Monday 26 January 2009
Sunday 28 December 2008
Optimists and opportunists
There are two types of people in this world. The first are the ones who are always pessimistic about each and everything. They hate life and always think the worst is going to happen. No matter what you want to do, they will tell you “That can’t be done.” and “That is impossible.” I’m sure you must have encountered a lot of such people.Especially in times like now, these people start speaking even more. They keep talking about how bad the world economy is and how millions of people will lose their jobs. They keep talking about how the world is headed for doom and how everything will collapse. Lehman Brothers went bankrupt, Bear Stearns went bust, Real estate is in trouble – so most probably you are going to be in big trouble too according to these ‘pessimists.’Unfortunately most people are this way, and even if they aren’t they let pessimists tell them what is possible and what is impossible. These are challenging times, but every challenge also brings in an opportunity in disguise.On the other hands is a very small minority who are optimists and opportunists. These people look at the global economic crash, economic slowdown and recession as one of the greatest opportunities in history. Very few people actually know that 1929 was in fact one of the best years for a small minority. The crash of 2008 and 2009 present such people another great opportunity. This opportunity isn’t only about buying cheap stocks and cheap assets, but also about new ideas.I see the US dollar crashing as it is the most oversupplied commodity on the planet, and we can certainly see many more problems in America. The old world has collapsed, but this also means that there is a great opportunity for a new world order to be established. It means that we need new entrepreneurs, investors and businesses to take the place of the old. We in India have this opportunity in front of us.People who are ignorant and pessimistic always miss out on opportunities. Simply watching the index isn’t what a smart investor does. For instance a stock like HPCL, was at around Rs. 180 when the Sensex was at 14,000 levels. However after the market fell by over 40% to 9,300 the stock was at Rs. 280.This means even though the Sensex fell by over 40%, the stock went up by over 50%. Just a few years ago there was a time when Bank of India could be bought for barely Rs. 11, even now after the correction it is priced at Rs. 280. Most people forget that immense amount of wealth has been created by a small minority, who invested in the previous bear market. What I am saying isn’t just something out of thin air, but something I have personally experienced and benefited from. There are many such instances on how, times like now offer lots of potential and opportunities.People who create wealth are people who look for solutions every time there is a problem. Sunil Mittal, of Bharti Airtel provided the solution of being able to use a mobile for Rs. 0.50 paise a minute. Before that it cost Rs. 32 a minute. He brought about a revolution which empowered millions of Indians and at the same time created tremendous amount of wealth for him.Dhirubhai Ambani, Ratan Tata, Bill Gates all have been people who have provided a solution or an improved way of doing things.You can’t be a successful at anything if you aren’t optimistic and opportunistic! This is something I have always believed and experienced throughout my life. In fact some of my best successes have been a result of crisis, problems and challenges.It is hard at first, but it is also brings out the best in us. Don’t let temporary losses, hardships, failure and challenges break your spirit, ambition and desire!
Friday 12 December 2008
Governer of india belives in a significant crisis situation
D Subbarao, Governor of the Reserve bank
of India, believes we are in a significant crisis situation and said the situation in the distant future is uncertain.
Subbarao expects banks to cut lending rates soon. He believes all measures taken by the RBI to ease liquidity were adequate and feels they have yielded some positive impact. He said that it is too early to comment on further rate cuts.
Here is a transcript of D Subbarao's comments in a press conference
On RBI monetary policy
I think the monetary policy measures that we have taken have resulted in some positive outcome. As we had said in the policy statement on Saturday, all the measures of liquidity are appropriate. We reduced repo rate and the reverse repo rate on Saturday and we expect banks to respond to that and cut their lending rates and keep credit flowing for productive sectors.
On Inflation
We make our next review of the policy variables, our projections of core inflation when we make quarterly policy view which is slated for January 27. Certainly the developments will reflect in our assessment.
The Governor after the RBI's central board meet also announced a Rs 9000 crore line of credit to the National Housing Bank or NHB and the Exim bank to revive the housing and export sectors.
He said that a refinance facility of Rs 4000 crore for NHB and Rs 5000 crore facility for Exim bank will be extended at the repo rate of 6.5%.
of India, believes we are in a significant crisis situation and said the situation in the distant future is uncertain.
Subbarao expects banks to cut lending rates soon. He believes all measures taken by the RBI to ease liquidity were adequate and feels they have yielded some positive impact. He said that it is too early to comment on further rate cuts.
