Nifty ends marginally lower but holds above 10,000 , up 1% for week


The benchmark Nifty50 pared losses in the last leg of trade to end the first day of August series above 10,000-mark, up 1% for the week. Sensex, on the other hand, also ended marginally lower for the day but up 1% for the week. The street was dragged down by after Dr. Reddy’s extended fall for the second straight day post weaker Q1 quarterly earnings. Negative cues from Asian markets after US tech shares pulled Wall Street slightly lower also contributed to the losses.

Broader markets outperformed benchmark indices with BSE Midcap and BSE Smallcap, up 0.5% and 0.4% respectively.

Focus now shifts to Reserve Bank of India’s two-day monetary policy meeting, which is set to begin next week on Tuesday, while the outcome is expected on Wednesday.

HDFC, Infosys, Kotak Mahindra Bank, Adani Ports and ONGC gained the most on BSE Sensex while Dr Reddy’s, Sun Pharma, Lupin, ICICI Bank and HeroMoto Corp lost the most on the index

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Reblog: 5 Books That Inspired Warren Buffett


An interesting vlog that appears on inc.com. It speaks of the 5 books that inspired Warrent Buffet. The link to the video is here.

The names of the 5 books are here:

The Intelligent Investor – Benjamin Graham

Common Stocks and Uncommon Profits – Philip A. Fisher

Business Adventures 12 Classic Tales from the World of Wall Street – John Brooks

Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger

Outsider – Thorndike


Reblog: 3 Quick Investing Tips from Warren Buffett’s Favorite Book


Have you read the Intelligent Investor by Benjamin Graham? Graham is Warren Buffett’s mentor. He mentions him in almost every long-form talk and interview. A great blog post was recently shared showing 74 of the top quotes from the Intelligent Investor book. Here are 3 that caught everyone’s attention:

  1. “Mr. Market’s job is to provide you with prices; your job is to decide whether it is to your advantage to act on them. You do not have to trade with him just because he constantly begs you to.” (p. 215)
  2. “Losing some money is an inevitable part of investing, and there’s nothing you can do to prevent it. But to be an intelligent investor, you must take responsibility for ensuring that you never lose most or all of your money.” (p. 526)
  3. “The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioural discipline that are likely to get you where you want to go.” (p. 220)

The original post appeared on medium.com. This post was created by Stefan Cheplick, who does digital marketing for StockTwits and is available here.


Sensex rises 124 points, Nifty50 ends near lifetime high


In a highly volatile session, the domestic equity market ended on a positive note with BSE Sensex just 40 points shy of its record high level and Nifty50 closing near its all-time high.

Sensex closed 124 points or 0.39 per cent higher at 32,020.89 while Nifty50 closed the day at 9,915.25, up 42 points or 0.42 per cent.

The 30-share pack had opened at 32,035.88 and touched an intraday high and low of 32,062.23 and 31,808.93, respectively, as index heavyweights WiproBSE 6.47 % (up 6.54 per cent) and Reliance (up 3.75 per cent) hogged the limelight.

BSE Midcap index gained 6 points or 0.04 per cent to 15,185.53 as shares of Adani Power, Bajaj Holdings and Bajaj Finserv surged up to 7 per cent.

On the other hand, BSE Small Cap index shed 7 points or 0.05 per cent to end the day at 15,992.63 as shares of Gujarat NRE Coke (down 6.55 per cent), Nucleus (down 6.07 per cent) and Dish Tv (down 5.85 per cent) capped gains.

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Reblog: The 27 Most Important Finance Books Ever Written


“In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time — none,” Charlie Munger, the vice chairman at Berkshire Hathaway, once said.

With that in mind, we’ve highlighted 27 classic works that every Wall Streeter should read.

Many of these books show up time and again in lists of books recommended by the pros themselves.

Topics covered include everything from the most important principles of investing to inside stories of the worst financial crises in modern history.

1. “The Intelligent Investor” by Benjamin Graham

“The greatest investment advisor of the twentieth century, Benjamin Graham, taught and inspired people worldwide. Graham’s philosophy of “value investing” — which shields investors from substantial error and teaches them to develop long-term strategies — has made The Intelligent Investor the stock market bible ever since its original publication in 1949.”

2. “Common Stocks and Uncommon Profits” by Philip Fisher

“Widely respected and admired, Philip Fisher is among the most influential investors of all time. His investment philosophies, introduced almost forty years ago, are not only studied and applied by today’s financiers and investors, but are also regarded by many as gospel. This book is invaluable reading and has been since it was first published in 1958.”

