In August, I mentioned that I had chosen the title “Political Reality” for my memo in part because of my liking for oxymorons. I classed that title with other internally contradictory statements, such as “jumbo shrimp” and “common sense.” Now I’m going to discuss one more: “expert opinion.”
This memo was inspired by a thought that popped into my head when the outcome of the election settled in. You may point out that at the end of my November 14 memo “Go Figure!,” I said I wouldn’t write any more about politics. True, but I didn’t say I wouldn’t think about politics. Anyway, this memo isn’t about politics, it’s about opinions.
Last spring I attended a dinner where one of Hillary Clinton’s senior advisers was soliciting input, as she and her campaign were struggling to come up with an effective counter to Bernie Sanders’s populist message. Most of those present expressed frustration on the subject, until an experienced, connected Democrat assured everyone, “Don’t worry. She’ll win. The math is irresistible.” The Hillary supporters were relieved, and he turned out to be right: she won the nomination going away.
In late October, with the issue of Clinton’s private email server and the FBI’s new investigation further dogging her, that same seasoned Democrat was asked whether the election was in jeopardy. “Don’t worry,” he said. “She’ll win. The math is irresistible.” We all know the result.
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It’s better to sell when there is a deterioration in business fundamentals. Here are four triggers:
Most investment writing revolves around telling investors what to buy. But selling a stock at the right time is equally important. Many investors base their sell decisions on stock price moves. They book profits if a stock doubles or trebles.
But this can rob your portfolio of potentially big wealth creators in the long run. Instead, it is better to base your sell decision on fundamental changes in the business itself. Here are four sell triggers that work well in India.
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The benchmark indices on Friday settled higher thanks to gains in banking stocks following news reports that the Finance Minister Arun Jaitley has promised to offer a solution to the growing non-performing assets (NPA) crisis in next few days.
The S&P BSE Sensex ended at 29,421, up 89 points, while the broader Nifty50 settled at 9,108, up 22 points. Both the indices logged their first weekly loss in March, retreating from a record high hit last week.
In the broader market, the S&P BSE Midcap ended 0.1% down, while the S&P BSE Smallcap index gained 0.3%.
The market breadth, indicating the overall health of the market, turned negative. On the BSE, 1,471 shares declined and 1,346 shares advanced. A total of 218 shares were unchanged.
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There are literally tens of millions of stock market and private investors today. The personal investing revolution has enabled anyone with a few hundred dollars to trade stocks. But we don’t have millions of great investors. Only a select few will ever be bestowed this title. So, how can you try to be one of them? You can emulate the people who were – or still are – the greatest. Below is our list of 8 of the greatest investors of all time; let us know in the comments below if you think we’ve missed out on any important names.
This list was compiled based on inputs from our members of Value Investing Clubs in UK, France, Belgium and Austria, and from our users at our FinTech company CityFALCON. Our focus at the Value Investing Clubs and CityFALCON remains on long-term fundamental investors who are looking to go through research to buy, hold and sell financial assets to generate strong higher than inflation returns.
We will just start off with the obvious case: Warren Buffett. Who doesn’t consider him one of the greatest, if not the greatest investor? Born just in time for the Depression (1930), Warren Buffett was born in Omaha, Nebraska, whence he eventually took his nickname “The Oracle of Omaha”.
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Hmm … When WAS the best time to invest you mean?
Well, the day your dad was born if you had money … this is circa 1959 .. or when your grandfather died …. or … but hey since we did not do any of those things, it has to be today.
It’s not surprising that first-time investors often worry about the timing of their initial share purchases. When you follow stories which keep saying “market is up” or ‘Market is Going down” this has to happen! It looks like you have started at the wrong point in the market’s ups and downs and it can leave you with losses even before you reach the batting crease!
But relax kiddos: Whenever you first invest, time is on your side. So the kid who started at 22 is smarter than the kid who waited till he / she turned 32. In the long run, the compound returns of a smart investment will all add up nicely. How the market was when you began will not matter if you do a sip.
That is what is important! Instead of wondering about when you should make that first share / mutual fund purchase, think instead about how long you will stay invested. If you are 22 years of age, you will stay invested for say 50/60 years! Different investments offer varying degrees of risk and return, and each is best suited for a different investing time perspective. In general, debt instruments like bond funds/ bank fixed deposits, etc. offer lower, more assured returns for investors with shorter time frames (say 24 months). Historically, short-term Treasury bills yielded roughly 5% per year. Savings bank gives you about 3% p.a. taxable. With inflation at 7% these rates may or may not attract you.
Longer-term government bonds like the 10-year gilt can provide higher returns – say 8% p.a. These returns could be stable only in the short run. In the long run even these bonds could be volatile.
Shares have also been very good to sensible and patient investors. Overall, the BSE’s Sensex has returned an average of 19.4% per year from 1979 to 2017 — way ahead of debt instruments. The range of the returns for stocks OBVIOUSLY much larger than the range for debt instruments over the same period. Stocks suffered a decline in 1993 – of 42%, but this was obviously the outcome of an amazing 1992 of about 241% !! It enjoyed several particularly strong years of course, and the period 2002 to 2007 took the cake when the market went up 7x in 4 years!
