The keys to investing in equity

'I bought this scrip last week and it is down. Should I sell?'

'The markets are trading at a peak. Is it right to invest now?'

'I want to make maximum returns in minimum time. Suggest some stocks.'

'Which are the stocks worth buying with price less than Rs. 50?'

'When will the market correct? I want to invest in some good shares.'

This kind of approach to investing in equity is a recipe for disaster.
There are some serious problems here. Let's pick up some important lessons.

Lesson 1

The moment the prices of scrips drop, say, by 5%-10%, we get worried. In that anxiety, we want to sell and get out.

Let's say the Reliance share you bought last week is down 10%. So what? Will Reliance business close down? Or will Mukesh Ambani run away with your money? No.

The movement in stock prices has no impact on the business. Reliance will continue to make profits and grow. Mukesh Ambani will continue to build world-class projects. If that is the case, Reliance shares will see new heights in future. Why bother about these falls which likely will only be temporary?

The problem is, we buy stocks, not businesses. The Tatas and Birlas have been around for over 100 years. Hundreds of successful companies have run for decades and continue to grow irrespective of the stock market volatilities.

Yes, some businesses succeed, some fail. There are ups and downs. That is the inherent nature of a business. But, in the long run, they will make profits and grow. That is where management counts. Good managements run profitable operations.

Second, that's why we diversify. Even if we lose money in a few stocks, we will still make lots of money in others.

Moral: Buy businesses, not stocks.

TECHNICAL ANALYSIS RATIONALE

Why would someone rely on just studying charts that plot past and current

price and volume information, as well as perhaps technical indicators or

formulas that use the same information?

The reasons are found in observations of the stock market, as first

noted by Charles Dow in this country and can be described in three ways.

1. Efficient Market. Over time, market prices reflect everything that

can be known about a stock and its future prospects. The market as

a mechanism is very efficient at discounting whatever can affect

prices. Even unforeseen events, such as new competition, legal or financial

problems, a company takeover, the death of a founder, and

so on are quickly priced into the stock. Even unknown (not yet

publicized) fundamental factors, such as a sharp earnings drop, are

seldom unknown or unanticipated by everyone; those who know

often act on the information, and selling volume starts to pick up

on rallies. Here I am not talking necessarily about facts known only

by company insiders. There are traders, investors, and analysts outside

a company or an industry who see changes coming, through astute

observation and sharp analysis.

2. Trends. The information about a company’s stock and its future

earnings prospects that are reflected in the stock price will also be

reflected in a price trend or tendency to go up or down. Trends are

not only up or down, but sideways as well or what is sometimes

called a trendless pattern—I consider a sideways movement to be

the third trend possibility, for example, a stock moves between 40

and 50 multiple times. A trend is the action of a body in motion

staying in motion until an equal countervailing force occurs.

3. Reoccurrence. Price trends occur and reoccur in patterns that are

largely predictable. The idea of trends reoccurring is that history repeats

itself. If there was abundant stock for sale (supply) previously

for sale at 50 and that selling caused a retreat in prices, it may well

be the case again when the stock approaches this level again. If it

doesn’t, that tells you something also, as demand was this time

strong enough to overcome selling.

The basic technical analysis rationale can be remembered by the ETR

acronym (as in Estimated Time of Arrival). Well, you can estimate arrivals

Source:-ESSENTIAL TECHNICAL ANALYSIS

by-LEIGH STEVENS

with technical analysis!

HISTORY OF GOLD PRICE

Did you notice the GOLD price jumped erotic from 2005 onwards...Can any one tell me the solid reason behind this aggressive rise??

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