3. “The Theory of Investment Value” by John Burr Williams

“This book was first printed in 1938, having been written as a Ph.D. thesis at Harvard in 1937. Our good friend, Peter Bernstein mentioned this book several times in his excellent Capital Ideas which was published in 1992. Why the book is interesting today is that it still is important and the most authoritative work on how to value financial assets. As Peter says: ‘Williams combined original theoretical concepts with enlightening and entertaining commentary based on his own experiences in the rough-and-tumble world of investment.’

“Williams’ discovery was to project an estimate that offers intrinsic value and it is called the ‘Dividend Discount Model’ which is still used today by professional investors on the institutional side of markets.”

4. “Irrational Exuberance” by Robert Shiller

“As Robert Shiller’s new 2009 preface to his prescient classic on behavioral economics and market volatility asserts, the irrational exuberance of the stock and housing markets “has been ended by an economic crisis of a magnitude not seen since the Great Depression of the 1930s.

“As we all, ordinary Americans and professional investors alike, crawl from the wreckage of our heedless bubble economy, the shrewd insights and sober warnings, and hard facts that Shiller marshals in this book are more invaluable than ever.”

5. “One Up on Wall Street” by Peter Lynch

“America’s most successful money manager tells how average investors can beat the pros by using what they know. According to Lynch, investment opportunities are everywhere. From the supermarket to the workplace, we encounter products and services all day long. By paying attention to the best ones, we can find companies in which to invest before the professional analysts discover them. When investors get in early, they can find the ‘tenbaggers,’ the stocks that appreciate tenfold from the initial investment. A few tenbaggers will turn an average stock portfolio into a star performer.”

6. “Against the Gods” by Peter Bernstein

“In this unique exploration of the role of risk in our society, Peter Bernstein argues that the notion of bringing risk under control is one of the central ideas that distinguishes modern times from the distant past. Against the Gods chronicles the remarkable intellectual adventure that liberated humanity from oracles and soothsayers by means of the powerful tools of risk management that are available to us today.”

7. “Reminiscences of a Stock Operator” by Edwin Lefevre

“First published in 1923, Reminiscences of a Stock Operator is the most widely read, highly recommended investment book ever. Generations of readers have found that it has more to teach them about markets and people than years of experience. This is a timeless tale that will enrich your life—and your portfolio.”

8. “The Alchemy of Finance” by George Soros

“George Soros is unquestionably one of the most powerful and profitable investors in the world today. Dubbed by BusinessWeek as “the Man who Moves Markets,” Soros made a fortune competing with the British pound and remains active today in the global financial community.

“Now, in this special edition of the classic investment book, The Alchemy of Finance, Soros presents a theoretical and practical account of current financial trends and a new paradigm by which to understand the financial market today. This edition’s expanded and revised Introduction details Soros’s innovative investment practices along with his views of the world and world order.”

9. “Security Analysis” by Benjamin Graham and David Dodd

“First published in 1934, Security Analysis is one of the most influential financial books ever written. Selling more than one million copies through five editions, it has provided generations of investors with the timeless value investing philosophy and techniques of Benjamin Graham and David L. Dodd.

“As relevant today as when they first appeared nearly 75 years ago, the teachings of Benjamin Graham, “the father of value investing,” have withstood the test of time across a wide diversity of market conditions, countries, and asset classes.”

10. “The Handbook of Fixed Income Securities” by Frank J. Fabozzi

“For decades, The Handbook of Fixed Income Securities has been the most trusted resource in the world for fixed income investing. Since the publication of the last edition, however, the financial markets have experienced major upheavals, introducing dramatic new opportunities and risks.

“This completely revised and expanded eighth edition contains 31 new chapters that bring you up to date on the latest products, analytical tools, methodologies, and strategies for identifying and capitalizing on the potential of the fixed income securities market in order to enhance returns.”

11. “Damodaran on Valuation” by Aswath Damodaran

“In order to be a successful CEO, corporate strategist, or analyst, understanding the valuation process is a necessity. The second edition of Damodaran on Valuation stands out as the most reliable book for answering many of today’s critical valuation questions. Completely revised and updated, this edition is the ideal book on valuation for CEOs and corporate strategists. You’ll gain an understanding of the vitality of today’s valuation models and develop the acumen needed for the most complex and subtle valuation scenarios you will face.”

12. “Common Sense on Mutual Funds” by John Bogle

“Since the first edition of Common Sense on Mutual Funds was published in 1999, much has changed, and no one is more aware of this than mutual fund pioneer John Bogle. Now, in this completely updated Second Edition, Bogle returns to take another critical look at the mutual fund industry and help investors navigate their way through the staggering array of investment alternatives that are available to them.