How long will you stay invested?
The more the time that you have to create wealth, the greater risk you can accept. This comes from having a good income, and ability to save money. And since you’ll have more time to wait out periods of bad returns you SHOULD stay cool.
If you need the money within the next five years, you should put say 70% of your money in bonds and only about 30% in shares. If you need the money within the next three years, you should also avoid long bond mutual funds – you are better off investing in bond funds with duration of 3/4 years. The lesser time you plan to be invested, the less you can afford to lose. On the other hand, shares are an attractive option for long-term goals like children’s education, long term and retirement. The higher returns are simply too good to ignore because you do not understand. Take time to learn it!
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Warren Buffett’s Berkshire Hathaway is out with its annual letter to shareholders.
Near the bottom of the letter, the billionaire investor touches on his favourite reads of 2016.
“The best book I read last year was ‘Shoe Dog’ by Nike’s Phil Knight ,” he writes. “Phil is a very wise, intelligent and competitive fellow who is also a gifted storyteller.”
He adds that Omaha, Nebraska-based retailer The Bookworm will have “piles” of the book, in addition to “investment classics by Jack Bogle,” at the annual Berkshire shareholder meeting in May.
Notably, Buffett is actually briefly mentioned near the end of “Shoe Dog.”
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Benchmark indices settled the day flat and posted small weekly gains as investors stayed cautious ahead of assembly election results. Exit polls declared yesterday showed BJP ahead of other rival parties in all the five states.
Victory for BJP in Uttar Pradesh will boost PM Narendra Modi’s chances of winning the 2019 general election. It would also give the party more number of legislators in the Rajya Sabha where it doesn’t have a majority, improving the government’s chances of passing key reform bills.
The 30-share Sensex ended 17 points higher at 28,946, while the 50-share Nifty settled the day at 8,934, up 7 points.
In the broader market, the BSE Midcap was down 0.2%, while BSE Smallcap fell 0.1%.
Avenue Supermarts Ltd (ASL) is an emerging national supermarket chain (D mart) , with a focus on value-retailing. According to Technopak, in Fiscal 2016 ASL was one of the largest and the most profitable F&G retailer in India. It offers a wide range of products with a focus on the Foods, Non-Foods (FMCG) and General Merchandise & Apparel product categories. ASL opened its first store in Mumbai, Maharashtra in 2002. As of January 31, 2017, it had 118 stores with Retail Business Area of 3.59 million sq.ft, located across 45 cities in Maharashtra (59), Gujarat (27), Telangana (13), Karnataka (7), Andhra Pradesh (4), Madhya Pradesh (3), Chhattisgarh (1), NCR (1), Daman (1) and Rajasthan (2). At the end of the nine months period ended December 31, 2016 and Fiscals 2016, 2015 and 2014, the company had 117, 110, 89 and 75 stores with Retail Business Area of 3.57 million sq. ft., 3.33 million sq. ft., 2.66 million sq. ft. and 2.14 million sq. ft., respectively.
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Music Broadcast Ltd (MBL) is operating radio stations under the branch “Radio City” and has grown its presence from 4 cities in 2001 to 37 cities as on 15th February 2017. These radio stations include the eight “Radio Mantra Stations” transferred from SPML pursuant to the Scheme of Arrangement and nine out of eleven New Radio City Stations. The company expects the remaining two New Radio City Stations to be operationalised by March/ April 2017. MBL is present in 12 out of the top 15 cities in India by population having a reach to over 49.60 million listeners in 23 cities. All its Phase II Radio City Stations which were under Phase II Policy have been migrated to the Phase III Policy. These include Radio City stations which are present at Bengaluru, Lucknow, Mumbai, New Delhi, Chennai, Pune, Hyderabad, Ahmedabad, Surat, Nagpur, Jaipur, Vadodara, Coimbatore, Vizag, Ahmednagar, Sholapur, Sangli, Nanded, Jalgaon and Akola and the Radio Mantra Stations which have been transferred to it pursuant to the Scheme of Arrangement which are located at Agra, Bareilly, Gorakhpur, Varanasi, Jalandhar, Ranchi, Hissar, and Karnal. Under the Phase III Policy, new cities were opened up for auction, pursuant to which MBL acquired 11 additional radio stations i.e. the New Radio City Stations. The New Radio City Stations which have been operationalised are located at Kanpur, Ajmer, Kota, Udaipur, Patiala, Jamshedpur, Nasik, Kolhapur and Madurai. The remaining two New Radio City Stations namely Bikaner and Patna are expected to be operationalised by March/ April 2017. Under the Phase III Policy the license period for radio stations has been increased to 15 years and radio stations are now permitted to carry news bulletins of AIR and also network their radio stations in all cities.
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