Here is a transcript of D Subbarao's comments in a press conference
On RBI monetary policy
I think the monetary policy measures that we have taken have resulted in some positive outcome. As we had said in the policy statement on Saturday, all the measures of liquidity are appropriate. We reduced repo rate and the reverse repo rate on Saturday and we expect banks to respond to that and cut their lending rates and keep credit flowing for productive sectors.
On Inflation
We make our next review of the policy variables, our projections of core inflation when we make quarterly policy view which is slated for January 27. Certainly the developments will reflect in our assessment.
The Governor after the RBI's central board meet also announced a Rs 9000 crore line of credit to the National Housing Bank or NHB and the Exim bank to revive the housing and export sectors.
He said that a refinance facility of Rs 4000 crore for NHB and Rs 5000 crore facility for Exim bank will be extended at the repo rate of 6.5%.
Friday 28 November 2008
WHY WE NEED WAR ON TERROR
Here is what our security forces, government and PM should immediately do. However before you read further please promise me that you will share this with at least five people you know. Those five people will in turn share with another five and that way we can let everyone know about what we truly believe in. I believe that all of us together can have a very strong impact and this is a time for us to be united. We need to let everybody know that security is a major concern for all of us. We need our government and politicians to know that we won’t tolerate such weak security and it is high time they listened to us. A strong message needs to be sent by us that it is high time this injustice stops. I assume if you are reading further you will fulfill your promise of sharing this with at least five people.
Declare A War On Terror
We are targets of global terror and still our leadership has no proper strategy or declaration on our war on terror. Why have we not prepared ourselves still to fight this evil? Our politicians have linked terror with politics and votes – instead of fighting it. Today the voter will decide based on security. If my government can’t fight terror – I as a voter will not give my vote to them. We as Indians demand security and immediately want out government to have a strong anti-terror strategy. The terrorists have declared a war and have waged and invasion. It is time to follow the path of Arjuna who went to war with the blessing of Lord Krishna. It isn’t time for discussions – but time to wage war on this evil. What are we waiting for still?
Allocate More Funds
The first thing that needs to be done is allocate more funds towards internal security. India has around $300 billion of foreign reserve. Instead of just keeping the money and earning barely any interest, at least $30 billion should be used to beef up internal security. All this money should be invested bullet proof security–vests, more advanced automatic weapons, surveillance cameras, superior air and navy support, helicopters, advanced drone technologies, etc. To fight terror we need to invest in security and technology. This is much more important than anything else – because without security no investment or no money means anything. Our country doesn’t have a shortage of money and I hope our government seriously acts. There is no time to think – but just to act.
Tougher Terror Laws
We should stop letting terrorists go free and should give them the harshest possible punishment. It is high time we start ignoring so called Human Rights groups who disappear when terrorists slaughter innocent men and women, but tell all of us we should be soft on terror. These terrorists are not humans and deserve no Human Right. More power has to be given to our security forces to not fear and take action against terror. I have been told that we don’t even have a terror law now. Our government can not continue this way – because terror is a major challenge. There should be no mercy shown to terrorists.
Learn From Countries Like America
America after 9/11 invested heavily into internal security and hasn’t had any terrorist attack. We need to learn from them and work with their forces. They are using extremely advanced technology and equipment to make their country a more secure place. No matter what they have done with the economy- we should learn from them in the area of anti-terror security.
Technology
Today the terrorists have automatic weapons, while a large part of our police force is under-equipped only with pistols and lathis. We need to invest in advanced technologies which can be used in situation of urban areas. Today robotic drones that can be controlled by remote control are all available. If we had such technology we could have sent these drones inside hotels to take out terrorists while making sure hostages are safe. We have a brave police force and army – we need to make sure we respect their bravery and give him what they deserve.
Surveillance camera, tapping of phones and e-mail, helicopters, armoured vehicles, navy ships patrolling the coast, bomb detection equipment should all be used. Every major hotel, mall and office needs to have better technology and equipment to fight terror. A hotel like Taj or Oberoi need to have armed security guards who can immediately take out a threat.
Communications Monitoring
Complete monitoring of communications channels is needed. That way we can detect terror attacks before they actually happen. Places like America , UK and Israel all are doing this. We need to do this too. Our freedom is more important than what a few people might think. Every phone and e-mail should be monitored. Major cities should all be captured by surveillance cameras to detect any suspicious movements. Cities like London have invested billions to make sure there are CCTV camera all over the city – from streets to busses to trains. We need stronger intelligence.