“Written in a straightforward and accessible style, this reliable resource examines the fundamentals of mutual fund investing in today’s turbulent market environment and offers timeless advice in building an investment portfolio. Along the way, Bogle shows you how simplicity and common sense invariably trump costly complexity, and how a low cost, broadly diversified portfolio is virtually assured of outperforming the vast majority of Wall Street professionals over the long-term.”

13. “Thinking Fast and Slow” by Daniel Kahneman

“In the international bestseller, Thinking, Fast and Slow, Daniel Kahneman, the renowned psychologist and winner of the Nobel Prize in Economics, takes us on a groundbreaking tour of the mind and explains the two systems that drive the way we think. System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberative, and more logical.

“The impact of overconfidence on corporate strategies, the difficulties of predicting what will make us happy in the future, the profound effect of cognitive biases on everything from playing the stock market to planning our next vacation―each of these can be understood only by knowing how the two systems shape our judgments and decisions.”

14. “A Random Walk Down Wall Street” by Burton Malkiel

“Especially in the wake of the financial meltdown, readers will hunger for Burton G. Malkiel’s reassuring, authoritative, gimmick-free, and perennially best-selling guide to investing. With 1.5 million copies sold, A Random Walk Down Wall Street has long been established as the first book to purchase when starting a portfolio. In addition to covering the full range of investment opportunities, the book features new material on the Great Recession and the global credit crisis as well as an increased focus on the long-term potential of emerging markets.

“With a new supplement that tackles the increasingly complex world of derivatives, along with the book’s classic life-cycle guide to investing, A Random Walk Down Wall Street remains the best investment guide money can buy.”

15. “The Essays of Warren Buffett” by Warren Buffett

“By arranging Buffett’s lengthy writings thematically, Cunningham’s classic book makes clear and coherent the principles and logic of Buffett’s philosophy of business, investing and life. When first published in 1997, many knew Buffett’s writings were gems, but this book’s novelty was to lay out exact principles and their relationship to each other.

“The central discovery is that the philosophy pivots around one core concept: the vast difference between price and value. From that core radiate the other themes that the book’s arrangement clarifies. The Essays of Warren Buffett is a unique book that takes the raw material of Buffett’s 700+ pages of letters and renders them into a finely-woven 270-page narrative, fulfilling Buffett’s hope that Cunningham would “popularize” his writings.”

16. “Extraordinary Popular Delusions and the Madness of Crowds” by Charles Mackay

“This classic survey of crowd psychology takes an illuminating, entertaining look at three historic swindles: “The Mississippi Scheme,” “The South-Sea Bubble,” and “Tulipomania.” Fired by greed and fed by naïveté, these stratagems gone awry offer essential reading for investors as well as students of history, psychology, and human nature.”

17. “Manias, Panics, And Crashes” by Charles P. Kindleberger

“This highly anticipated sixth edition has been revised to include an in-depth analysis of the first global crisis of the twenty-first century. Providing a scholarly and entertaining account of such topics as the history of crises, speculative manias and Lehman Brothers, this book has been hailed as ‘a true classic…both timely and timeless.'”

18. “Barbarians at the Gate” by Bryan Burrough and John Helyar

“A #1 New York Times bestseller and arguably the best business narrative ever written, Barbarians at the Gate is the classic account of the fall of RJR Nabisco. An enduring masterpiece of investigative journalism by Bryan Burrough and John Helyar, it includes a new afterword by the authors that brings this remarkable story of greed and double-dealings up to date twenty years after the famed deal.

“The Los Angeles Times calls Barbarians at the Gate, “Superlative.” The Chicago Tribune raves, “It’s hard to imagine a better story…and it’s hard to imagine a better account.”And in an era of spectacular business crashes and federal bailouts, it still stands as a valuable cautionary tale that must be heeded.”

19. “The Courage to Act: A Memoir of a Crisis and its Aftermath” by Ben Bernanke

“Working with two US presidents, and under fire from a fractious Congress and a public incensed by behavior on Wall Street, the Fed ― alongside colleagues in the Treasury Department ― successfully stabilized a teetering financial system. With creativity and decisiveness, they prevented an economic collapse of unimaginable scale and went on to craft the unorthodox programs that would help revive the U.S. economy and become the model for other countries.

“Rich with detail of the decision-making process in Washington and indelible portraits of the major players, The Courage to Act recounts and explains the worst financial crisis and economic slump in America since the Great Depression, providing an insider’s account of the policy response.”

20. “The Little Book of Behavioural Investing” by James Montier

“Bias, emotion, and overconfidence are just three of the many behavioral traits that can lead investors to lose money or achieve lower returns. Behavioral finance, which recognizes that there is a psychological element to all investor decision-making, can help you overcome this obstacle.

“In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. Montier reveals the most common psychological barriers, clearly showing how emotion, overconfidence, and a multitude of other behavioral traits, can affect investment decision-making.”

