Be an informed investor in an informed world

Indian investor many time need easy way to become rich and small basic investigation is also not done by them to check on the company they invest. While NSE & BSE website give them basic details about the company and many brokering and media website give additional insight and data which can be used effective to understand a company better like Money control, Reuters & Bloomberg gives good free service for managing online portfolio service with news update and results of the company analyzed. I don’t know how many make use of this kind of service and there are many more website site above given is a sample.

http://secure.in.com/active18/sso/portfolio_signup.php  Money control

http://portfolio.in.reuters.com/IN/public/index.asp  Reuters

https://software.bloomberg.com/account/access.html  Bloomberg

Today high competition has increased service of brokering company each one has to better others to show they care for their investor as brokerage is now so low that a company can’t make a difference so each one has improve their research report and accessible database on their website http://content.icicidirect.com/research/research.asp  and investor should take time to read this report. Update themselves on the companies they invest on quarterly basis.

How many check company website and download their annual balance sheet, most of the company website has a page called “Investor Relations” where many data an investor would like on a company is available.

Points to note: Many look at website to gets tips or trading ideas but if someone can be so prefect then why would he/she share his/her ideas. Then all these tipsters or technical analyst or fundamental analyst should be rich people but why is it not so, as legendary Warren Buffet has said, “Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.” Investor has to do more homework to make their investment work, people get craze stock which hit’s upper freeze on regular basis, do top 200 market cap companies hit 20% circuit? on very rare occasion; Investor should understand margin of safety while investing in a stock or sector many expose themselves more to single stock and sector and it happens so that a sector or stock where retail interest is high doesn’t perform for few years now many are struck in Realty sector with over exposure.

The greater fool theory is the belief held by one who makes a questionable investment, with the assumption that they will be able to sell it later to "a bigger fool"; in other words, buying something not because you believe that it is worth the price, but rather because you believe that you will be able to sell it to someone else for an even higher price.

SEBI bans 16 entities from Market for 'synchronized trades'

SEBI has started investigations against 16 people for alleged synchronized trading and banned them from trading in the securities market. (Synchronized trades are ones where buy and sell orders are entered within a minute of each other.)

The notice said that these people had picked up stocks with low daily volume or not very liquid stocks and injected liquidity artificially by their trading. http://www.business-standard.com/india/news/sebi-bans-16-entitiesmarket-for-/synchronised-trades//386514/

UPDATE on GUJ NRE COKE:

GUJNRECOKE we hold in our Fabulous-15 as investment for Target of Rs.110- India could face a ‘coal shock’ sooner than later

International coking coal prices are forecast to climb upto $200 per MT due to bad weather & tight lending practice in China http://www.coalexplorer.com/20102002/international-coking-coal-prices-are-forecast-climb-upto-200-mt-due-bad-weather-tight-lendi?utm_source=www.coalexplorer.com&utm_medium=email&utm_campaign=Coal+Explorer+Newsletter+Feb+21,+2010  

China’s coal demand has overtaken its domestic production, forcing the world’s largest coal producer to import coal. Till 2006, China was a net exporter of coal.

The global coal production in 2008 was 6.8 billion tonne while consumption stood at 6.7 billion tonne. China produced 43% of the world’s coal. So there is a clear risk that if a big coal consumer like India suddenly enters the world market, it could send international coal prices soaring.

http://www.business-standard.com/india/news/australia-scouts-for-indian-investment-in-coking-coal-sector/86121/on Australia expects to gain on India's appetite for coking coal considering the projections in the steel sector, which indicates an upward trend, a top official from New South Wales said.

Gujarat NRE, India's premier mining and coke making company, has already invested and achieved production of around 1.5 million tones per annum (MTPA) of coking coal in the Australia.

"It (Gujarat NRE) has significantly imported coking coal from Australia and 2012 predictions indicate that the major investment would be from them," he said.