Costal Safety
These terrorists came from sea and landed on the coast near the Gateway of India. It is very sad that anyone can enter our country this way. We need a stronger costal guard force which can detect such threats and take them out even before they enter. The entire Western and Eastern coast needs a much larger and stronger force.
Media Awareness and Education
There is a strong need that the media is educated about how they deal and report terror. Unfortunately a large part of the media isn’t trained in dealing with such situations and should not hamper investigation and police action. With the media and civilians around, it becomes difficult for security forces to detect terror and take them out. People need to understand that they should stay of the streets and not surround the area. There is a real threat and it isn’t some sort of tamasha. With civilians surrounding the area things become even more difficult. Education in the areas of evacuation, first aid and group action needs to be given to all of us to cope with terror with better.
Global Elite Force
Terror is a major problem facing all countries in the world. A global elite anti-terror force needs to be formed that will be able to fight terror anywhere in the world. Today we all have a common enemy – we need a common force that will fight this enemy. This force should be able to take out terror targets and suspects anywhere in the world and archaic laws should not slow them down. Anyone who tries to promote feeling of hate or terror – should be eliminated immediately by this force. We can see that the terrorists are all young mis-guided people who have been brainwashed. The people behind this brainwashing need to be eliminated.
This Isn’t About Religion
These people claim to be fighting for Islam and for Muslims – but we all know that this isn’t true. They kill anyone and everyone. This isn’t a time to label terror with religion. It isn’t a time for politicians to fight amongst each other – but unite and fight together as Indians.
Terrorists want to spread hate and divide this world and nation on the basis of religion. We shouldn’t let them succeed at doing this. Today we are all one – and when terror attacks they don’t just kill people of one religion. They kill everybody - Muslims, Hindus, Christians, Jews, Atheists. This is a war of good vs. evil and not about religion. This is a war where we need to fight evil which kills children and destroys families.
We need to pray for everyone who has been affected by terror and hope there is peace. We need to pray that these terrorists are blessed with intelligence that makes them not do such vicious crimes on humanity. We need to pray and hope there is a lot more love on this planet. Irrespective of how much money we have(or don’t have) – we should realize that at the end of the day we are all human beings who want peace, love and a safe and happy life.
I’m sure together we will be able to make this world a better and safer place where there is more happiness and love.
Declare A War On Terror
We are targets of global terror and still our leadership has no proper strategy or declaration on our war on terror. Why have we not prepared ourselves still to fight this evil? Our politicians have linked terror with politics and votes – instead of fighting it. Today the voter will decide based on security. If my government can’t fight terror – I as a voter will not give my vote to them. We as Indians demand security and immediately want out government to have a strong anti-terror strategy. The terrorists have declared a war and have waged and invasion. It is time to follow the path of Arjuna who went to war with the blessing of Lord Krishna. It isn’t time for discussions – but time to wage war on this evil. What are we waiting for still?
Allocate More Funds
The first thing that needs to be done is allocate more funds towards internal security. India has around $300 billion of foreign reserve. Instead of just keeping the money and earning barely any interest, at least $30 billion should be used to beef up internal security. All this money should be invested bullet proof security–vests, more advanced automatic weapons, surveillance cameras, superior air and navy support, helicopters, advanced drone technologies, etc. To fight terror we need to invest in security and technology. This is much more important than anything else – because without security no investment or no money means anything. Our country doesn’t have a shortage of money and I hope our government seriously acts. There is no time to think – but just to act.
Tougher Terror Laws
We should stop letting terrorists go free and should give them the harshest possible punishment. It is high time we start ignoring so called Human Rights groups who disappear when terrorists slaughter innocent men and women, but tell all of us we should be soft on terror. These terrorists are not humans and deserve no Human Right. More power has to be given to our security forces to not fear and take action against terror. I have been told that we don’t even have a terror law now. Our government can not continue this way – because terror is a major challenge. There should be no mercy shown to terrorists.
Learn From Countries Like America
America after 9/11 invested heavily into internal security and hasn’t had any terrorist attack. We need to learn from them and work with their forces. They are using extremely advanced technology and equipment to make their country a more secure place. No matter what they have done with the economy- we should learn from them in the area of anti-terror security.