21. “Too Big to Fail” by Andrew Ross Sorkin

“In one of the most gripping financial narratives in decades, Andrew Ross Sorkin — a New York Times columnist and one of the country’s most respected financial reporters — delivers the first definitive blow- by-blow account of the epochal economic crisis that brought the world to the brink.

“Through unprecedented access to the players involved, he re-creates all the drama and turmoil of these turbulent days, revealing never-before-disclosed details and recounting how, motivated as often by ego and greed as by fear and self-preservation, the most powerful men and women in finance and politics decided the fate of the world’s economy.”

22. “When Genius Failed” by Roger Lowenstein

“In this business classic — now with a new Afterword in which the author draws parallels to the recent financial crisis — Roger Lowenstein captures the gripping roller-coaster ride of Long-Term Capital Management. Drawing on confidential internal memos and interviews with dozens of key players, Lowenstein explains not just how the fund made and lost its money but also how the personalities of Long-Term’s partners, the arrogance of their mathematical certainties, and the culture of Wall Street itself contributed to both their rise and their fall.”

23. “Liar’s Poker” by Michael Lewis

“The time was the 1980s. The place was Wall Street. The game was called Liar’s Poker. Michael Lewis was fresh out of Princeton and the London School of Economics when he landed a job at Salomon Brothers, one of Wall Street’s premier investment firms. During the next three years, Lewis rose from callow trainee to bond salesman, raking in millions for the firm and cashing in on a modern-day gold rush. Liar’s Poker is the culmination of those heady, frenzied years—a behind-the-scenes look at a unique and turbulent time in American business.

“From the frat-boy camaraderie of the forty-first-floor trading room to the killer instinct that made ambitious young men gamble everything on a high-stakes game of bluffing and deception, here is Michael Lewis’s knowing and hilarious insider’s account of an unprecedented era of greed, gluttony, and outrageous fortune.”

24. “Stocks For The Long Run” by Jeremy Siegel

“Much has changed since the last edition of Stocks for the Long Run. The financial crisis, the deepest bear market since the Great Depression, and the continued growth of the emerging markets are just some of the contingencies directly affecting every portfolio in the world.

“To help you navigate markets and make the best investment decisions, Jeremy Siegel has updated his bestselling guide to stock market investing.

“This new edition of Stocks for the Long Run answers all the important questions of today: How did the crisis alter the fi nancial markets and the future of stock returns? What are the sources of long-term economic growth? How does the Fed really impact investing decisions? Should you hedge against currency instability?”

25. “Black Swan” by Nassim Nicholas Taleb

“A black swan is an event, positive or negative, that is deemed improbable yet causes massive consequences. In this groundbreaking and prophetic book, Taleb shows in a playful way that Black Swan events explain almost everything about our world, and yet we—especially the experts—are blind to them. In this second edition, Taleb has added a new essay, On Robustness and Fragility, which offers tools to navigate and exploit a Black Swan world.”

26. “Den of Thieves” by James B. Stewart

“A #1 bestseller from coast to coast, Den of Thieves tells the full story of the insider-trading scandal that nearly destroyed Wall Street, the men who pulled it off, and the chase that finally brought them to justice.

“Pulitzer Prize–winner James B. Stewart shows for the first time how four of the eighties’ biggest names on Wall Street—Michael Milken, Ivan Boesky, Martin Siegel, and Dennis Levine —created the greatest insider-trading ring in financial history and almost walked away with billions, until a team of downtrodden detectives triumphed over some of America’s most expensive lawyers to bring this powerful quartet to justice.”

27. “The Fix: How Bankers Lied, Cheated and Colluded to Rig the World’s Most Important Number” by Liam Vaughan and Gavin Finch

“In the midst of the financial crisis, Tom Hayes and his network of traders and brokers from Wall Street’s leading firms set to work engineering the biggest financial conspiracy ever seen. As the rest of the world burned, they came together on secret chat rooms and late night phone calls to hatch an audacious plan to rig Libor, the ‘world’s most important number’ and the basis for $350 trillion of securities from mortgages to loans to derivatives. Without the persistence of a rag-tag team of investigators from the U.S., they would have got away with it.”

This story originally appeared on time.com and is available here.


Reblog: 74 Quotes From The Intelligent Investor, Revised Edition


While preparing for The Intelligent Investor Book Review, I underlined the great quotes from the book. They provide an interesting and valuable perspective of, what may be, the greatest investing book ever written. I have included the page number for each quote for easy reference.

You may want to consider purchasing The Intelligent Investor (Revised Edition), Updated with New Commentary by Jason Zweig. If you could only buy one investment book in your lifetime, this would probably be the one. By purchasing through the above link, this site will receive a small commission without costing you anything extra.