Mullard, who represented the Australian government at the Conference, said Gujarat NRE has been undertaking significant expansion which will further upswing the overall coking coal exports to India.

The statistics by Ahmedabad-based company reveals that the production in Australia is expected to rise to 6 million tonnes per annum (MTPA) in about 3-4 years.

"The company has already invested around 300 million Australian dollars with plans to further invest 500 million Australian dollars for the development of Australian mines," Gujarat NRE company spokesman said at the steel conference.

Technical view: This stock has been in rising channel in almost 31weeks and has taken channel support @Rs.66 to reverse back and now Resistance comes near Rs.105 in near term if market sentiment is supportive.

Coal is Black Diamond: http://tanmaygopal.blogspot.com/2010/01/coal-black-diamond-india-is-3rd-largest.html

India Likely to face coal shock: http://tanmaygopal.blogspot.com/2010/02/update-on-coal-and-guj-nre-coke-we-had.html

GOLD looks negative in short-term

• Gold is showing short-term weakness and IMF is said Wednesday it will soon begin selling to the market the remaining 191.3 metric tons of gold it has slated for release, though the sales will be conducted in phases to avoid disrupting markets. The sale of gold, currently worth nearly $6.9 billion, will begin "shortly," the fund said in a brief statement and it may weigh down on prices.
• Billionaire George Soros’s Soros Fund Management more than doubled its holding in the biggest gold exchange-traded fund in the fourth quarter after bullion advanced 8.9% to a record. The $25-billion New York-based firm became the fourth-largest holder in the SPDR Gold Trust, adding 3.728 million shares valued at $421 million, according to a filing with the US Securities and Exchange Commission on Tuesday. Its investment was worth about $663 million, the fund’s largest single investment, as of December 31.
• India held on to its position as the world’s largest gold-consuming nation in 2009, mainly due to higher consumer demand during the fourth quarter, according to the World Gold Council. For every 100 gms of gold bought across the world, 14 gms were picked up by Indians, who continued to buy gold for jewellery and investment purposes despite the average price of gold in 2009 being 12% higher at $972.35 an ounce in the international market from the 2008 levels.
• Dollar Index is showing strength which means pressure on commodities and GOLD shows signs of short-term negative as IMF supply would pressurize the price.

Caution to investors from SEBI

http://www.sebi.gov.in/press/2010/201036.html  The following caution is issued by SEBI in the interest of investors. Be extra cautious while using information available from media sources such as Websites/ Blogs/ Newspaper Advertisements/ SMS’s Emails/rumours/ advice through television or print media for information and tips for intra-day, short term or long term investing.

Very important caution and this has been done on regular basis and investors have never cared to read this, I find many queries. Can I find a website which gives free intraday Tips? Is what many /majority of traders want. Many investor want stocks below Rs.50 as they feel it can double faster and they fail to understand many stocks below Rs.50 have Re.1 paid up also. Many investor want multi bagger if I can find easily then I should in Forbes list but it is never so easy, as investor have bad memory they forget the failures, in 2000 Dotcom bust there has been Companies which quoted Rs.1000 and above have disappeared in next few year. But we talk of INFOSYS, WIPRO which have created wealth but out of 500companies only handful has created wealth and how many had invested in right stock.

Important is that this is basically greed of people to make fast money, it is not stock market where it happens there are other aspects of life where people want to become rich. So only many MLM schemes flourished and latter failed to make a head way. We have seen many investors investing in unregistered finance company which have promised abnormal interest. There was a season of plantation companies which promised investor mind blogging returns.

This is global risk otherwise Madoff’s Ponzi scheme wouldn’t have big names losing their saving http://www.business-standard.com/india/news/when-intelligent-people-make-poor-decisions/382348/  When intelligent people make poor decisions

Today we have more channels, Websites & Newspaper trying to catch attention of viewers and readers so they take all possible views from everyone. Interesting many channels have pre-market open session where many analyst speak I have never seen 2analsyt speaking in same line and it is never possible. Investment is a journey and each one travels in different mode, speed and class and destination is also different and the traveler should decide which destination he wants to go, what mode of travel, which class and his affordability. Never blame others for your mistake and past record is never a grantee for future.

