Sensex closes above 31,000 for first time ever, up almost 2% for the week


Markets continued their bull run to settle at fresh closing highs on Friday with the S&P BSE Sensex scaling past the 31,000-mark and the broader Nifty50index hitting 9600-mark for the first time ever as higher derivatives rollover led to strong follow-up buying in index heavyweights on the first day of June series.

Settling at fresh closing high, the 30-share Sensex ended at 31,028, up 278 points. The index was up 1.8% for the week. On the other hand, Nifty50 also ended at new peak of 9,595, up 85 points with a weekly gain of 1.7%.

Both frontline indices peaked fresh highs at intra-day level also. The S&P BSE Sensex rallied as much as 324 points to hit its new high of 31,074 surpassing its previous peak of 30,793 reached yesterday, while the broader Nifty50 gained 95 points to touch its fresh high of 9,592, overriding the previous milestone of 9,432, hit on May 17.

Broader market outperformed benchmark indices with the S&P BSE Midcap and the S&P BSE Smallcap indices gaining 2% and 1.6% respectively.

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Reblog: The Agony of High Returns


Even with a time machine, a lot of people wouldn’t want to own the best-performing stocks.

Monster Beverage (NASDAQ: MNST) was the best-performing stock from 1995 to 2015. It increased 105,000%, turning $10,000 into more than $10 million.

But this isn’t a retrospective about how you should wish you owned Monster stock. It’s almost the opposite.

The truth is that Monster has been a gut-wrenching nightmare to own over the last 20 years. It traded below its previous all-time high on 94% of days during that period. On average, its stock was 26% below its high of the previous two years. It suffered four separate drops of 50% or more. It lost more than two-thirds of its value twice, and more than three-quarters once.

That’s how the stock market works.

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Reblog: MACD – How to use the MACD correctly


The MACD is a momentum and trend-following indicator that is based on the information of moving averages and, thus, ideal to act as an additional momentum tool and momentum filter for your trading. In this article, we will explain what the MACD does, how it helps you analyze price and how to use it in your own trading.

First, let’s take a look at the individual components of the MACD indicator:

MACD Line: The MACD line is the heart of the indicator and it’s the difference between the 12-period EMA and the 26 period EMA. This means that the MACD line is basically a complete moving average crossover system in just one line.

Signal Line: The Signal line is the 9-period EMA of MACD Line

MACD Histogram: MACD Line – Signal Line

In this article, we focus on the MACD and the signal line in particular. The histogram is derived from the other two components of the MACD and, thus, don’t add as much explanatory value to overall MACD trading.

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Sensex ends flat on Friday after hitting record high on GST rates, up 1% for the week


Benchmark indices scuttled between gains and losses to finally settle the day marginally higher as 2-day GST Council meet ends where rates for various goods and services were decided.

The government today decided that most of the services would be taxed at the rate of 18% under the GST regime. Rates for more than 1,200 items under the GST were announced with products like hair oil, soaps and toothpaste down to 18% from 22-24%.

Earlier in the day, S&P BSE Sensex rose as much as 278 points to reach a fresh high of 30,712, surpassing its previous milestone of 30,691 hit on May 17 as FMCG surged on GST boost. The index has hit a new high for the fourth time in five sessions.

The S&P BSE Sensex settled at 30,465, up 30 points, while the broader Nifty50 ended at 9,427, down 1 point.

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Reblog: 10 Things a Trader has to Beat


To be a profitable trader you must overcome these ten things:

  1. You must beat the market benchmark you are competing against or you might was well just buy and hold that index.
  2. You must beat your emotions by following a trading plan.
  3. You must beat your ego by taking losses early when you are proven wrong.
  4. You must beat your greed by managing your position sizing to limit your risk exposure.
  5. You must beat your fears by letting a winning trade run when there is no reason to exit.
  6. You must beat your desire to predict the future by reacting to what price action is actually happening.
  7. You must beat the trader on the other side of your trade.
  8. You have to make enough money to beat your commission costs.
  9. You must not let the market beat you up with too many losses and make you quit.
  10. You must beat the naysayers who think active profitable trading is impossible.