Timeless Investing Quotes from The Intelligent Investor:

  1. To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.  (pg. ix)
  2. The sillier the market’s behavior, the greater the opportunity for the business like investor.  (pg. ix)
  3. The intelligent investor is a realist who sells to optimists and buys from pessimists.  (pg. xiii)
  4. No matter how careful you are, the one risk no investor can ever eliminate is the risk of being wrong. Only by insisting on what Graham called the “margin of safety” – never overpaying, no matter how exciting an investment seems to be – can you minimize your odds of error.  (pg.  xiii)
  5. By developing your discipline and courage, you can refuse to let other people’s mood swings govern your financial destiny. In the end, how your investments behave is much less important than how you behave.  (pg. xiii)
  6. The purpose of this book is to supply, in the form suitable for laymen, guidance in the adoption and execution of an investment policy.  (pg. 1)
  7. No statement is more true and better applicable to Wall Street than the famous warning of Santayana: “Those who do not remember the past are condemned to repeat it”.   (pg. 1)
  8. We have not known a single person who has consistently or lastingly make money by thus “following the market”. We do not hesitate to declare this approach is as fallacious as it is popular.  (pg. 3)
  9. The defensive (or passive) investor will place chief emphasis on the avoidance of serious mistakes or losses. His second aim will be freedom from effort, annoyance, and the need for making frequent decisions. (pg. 6)
  10. The determining trait of the enterprising (or active, or aggressive) investor is his willingness to devote time and care to the selection of securities that are both sound and more attractive than the average. (pg. 6)
  11. The investor’s chief problem – and even his worst enemy – is likely to be himself.  (pg. 8)
  12. For 99 issues out of 100 we could say that at some price they are cheap enough to buy and at some price they would be so dear that they would be sold.  (pg. 8)
  13. The distinction between investment and speculation in common stocks has always been a useful one and its disappearance is cause for concern. (pg. 20)
  14. Never mingle your speculative and investment operations in the same account nor in any part of your thinking. (pg. 22)
  15. To enjoy a reasonable chance for continued better than average results, the investor must follow policies which are (1) inherently sound and promising, and (2) not popular on Wall Street. (pg. 31)
  16. Speculative stock movements are carried too far in both directions, frequently in the general market and at all times in at least some of the individual issues.  (pg. 31)
  17. An investor calculates what a stock is worth, based on the value of its businesses. (pg. 36)
  18. A speculator gambles that a stock will go up in price because somebody else will pay even more for it.  (pg. 36)
  19. People who invest make money for themselves; people who speculate make money for their brokers. And that, in turn, is why Wall Street perennially downplays the durable virtues of investing and hypes the gaudy appeal of speculation. (pg. 36)
  20. Confusing speculation with investment is always a mistake. (pg. 36)
  21. The value of any investment is, and always must be, a function of the price you pay for it. (pg. 83)
  22. The most striking thing about Graham’s discussion of how to allocate your assets between stocks and bonds is that he never mentions the word “age”.  (pg. 102)
  23. The beauty of periodic rebalancing is that it forces you to base your investing decisions on a simple, objective standard.  (pg. 105)
  24. We urge the beginner in security buying not to waste his efforts and his money in trying to beat the market. Let him study security values and initially test out his judgment on price versus value with the smallest possible sums. (pg. 120)
  25. There is no reason to feel any shame in hiring someone to pick stocks or mutual funds for you. But there’s one responsibility that you must never delegate. You, and no one but you, must investigate whether an adviser is trustworthy and charges reasonable fees.  (pg. 129)
  26. Thousands of people have tried, and the evidence is clear: The more you trade, the less you keep. (pg. 149)
  27. We define a bargain issue as one which, on the basis of facts established by analysis, appears to be worth considerably more that it is selling for. (pg. 166)
  28. In an ideal world, the intelligent investor would hold stocks only when they are cheap and sell them when they become overpriced, then duck into the bunker of bonds and cash until stocks again become cheap enough to buy. (pg. 179)
  29. In the financial markets, hindsight is forever 20/20, but foresight is legally blind. And thus, for most investors, market timing is a practical and emotional impossibility. (pg. 180)
  30. A great company is not a great investment if you pay too much for the stock.  (pg. 181)
  31. The intelligent investor gets interested in big growth stocks not when they are at their most popular – but when something goes wrong. (pg. 183)
  32. It is absurd to think that the general public can ever make money out of market forecasts. (pg. 190)
  33. It should be remembered that a decline of 50% fully offsets a preceding advance of 100%.  (pg. 192)
  34. Even the intelligent investor is likely to need considerable will power to keep from following the crowd.  (pg. 197)
  35. Price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. (pg. 205)
  36. The speculator’s primary interest lies in anticipating and profiting from market fluctuations. The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices. (pg. 205)