To conclude even government have lured investor globally as Stock market are lifeline of economy, I can recollect in 2007 end when there were statement that India is decoupled from global financial crisis from a Cabinet minister, but we had a big crash. This only teaches that no one is prefect in stock market and any judgment can go wrong. stock market is a very efficient hypothesis and it can’t be controlled for long it reacts and counter reacts faster than we can estimate and investor has to protect his own interest on his hard earned money and no effective policing can be made.

Inflation, Taxation and Social justice

Kirit Parikh Committee recommendation has started to worry common man already and many ask, “already we have very high inflationary pressure and wont this also add more impacting middle class like us”.( Problem with our political system is not in the system but people mind as people who are middle class/ upper middle class and rich don’t vote so politician are forced to create policy and benefits only for the voting community so if you feel you need change please never miss to express yourself and if you don’t like any candidate then under section 49-0 I can express saying I don’t vote which becomes valid)

 

Very true India has been a country of banana republic where we never thought of life beyond 10-15yrs politically it was always about election and vote bank so political parties to please the vote bank behaved in such a way that they can hold on to power. India with growing middle class is still seeing a policy towards poor by keeping them poor, with many free subsidy schemes which has hampered our agriculture growth as people have started to get benefit without working and productivity has come down. U.S and Australia are the biggest agriculture product exporter so only there is development and they also have subsidy for farmers they also protect their farmers, but they don’t get food shortage, India and many developing nations face food security.

India’s non-oil import has jumped last 10 month mainly from Agriculture imports and still there seems to be no major reforms in agriculture as this is vote bank and any reforms will take more time to show results so temporary measure is adopted to please poor to keep them poor.

Before we go deep in Kerala, Tamilnadu and pockets of Karnataka you don’t get local labor and people from less developed state come to work here and this has been seen in pockets of Maharashtra also which is why few political parties make an issue. Few days back a newspaper report said Kerala outbound remittance to states like Bengal, Bihar & Orissa has been on rise. Simple reason is Kerala achieved 100% literacy & Tamil Nadu is 2nd and now you don’t get farm labor in these states and TN has 44% urban population.

Development should see change in policy of government but that has never happened many Indian state adopt a policy of Re.1 rice, free television and many freebies which includes power and if no employment government will pay wages which has made government come to power. But these has its own recuperation how many years can u feed people and by doing so they become lazy without improving, tax other people for government failure. Give free good education, develop infrastructure, improve mobility of people make people multi lingual and jobs will be created. Now getting a driver for car has become most difficult and I see few ads saying call us we provide drivers on makeshift basis (temporary basis).

My father came out of the village near Sivakasi and came to a metro called Madras now called Chennai but people who were late to move didn’t move to metro in India but U.S, Australia, Gulf, Singapore and Europe and when I last visited my father’s village it was like a old age home and I didn’t see people below 45-50 and when I asked they told me their son/Daughter ( including Grand) live in Texas / Newyork / Melbourne which they were not able to pronounce but these old souls couldn’t adjust to new environment so they live in villages and get remittance from abroad. Below is a good explanation which I received from one of my friend.

Taxation and Social Justice - a funny explanation of how our economic system works!!

Suppose that every day, ten men go out for lassi and the bill for all ten comes to Rs.100.

If they paid their bill the way we pay our taxes, it would go something like this: The first four men (the poorest) would pay nothing. The fifth would pay Rs.1. The sixth would pay Rs.3. The seventh would pay Rs.7. The eighth would pay Rs.12. The ninth would pay Rs.18. The tenth man (the richest) would pay Rs.59. So, that's what they decided to do.