Technology
Today the terrorists have automatic weapons, while a large part of our police force is under-equipped only with pistols and lathis. We need to invest in advanced technologies which can be used in situation of urban areas. Today robotic drones that can be controlled by remote control are all available. If we had such technology we could have sent these drones inside hotels to take out terrorists while making sure hostages are safe. We have a brave police force and army – we need to make sure we respect their bravery and give him what they deserve.
Surveillance camera, tapping of phones and e-mail, helicopters, armoured vehicles, navy ships patrolling the coast, bomb detection equipment should all be used. Every major hotel, mall and office needs to have better technology and equipment to fight terror. A hotel like Taj or Oberoi need to have armed security guards who can immediately take out a threat.
Communications Monitoring
Complete monitoring of communications channels is needed. That way we can detect terror attacks before they actually happen. Places like America , UK and Israel all are doing this. We need to do this too. Our freedom is more important than what a few people might think. Every phone and e-mail should be monitored. Major cities should all be captured by surveillance cameras to detect any suspicious movements. Cities like London have invested billions to make sure there are CCTV camera all over the city – from streets to busses to trains. We need stronger intelligence.
Costal Safety
These terrorists came from sea and landed on the coast near the Gateway of India. It is very sad that anyone can enter our country this way. We need a stronger costal guard force which can detect such threats and take them out even before they enter. The entire Western and Eastern coast needs a much larger and stronger force.
Media Awareness and Education
There is a strong need that the media is educated about how they deal and report terror. Unfortunately a large part of the media isn’t trained in dealing with such situations and should not hamper investigation and police action. With the media and civilians around, it becomes difficult for security forces to detect terror and take them out. People need to understand that they should stay of the streets and not surround the area. There is a real threat and it isn’t some sort of tamasha. With civilians surrounding the area things become even more difficult. Education in the areas of evacuation, first aid and group action needs to be given to all of us to cope with terror with better.
Global Elite Force
Terror is a major problem facing all countries in the world. A global elite anti-terror force needs to be formed that will be able to fight terror anywhere in the world. Today we all have a common enemy – we need a common force that will fight this enemy. This force should be able to take out terror targets and suspects anywhere in the world and archaic laws should not slow them down. Anyone who tries to promote feeling of hate or terror – should be eliminated immediately by this force. We can see that the terrorists are all young mis-guided people who have been brainwashed. The people behind this brainwashing need to be eliminated.
This Isn’t About Religion
These people claim to be fighting for Islam and for Muslims – but we all know that this isn’t true. They kill anyone and everyone. This isn’t a time to label terror with religion. It isn’t a time for politicians to fight amongst each other – but unite and fight together as Indians.
Terrorists want to spread hate and divide this world and nation on the basis of religion. We shouldn’t let them succeed at doing this. Today we are all one – and when terror attacks they don’t just kill people of one religion. They kill everybody - Muslims, Hindus, Christians, Jews, Atheists. This is a war of good vs. evil and not about religion. This is a war where we need to fight evil which kills children and destroys families.
We need to pray for everyone who has been affected by terror and hope there is peace. We need to pray that these terrorists are blessed with intelligence that makes them not do such vicious crimes on humanity. We need to pray and hope there is a lot more love on this planet. Irrespective of how much money we have(or don’t have) – we should realize that at the end of the day we are all human beings who want peace, love and a safe and happy life.
I’m sure together we will be able to make this world a better and safer place where there is more happiness and love.
Monday 27 October 2008
MARKET EXAM
Every day and in every trade, the market gives us an examination. The results are unforgiving. Get the examination question correct and the market gives you money. Get the examination question incorrect and the market takes money from you. Every trading decision to buy, or sell, or just observe is a test of all the skills and knowledge and experience you have accumulated. Unlike on-the-job training, the market gives you no latitude for error, for past successes, or experience. Every test is for real, and every test pass or fail carries the same consequences. It is a demanding task. Over ten weeks we give you a less demanding test – at least in terms of consequences. These questions are designed to help you to evaluate your knowledge about trading and help to identify areas where you may needs to do some more homework.
Friday 24 October 2008
Cash is king
Sometimes finding a great investment starts with going through several balance sheets and discovering something. Such type of research is usually very time consuming and intensive, and to be honest not meant for everybody.