The original post is authored by Steve at newtraderu.com and is available here.

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Reblog: Mean Reversion and the Bell Curve


The pressure to outperform all the time leads stock pickers to constantly seek mean reversion trades

Over a three-year time period, stock prices tend to mean revert. This has spawned numerous investment approaches that try to squeeze capital gains out of those reversions. Classic deep value investing, as popularised by Benjamin Graham at Columbia Business School, taught that you would succeed by buying 50-cent dollars and selling them when and if they reverted to the mean. The “Dogs of the Dow” strategy of buying the 10 highest-yielding Dow stocks was born out of mean reversion.

Over long time periods, common stock performance falls on a bell curve like the one listed below. Half the stocks outperform and half underperform. Among the poorest performers, some go to 0%, and 5% of common stocks do so poorly that they can ruin a concentrated stock portfolio. (1)

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Nifty ends on Friday at 9,400 ahead of inflation data, up 1% for the week


 

Benchmark indices ended lower with the Nifty settling at 9,400 as investors turned cautious ahead of inflation data and booked profits in recent outperformers.

 

Consumer price inflation (CPI) is expected to have eased to a three-month low of 3.49% in April from 3.81% the previous month, according to Reuters poll. The government will also unveil the new series of Index of Industrial Production (IIP) as well as Wholesale Price Index (WPI), with 2011-12 as the base year, later in the day.

 

Both Sensex and Nifty hit record highs of in the previous two sessions, and were up more than 1% for the week. This is a second consecutive week of gains for the indices.

 

The S&P BSE Sensex ended at 30,188, down 62 points, while the broader Nifty50 settled at 9,401, down 21 points.

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Reblog: YES, MUTUAL FUNDS CAN STAND OUT FROM THE HERD


Forbes Magazine, Dec. 19, 1994

At the typical stock-fund office, phalanxes of computer screens glow like the control room of a nuclear reactor. The portfolio manager is an intense young MBA. He can recite earnings estimates by rote for each of the 100 stocks in his billion-dollar fund. He’s a high-pressure guy, the atmosphere is electric with excitement, and the phones are always ringing. All this costs money, but the managers have to justify themselves. What are they for if not to trade in and out of stocks?

Yet all this striving does nothing for most fund investors. Although the industry has its good years, over long periods of time the average U.S. stock fund does worse than a market index. No wonder: Typical annual expenses run to 1.3% of assets.

George Mairs, 66, does things differently. Mairs & Power, Inc., founded by Mairs’ father in 1931, has nine employees and runs a total of $300 millon out of the old First National Bank Building in St. Paul, Minn. Nearly all that money is in separate accounts. Mairs & Power Growth Fund has $41 million in assets; a balanced mutual fund, Mairs & Power Income Fund, runs $13 million.

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Reblog: On outperformance


Some excerpts from my annual review to subscribers. Hope you will find it useful

Sources of outperformance

Superior performance versus the indices can usually be broken down into three buckets

  1. Informational edge – An investor can outperform the market by having access to superior information such ground level data, ongoing inputs from management etc.
  2. Analytical edge – This edge comes from having the same information, but analyzing it in a superior fashion via multiple mental models
  3. Behavioral edge – This edge comes from being rational and long term oriented.

I personally think our edge can come mainly from the behavioral and analytical factors. The Indian markets had some level of informational edge, but this edge is slowly reducing with wider availability of information and increasing levels of transparency.

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Sensex settles 267 points lower, Nifty below 9,300 on Friday as banking stocks dip



The benchmark indices settled lower on Friday as banking stocks dipped after the government notified the Banking Regulation (Amendment) Ordinance, 2017, while a drop in crude prices dragged down oil explorers such as ONGC and Oil India.

The S&P BSE Sensex ended at 29,858, down 267 points, while the broader Nifty50 closed at 9,285, down 75 points. The Nifty50 index reversed course seconds after hitting its fresh all-time high of 9,367 in early trade.

India VIX, essentially a fear gauge, closed the day at 11.98, rising over 5% from the previous close.

In the broader market, the S&P BSE Midcap and S&P BSE Smallcap indices settled 1% and 0.8% lower, respectively.

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