NSE India

CHASING MARKET….

The third quarter results are out and most of the businesses have come out with their results. The budget for the year 2015 – 16 is out, though we haven’t looked its impact on individual businesses but an increase in service tax will put a bit of pressure on inflation.

This is how the market […]

“What is it that goes up but never comes down…?”

“What is it that goes up but never comes down?” this was a riddle that was asked to me by 21 year old boy. My answer to him was, “definitely not the stock market!” We started this year around 4650 and rallied to 5400 levels and today we are close to 4900 levels.

Does it really matters where markets are heading for you to take your investment decision? If your answer is ‘yes’, then my advice is to re look at your strategy and it is time to re-write it again.

Warren Buffett once said that invest in equities thinking stock market will close down for next 10 years. My understanding to his insight on this subject is to focus on quality stocks (Companies) rather then studying the behaviour of stock market. Finding out quality stock is far easy then investing just looking at price and volume charts or any other technical charts.

The European financial crisis and specially Greece is being taking the centre stage from last one year in financial world. The last weekend G8 meeting at Camp David Maryland USA addressed European crisis by their leaders, but nothing new emerged from that.

A very reputed hedge fund founder Ray Dalio said in the interview with Barrons last weekend that, “At the moment, there is a tipping toward slowing growth and a question of whether there will be a negative European shock, and that will favor low-risk assets. But to whatever extent we have negative conditions, central banks will respond by printing more money. There will be a big spurt of printing of money, and that will cause a rally and an improvement in the stock markets around the world. It’s like a shot of adrenaline: The heart starts pumping again and then it fades. Then there is another shot of adrenaline. Everybody is asking, “Are we going to have a bull market or a bear market?” I expect we will have both with no big trend. Typically, in these up and down cycles, the upswing will last about twice as long as a down swing. We are now in the higher range of the up-cycle.”

 

You can read the whole interview here:

 

http://online.barrons.com/article/SB50001424053111904370004577390023566415282.html#articleTabs_article%3D1

What are your views in regards to the above interview? Share with us.

Also do let me know which company you want me to cover for my next week post. Leave maximum 5 names of the companies in the comment and we will choose the most popular ones.

By |May 23rd, 2012|Treasure|4 Comments|

Is your company “Mr Perfect”?

Portfolio Point: Do you believe in the idea of investing in ‘Perfect Company’?

We started Value Operations blog on 18th April last year and our vision to get that started was to share our knowledge and idea that we have evolve on how to invest successfully in stock market.

When we started our blog, Indian equity market was almost in the sixth month of declining phase. Investors were talking about value investment opportunities available in the market. My inbox was full of investment ideas for our fund from our clients.

I was sitting tight lip and was of view, that yes there are opportunities available but not many. I found three investment opportunities out of 1565 stocks trading on National Stock Exchange (NSE) at that time which were in my radar.

Bharti Shipyard was the hot topic at that time and its stock price was travelling down from around Rs 200 to Rs 140. Today it is trading at Rs 68! We are expecting its value after third quarter results in range of Rs 50 – 60 for March 2012 and at that time too we didn’t considered as investment grade.

Few months back VIP Industries was trading at Rs 80 and travelled as far as Rs 110 in less than 10 weeks. Almost 40% jump! But the stock price landed back to Rs 80. When it was trading at Rs 80, we said that it’s trading at its fair value to its March 12 earnings and there is no discount available. Many investors had different view and few of the investors also sent email and posted their views on our blog that it is going to cross very soon Rs 100, and it did happened!

My point to long term investors to think over here is, that if your horizon for investment is for the long term like our own fund or any other fund ( I am not thinking to retire another 40 years!) then running behind the momentum is foolishness.

In short run, the father of investment Benjamin Graham observed that market tends to be a bit like a popular election (made up of operators) and prices can bear no relationship to the underlying value of the business. Fads, fashions, so-called “new paradigm” or genuine innovations like the Facebook idea or internet can all produce prices that diverge frighteningly from the true value of the business.

In July 1999, Warren Buffett added: “weight counts eventually. But votes count in the short term… unfortunately, they have no literacy tests in terms of voting qualifications…”

There are more than 1800 opportunities available to invest with, but same time not all are worth to invest with on the National Stock Exchange today. Investors are always in look for perfect opportunity to park their money. But how do we know which company is the perfect one?

We advocate looking for these five attribute and doing thorough research and follow our quality ratings and intrinsic values:

1. Less or no debts on the balance sheet

2. Surplus Cash Flows

3. Extraordinary returns on equity with sustainable competitive advantage

4. Long term prospects of the business

5. Quality management

If you do not find any one of the above attribute missing in your favourite company then just ignore that opportunity, as you will come across many more opportunities in the future to invest with.

One Fund Manager shared with me the points of Perfection which he looks for before investment:

1. The company’s Balance sheet should have Net cash rather than Net Debt.

2. The company should show profit growth in all economic conditions.

3. The business should be experiencing fast growth.

4. The business should be unique in nature and very hard to be copied.

5. The business should grow without buying other businesses.

6. The business does not exist because of government regulations.

7. Poor management is not desirable

8. The business has many customers.

9. The share registry is free of institutional shareholders.

10. The financials should be as easy to read as children’s book.

What points of perfection you look for in any business before investing? Share with us if possible with the name of the company.

By |May 14th, 2012|Research|18 Comments|

How To Construct Your Portfolio..? Aziz Reveals it….!!

How to construct your portfolio is revealed by Aziz! I get plenty of emails for portfolio reviews. I am amazed to see the list of stocks people hold in their portfolios. Last week I got an email of almost 35 different companies portfolio and he wants to add another 20 in them! I can […]

By |September 21st, 2011|Treasure|18 Comments|

Which A2 rated companies Aziz is watching closely?

Which A2rated companies Aziz thinks will qualify soon to become A1?The team over here asked me apart from list of A1 companies, which A2 companies do I feel is close to get qualified as A1 very soon? My answer to them was Amar Raja batteries and Ambuja Cements. They both have their positives and […]

By |September 16th, 2011|Research|8 Comments|

The Huss and Fuss of Macro Economics…. How Investors Should Deal with them?

How to play with fast and furious change in Macro Economics in last decade? A too much fuss is created by so called economic forecasters, analyst and media in the minds of retail investors. I believe that we humans have tendency to make things complicated then they need to be. In a quest for […]

By |September 14th, 2011|Treasure|0 Comments|

A Sneak Peek To Real Estate Sector…..

A Sneak Peek to Real estate Sector of India” Now any bargain is merly an extravagance, unless one has a use for it.” The Australian Traveler, June 1923   There are many questions investors are puzzled with while investing. Questions like buy low sell high but what is high or what is low? And […]

By |September 7th, 2011|Research|4 Comments|

Capital Intensified Vs Service Sector ? Which one is better…

Reliance Industries Vs Tata consultancy ServicesLast month I attended investors trade show held in Sydney, Australia. Met many reputed local analysts and brokers. Many fund managers I recognised in trade show are very active in Asian countries (India is also included within that). Had great insightful day. Many new clients who want to join […]

By |September 2nd, 2011|Research|2 Comments|

Are You Really Invested In Blue Chip Companies?

For many of us blue chip companies are the top 50 big companies. But I don’t agree with this. Qualification to become a blue chip company is not to have a huge market capitalisation and massive infrastructure surrounded all over the country and world. My definition of Blue Chip Company is to have excellent […]