  37. Always remember that market quotations are there for convenience, either to be taken advantage of or to be ignored.  (pg. 206)
  38. Never buy a stock because it has gone up or sell one because it has gone down.  (pg. 206)
  39. The investor should be aware that even though safety of its principal and interest may be unquestioned, a long term bond could vary widely in market price in response to changes in interest rates. (pg. 207)
  40. Nothing important on Wall Street can be counted on to occur exactly in the same way as it happened before. (pg. 208)
  41. Mr. Market does not always price stocks the way an appraiser or a private buyer would value a business. Instead, when stocks are going up, he happily pays more than their objective value; and, when they are going down, he is desperate to dump them for less than their true worth. (pg. 213)
  42. The intelligent investor shouldn’t ignore Mr. Market entirely. Instead, you should do business with him- but only to the extent that it serves your interests.  (pg. 215)
  43. Mr. Market’s job is to provide you with prices; your job is to decide whether it is to your advantage to act on them. You no not have to trade with hime just because he constantly begs you to. (pg. 215)
  44. Investing isn’t about beating others at their game. It’s about controlling yourself at your own game.  (pg. 219)
  45. The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.  (pg. 220)
  46. Only in the exceptional case, where the integrity and competence of the advisers have been thoroughly demonstrated, should the investor act upon the advice of others without understanding and approving the decision made. (pg. 271)
  47. Before you place your financial future in the hands of an adviser, it’s imperative that you find someone who not only makes you comfortable but whose honesty is beyond reproach. (pg. 274)
  48. If fees consume more than 1% of your assets annually, you should probably shop for another adviser.  (pg. 277)
  49. The ideal form of common stock analysis leads to a valuation of the issue which can be compared with the current price to determine whether or not the security is an attractive purchase. (pg. 288)
  50. The only thing you should do with pro forma earnings is ignore them. (pg. 323)
  51. High valuations entail high risks.  (pg. 335)
  52. Even defensive portfolios should be changed from time to time, especially if the securities purchased have an apparently excessive advance and can be replaced by issues much more reasonable priced. (pg. 360)
  53. A defensive investor can always prosper by looking patiently and calmly through the wreckage of a bear market.  (pg. 371)
  54. The best values today are often found in the stocks that were once hot and have since gone cold. (pg. 371)
  55. It’s nonsensical to derive a price/earnings ratio by dividing the known current price by unknown future earnings.  (pg. 374)
  56. Calculate a stock’s price/earnings ratio yourself, using Graham’s formula of current price divided by average earnings over the past three years. (pg. 374)
  57. Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains. (pg. 389)
  58. To see how much a company is truly earning on the capital it deploys in its businesses, look beyond EPS to Return on Invested Capital (ROIC).  (pg. 398)
  59. Wall Street has a few prudent principles; the trouble is that they are always forgotten when they are most needed. (pg. 409)
  60. Although there are good and bad companies, there is no such thing as a good stock; there are only good stock prices, which come and go. (pg. 473)
  61. In the short run the market is a voting machine, but in the long run it is a weighing machine.  (pg. 477)
  62. The intelligent investor should recognize that market panics can create great prices for good companies and good prices for great companies. (pg. 483)
  63. The secret of sound investment into three words: MARGIN OF SAFETY. (pg. 512)
  64. The margin  of safety is always dependent on the price paid. It will be large at one price, small at some higher price, nonexistent at some still higher price. (pg. 517)
  65. There is a close logical connection between the concept of a safety margin and the principle of diversification. (pg. 518)
  66. Diversification is an established tenet of conservative investment. (pg. 518)
  67. It is our argument that a sufficiently low price can turn a security of mediocre quality into a sound investment opportunity — provided that the buyer is informed and experienced and he practices adequate diversification. For, if the price is low enough to create a substantial margin of safety, the security thereby meets our criterion of investment. (pg. 521)
  68. Investment is most intelligent when it is most businesslike.  (pg. 523)
  69. Losing some money is an inevitable part of investing, and there’s nothing you can do to prevent it. But to be an intelligent investor, you must take responsibility for ensuring that you never lose most or all of your money.  (pg. 526)
  70. By refusing to pay too much for an investment, you minimize the chances that your wealth will ever disappear or suddenly be destroyed. (pg. 527)
  71. Before you invest, you must ensure that you have realistically assessed your probability of being right and how you will react to the consequences of being wrong. (pg. 529)
  72. Successful investing is about managing risk, not avoiding it. (pg. 535)
  73. At heart, “uncertainty” and “investing” are synonyms.  (pg. 535)
  74. Without a saving faith in the future, no one would ever invest at all. To be an investor, you must be a believer in a better tomorrow.  (pg. 535)

 

The original post is authored by KenFaulkenberry, founder of the Arbor Investment Planner and is available here.