The ten men drank in the lassi shop every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers,' he said, 'I'm going to reduce the cost of your daily lassi by Rs.20.' Lassis for the ten now cost just Rs.80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free, but what about the other six men - the paying customers? How could they divide the Rs.20 windfall so that everyone would get his 'fair share?' They realized that Rs.20 divided by six is Rs.3.33. But if they subtracted that from everyone's share, then the fifth man and the sixth man would each end up being paid to drink his lassi. So, the shop owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. 

And so: The fifth man, like the first four, now paid nothing (100% savings). The sixth now paid Rs.2 instead of Rs.3 (33%savings) . The seventh now pay Rs.5 instead of Rs.7 (28%savings) . The eighth now paid Rs.9 instead of Rs.12 (25% savings). The ninth now paid Rs.14 instead of Rs.18 (22% savings). The tenth now paid Rs.49 instead of Rs.59 (16% savings). Each of the six was better off than before. And the first four continued to drink for free.

But once outside the restaurant, the men began to compare their savings. 'I only got a rupee out of the Rs.20,' declared the sixth man. He pointed to the tenth man, 'but he got Rs.10!' 'Yes, that's right,' exclaimed the fifth man. 'I only saved a rupee, too. It's unfair that he got ten times more than I did' 'That's true!!' shouted the seventh man. 'Why should he get Rs.10 back when I got only two? The wealthy get all the breaks' Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor'. The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for lassi, so the nine sat down and had lassis without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill.

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking lassis overseas where the atmosphere is somewhat friendlier.

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.

Note: The topic is very deep and I have hinted many things without going deep into subject, outline is there and this will give you many ideas and many things you see in life is around you.

Banks shouldn't be hedge funds, Volcker tells Senate

The federal safety net for commercial banks should protect depositors, not speculators; former Federal Reserve Chairman Paul Volcker told senators on Tuesday, urging them to pass the so-called Volcker Rule that would ban banks from trading for profit and that would restrict the size of the biggest banks.

Volcker said only four or five U.S. commercial banks and only a couple dozen worldwide engage in the kind of risky proprietary trading that would be banned by the Volcker Rule. He didn't name them, but the firms likely on the list would include Bank of America, JP Morgan, Citigroup, Goldman Sachs and Morgan Stanley http://www.marketwatch.com/story/banks-shouldnt-be-hedge-funds-volcker-testifies-2010-02-02?dist=afterbell  

Impact on Indian market: Indian market has seen continuous selling from FIIs in secondary market after positive inflows from them from March 2009 for 10 continuous month now January 2010 has seen negative flows to the tune of Rs.1136crs as per data but their selling in secondary market has been on higher side while QIP and IPO still attracting the flows so there has been no major outflow from the country and with Government disinvestment programme we need to see FIIs interest in that. http://www.moneycontrol.com/news/fiimf_activity/activity.php?flag=FII

DB Realty $325 mn IPO subscribed 3 times

http://www.bloomberg.com/apps/news?pid=20601087&sid=agQli9YNJWsQ&pos=6  Morgan Stanley is “evaluating” its investments in hedge funds including FrontPoint Partners LLC and London-based Lansdowne Partners LP, Chief Executive Officer James Gorman said today at an investor conference.

Treasuries fall on Speculation Lawmakers May Dilute Bank Rules

Treasuries fell for a second day on speculation U.S. lawmakers will dilute President Barack Obama’s Volcker rule restricting U.S. financial institutions, easing concern the proposal will crimp the economy lessened.

http://en.wikipedia.org/wiki/Paul_Volcker  Paul Adolph Volcker (born September 5, 1927) is an American economist. He was the Chairman of the Federal Reserve under United States Presidents Jimmy Carter and Ronald Reagan (from August 1979 to August 1987). He is currently chairman of the newly formed Economic Recovery Advisory Board under President Barack Obama.

Watch SUNNEWS on Thursday 4th February 2010 live on stock market 9.30-10.30