the next 2 to 3 months are uncertain depending on how events
turn out. The period for the next 9 months could be very good or could be okay.

But is the rampant speculation in commodities over?

I do not think so. Speculation in commodities is at an all-time high.But insiders tell me that you have been short commodities of late.Yes, I am shorting some commodities. I am short.

How come you have not made any large investments in last 6 months?
Delta Corp was only large investment you made and that was just before Diwali.
I have applied for a loan to my father-in-law. When he sanctions it, I will disburse it. I
will make it. I am fully invested and all that I have done in my life is investing. So now
even though I have some money, let me buy something else.

But if you had enough capital, do you see currently enough opportunities
which are available?
I am always capital short. If I see the opportunity, I will get the money. So if I see an
opportunity, I will surely invest.

Are you excited that Titan is at an all time high, your biggest investment?

I am happy that the company has proved itself to be an extremely good robust company, very good growth prospects, now getting very aggressive. I am extremely
very happy really.

But you are still of the view that Titan potentially could be $1 billion investment for you?

I am hopeful now it should be more than that.More than a billion? Why not?

Why is Titan an exciting business to own?

Because this business has the highest entry barriers. They have good growth. They
have excellent management. They are expanding very aggressively. They have good
brands. So I think the retailing is going to be one of the biggest growth stories in India
and Titan is in a sector which dominates whether watches or jewellery and now they
are coming to frames. They could enter other areas also. So with such high entry
barriers and growth and very high return on equity and good positive cash flows, Titan surely is a very sweet spot.

What about the PE multiple if you look at estimates and again I am looking the consensus estimate?

By Indian measure of measurement, it is expensive. But good stocks always remain
expensive.That is the investor Rakesh Jhunjhunwala, but

what is the trader Rakesh Jhunjhunwala thinking and doing?

Thinking and doing, I am trading. I feel the markets in the next 3 months have more
downsides than upsides.

So broadly speaking can I safely assume that the trader Rakesh Jhunjhunwala is short or he is not bullish?

I am certainly not bullish and let's not discuss my trades.So where do you think the new leadership in the markets could emerge from?Titan will be one of the leaders.
Even after this run up? Yes, why not?

It is interesting if I look at your investment portfolio. You do not own any Nifty 50 or Sensex 30 stocks. Why is that?

I hope that some of those stocks which I own will become part of the Nifty or Sensex.

So apart from Titan, which other stock has the possibility of being part of Nifty 50?
Lupin is a fairly large company now.

What makes you so bullish on Lupin because the Indian pharma business...?

It is growing well, they have done well. They are doing well in Japan, America.

Just For Fun

Two women were walking through the woods when a frog called out to them and said: "Help me, ladies! I am a stockbroker who, through an evil witch's curse, has been transformed into a frog. If one of you will kiss me, I'll be returned to my former state!"

One woman took out her purse, grabbed the frog, and stuffed it inside her handbag. The other woman, aghast, screamed, "Didn't you hear him? If you kiss him, he'll turn into a stockbroker!"

The second woman replied,

"Sure, but these days a talking frog is worth more than a stockbroker!"

PEG Ratio - What is it and its Significance

Below is the mathematical calculation for it,


PEG = [ (P/E) / (Growth) ]


Growth is year on year growth in %. For example, for stock "A" with P/E of 20 and growth of 50% will have a PEG ratio of 0.40 (20 / 50) . Stock "B" with a P/E of 30 and growth of 60% will have a PEG ratio of 0.50 (30 / 60). Stock "C" with a P/E ratio of 15 and growth of 15% will have a PEG ratio of 1.


In the above example, Stock "A" with least PEG ratio is the most attractive, followed by stock "B" and then stock "C". But, most investors get deceived by stock "C" for its least P/E and make mistakes. Generally, PEG ratio of less than 0.50 is considered an attractive buy and anything above 1 is expensive.


Of-course the PEG ratio becomes more decisive when growth taken into calculation is cumulative growth for 5 years or more which brings in the consistency factor.