Markets snap 4-day record closing trend, end flat; Nifty up 2% for the week


The markets ended flat, snapping 4-day record closing trend after opening at record highs after information technology heavyweight Infosys’ June quarter results beat Street estimates, while TCS, which declared its results post market hours on Thursday, was the top loser on Sensex and Nifty.

The BSE Sensex settled the day at 32,020, down 16 points while the broader Nifty50 index ended at 9,886, down 5 points

Nifty IT index was the top sectoral loser, down over 1% for the day dragged by Just Dial, TCS, Wipro and Tata Elxsi. Infosys also slipped in red, ending 0.7% down for the day after rising nearly 3% in early-morning trade.

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Reblog: The Disciplined Trader


When an aspiring trader asks me to recommend books on technical analysis he or she is often surprised at my answer.  While I do have a technical favourite or two (besides my own) I am quick to redirect him or her to books on trading psychology.

Technical analysis is worthless without a thorough understanding of the psychology behind winning and losing, buying and selling, fear and greed, risk versus reward, the past versus the future, the knowable versus the unknowable.  Technical analysis is best used as a psychological tool to help the trader manage random price action and the emotions associated with it, not as a way to predict price action and thus confirm the trader’s egotistical need to be right.  Psychology first; technical second.

One of my favourite “go to” authors on trading psychology is Mark Douglas.  Although he is best known for his book Trading In The Zone, Mr Douglas’ first book The Disciplined Trader is a gem of a read also.  I recommend both but start with The Disciplined Trader.  It will help you better understand and appreciate the principles discussed in Trading in the Zone.

The following is from the INTRODUCTION and provides the thesis for the book. In it, Douglas discusses the following:

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Reblog: 10 Best Investing Books for Beginners


Generally, the most successful people in the world are also voracious readers. This is also true of the most successful value investors.

Both Warren Buffett (who used to read 1,000 pages a day when he was starting out) and Charlie Munger (who often advises young investors to “develop into a lifelong self-learners through voracious reading”) credit their habit of reading as a major contributor to their success. Ben Graham was an even more prolific reader than his successors – he would often quote the Latin and Greek classics and once translated a Spanish novel into English.

I also come across a lot of queries from many of our blog readers about books to read to understand investing better. So, here is an effort to collate a list of 10 such books which I feel is a must read for all investors.

#1 THE INTELLIGENT INVESTOR: THE DEFINITIVE BOOK ON VALUE INVESTING – BY BENJAMIN GRAHAM

The Intelligent Investor by Benjamin Graham

If you only ever read one investment book, then let it be The Intelligent Investor by Benjamin Graham. There’s a reason why Graham is called the “Godfather of Value Investing.” Benjamin Graham was probably the most influential investing figure of the 20th century, and The Intelligent Investor is probably the most influential investment book of all time. The Intelligent Investor is the value investor’s bible… keep this one on you always.

#2 THE ESSAYS OF WARREN BUFFETT: LESSONS FOR CORPORATE AMERICA – BY LAWRENCE CUNNINGHAM (EDITOR), WARREN BUFFETT

If The Intelligent Investor is the value investor’s bible, then The Essays of Warren Buffett are the value investor’s New Testament. Warren Buffett has been writing essays about investing and business for 50 years, and his genius – combined with his down-to-earth charm and clear prose – makes him perhaps one of the greatest educators as well as one of the greatest investors to have ever lived. Many of these essays can be found for free online, but The Essays of Warren Buffett by Lawrence Cunningham brings them all together under one roof.

#3 VALUE INVESTING: FROM GRAHAM TO BUFFETT AND BEYOND – BY BRUCE GREENWALD, JUDE KAHN, PAUL SONKIN, & MICHAEL VAN BIEMA

 Bruce Greenwald is the Robert Heilbrunn Professor of Finance and Asset Management at Columbia University and is one of the leading authorities on value investing. This book gives the most comprehensive overview of value investing of any investment book I’ve read, covering general techniques of value investing as well as profiles of successful value investors such as Warren Buffett and Mario Gabelli.

#4 STOCKS FOR THE LONG RUN: THE DEFINITIVE GUIDE TO FINANCIAL MARKET RETURNS & LONG-TERM INVESTMENT STRATEGIES – BY JEREMY SIEGEL

Jeremy Siegel‘s nickname is the “Wizard of Wharton” (he’s been teaching there for 45 years). His investment book Stocks for the Long Run is sometimes called “the buy and hold Bible.” The book makes the convincing argument that – after you account for inflation – equities are actually the safest investment in the long run, proving the point that most people should be long-term, passive investors in the stock market.

#5 THE LITTLE BOOK OF COMMON SENSE INVESTING: THE ONLY WAY TO GUARANTEE YOUR FAIR SHARE OF STOCK MARKET RETURNS – BY JOHN C. BOGLE

Investing is all about common sense. Owning a diversified portfolio of stocks and holding it for the long term is a winner’s game. Trying to beat the stock market is theoretically a zero-sum game (for every winner, there must be a loser), but after the substantial costs of investing are deducted, it becomes a loser’s game. John C. (“Jack”) Bogle is the founder of the Vanguard Group and creator of the world’s first index fund, and The Little Book of Common Sense Investing is a top recommendation of Warren Buffett’s. There’s actually a funny story that when Jack Bogle first met Warren Buffett, Jack recognized Warren, went up and introduced himself, and he said to Warren, “you know the thing I really like about you is you have rumpled suits just the same as I do” – and Jack and Warren have been good friends ever since.

#6 BUFFETTOLOGY: THE PREVIOUSLY UNEXPLAINED TECHNIQUES THAT HAVE MADE WARREN BUFFETT THE WORLD’S MOST FAMOUS INVESTOR – BY MARY BUFFETT & DAVID CLARK

Mary Buffett is Warren Buffett’s former daughter-in-law and her book Buffettology provides a good introduction to Warren Buffett’s investment approach. The book offers profiles and analysis of 54 “Buffett companies.” Read it for the qualitative discussion of Buffett’s investment style, and skim the mathematical chapters (which I didn’t find to be as useful).

#7 ONE UP ON WALL STREET: HOW TO USE WHAT YOU ALREADY KNOW TO MAKE MONEY IN THE MARKET – BY PETER LYNCH

Peter Lynch is one of the most successful investors ever – from 1997 to 1990, his Magellan Fund averaged a 29.2% compound annual return. In One Up on Wall Street, Peter Lynch explains how average investors can beat the pros by using what they know. According to Lynch, investment opportunities are everywhere: from the supermarket to the workplace, we encounter products and services all day long. By paying attention to the best ones, we can find companies in which to invest before the professional analysts discover them.

#8 COMPETITIVE STRATEGY: TECHNIQUES FOR ANALYZING INDUSTRIES AND COMPETITORS – BY MICHAEL PORTER

Studying Michael Porter is one of the first things you do in business school. Competitive Strategy by Michael Porter has transformed the theory, practice, and teaching of business strategy throughout the world. This book introduces Porter’s 5 Forces to help investors analyse industry attractiveness, as well as the 3 forms of a company’s strategy – low cost, differentiation, and focus.

 

 

#9 – THE ASCENT OF MONEY: A FINANCIAL HISTORY OF THE WORLD – BY NIALL FERGUSON

Niall Ferguson follows the money to tell the human story behind the evolution of our financial system, from its genesis in ancient Mesopotamia to the latest upheavals on what he calls Planet Finance. What’s more, Ferguson reveals financial history as the essential backstory behind all history, arguing that the evolution of credit and debt was as important as any technological innovation in the rise of civilisation. This is a great overview of all things money and a nice introduction to the world of finance.

#10 THINKING, FAST AND SLOW – BY DANIEL KAHNEMAN

Daniel Kahneman is a professor of behavioural & cognitive psychology at Princeton, winner of the 2002 Nobel Prize for economics, and author of the best-selling book on cognitive biases and heuristics: Thinking Fast & Slow. This book explains the natural biases that affect our judgment in everyday life, as well as in investing. If you want to be a great investor, then it’s critical to be aware of the biases and tendencies. This is a fascinating book, and Kahneman himself is actually the subject of Michael Lewis’s next book The Undoing Project.

The original article is written by Mastermind, Megabaggers and appears here.

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Nifty ends flat on Friday, up 1.5% for the week; RIL, Lupin top gainers


Benchmark indices settled the day flat tracking weaker global cues amid concerns that central banks are moving closer to removing the monetary stimulus. The intra-day losses were recouped after index heavyweight Reliance Industries rallied to hit 9-year high. Losses were also capped as pharma and realty indices surged through the day on value buying.

Nifty was up 1.5% for the week, snapping a three-week losing streak, its biggest weekly gain since late May. On the other hand, BSE Sensex was up 1.4% for the week, extending gains for the second consecutive week.

The S&P BSE Sensex ended at 31,360, down 9 points after while the broader Nifty50 was ruling at 9,666, down 9 points

In the broader market, the S&P BSE Midcap was a little changed but ended in red while S&P BSE Smallcap index gained 0.3%.

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