Someone who is a doctor or an engineer, might not have so much time to browse through the financial statements of companies. But the rewards that one gets when such companies are found are truly incredible. It is almost like someone mining for gold and striking gold. I spend much more time researching every time markets correct as this is the best time to strike gold. I have discovered a handful of great companies which can do wonders to my portfolio in the coming few years. I’ll share one here with you, in which I have started buying.Let us say there is a candy shop and it has Rs. 4 lying in it’s cash box. Now let us say this entire candy shop has zero debt and the entire business is being sold for Rs. 4.
Would you buy it?
Still thinking what you would do?
Well if I was in your place, I wouldn’t think for a second and would immediately buy it for Rs. 4 before anybody else gets it. Because all I need to do is put Rs. 4 to buy the business and take my Rs. 4 from the cash box back, and the entire business is mine for free.
I’m sure most of you might be thinking which fool would sell their business for just Rs. 4 even though they have Rs. 4 cash with them. Well in the real world nobody would do it, but stock markets are irrational and no wonder we can actually find people doing such things. In fact we have a candy shop that has reserves more than Rs. 11,000 crores being sold for just around Rs. 4,000 crores . This isn’t even considering other fixed assets or net current assets.
Especially with the recent correction and global sentiment of doom and depression, people seem to forget that things change very fast. The very people who were buying the same companies 7-8 times the price until six months ago, today aren’t even looking at them. This is great news for all those who want to buy and create wealth.
Now this company which I have started buying into not only assets and cash much more than its market cap, and not only does it have a book value which is almost three times its current share price. It also has zero debt – which means it doesn’t have any interest burden. In times like now cash is king, queen, prince, everything!
Whenever I discover such companies and look at their balance sheets, it brings a big smile on my face and gets me extremely excited. I know most normal people don’t get excited looking at balance sheets and seeing the cash and book value. But then as I always say people who create wealth do things that others don’t. Being friendly with financial statements and understanding business is very important to succeed as an investor.
A part of me wants to jump in and buy as much as I can with whatever money I have, as such opportunities don’t come everyday. But of course experience (losses in the past due to over exposure) have taught me to never do that and to always buy gradually and never ever allocate all your funds to a single stock, because most probably than not after you buy it, there are chances of it going down.
However I feel that every investor should study this company and see how assets truly get mis-priced. A regular investor can buy these assets at much cheaper prices than even what big Mutual Funds and FIIs have bought it at. Anybody who calls himself an investor and hasn’t noticed or studied this company yet, will probably read about it three to four years down the line and how it was a great investment picked up by a few during the stock market crash of 2008.
Study history and it has always been this way. At the moment the stock might be ignored and down in the dumps, but one of these days it is going to have every Tarun, Dinesh and Harjeet running after it. That day will be the time for me to start thinking about selling it and making a nice hefty profit.As in the past I’m going to share this company with you. However I feel more than from just an investment angle please look at it from an educational angle.
Happy Wealth Creation!
Someone who is a doctor or an engineer, might not have so much time to browse through the financial statements of companies. But the rewards that one gets when such companies are found are truly incredible. It is almost like someone mining for gold and striking gold. I spend much more time researching every time markets correct as this is the best time to strike gold. I have discovered a handful of great companies which can do wonders to my portfolio in the coming few years. I’ll share one here with you, in which I have started buying.Let us say there is a candy shop and it has Rs. 4 lying in it’s cash box. Now let us say this entire candy shop has zero debt and the entire business is being sold for Rs. 4.
Would you buy it?
Still thinking what you would do?
Well if I was in your place, I wouldn’t think for a second and would immediately buy it for Rs. 4 before anybody else gets it. Because all I need to do is put Rs. 4 to buy the business and take my Rs. 4 from the cash box back, and the entire business is mine for free.
I’m sure most of you might be thinking which fool would sell their business for just Rs. 4 even though they have Rs. 4 cash with them. Well in the real world nobody would do it, but stock markets are irrational and no wonder we can actually find people doing such things. In fact we have a candy shop that has reserves more than Rs. 11,000 crores being sold for just around Rs. 4,000 crores . This isn’t even considering other fixed assets or net current assets.
Especially with the recent correction and global sentiment of doom and depression, people seem to forget that things change very fast. The very people who were buying the same companies 7-8 times the price until six months ago, today aren’t even looking at them. This is great news for all those who want to buy and create wealth.
Now this company which I have started buying into not only assets and cash much more than its market cap, and not only does it have a book value which is almost three times its current share price. It also has zero debt – which means it doesn’t have any interest burden. In times like now cash is king, queen, prince, everything!
Whenever I discover such companies and look at their balance sheets, it brings a big smile on my face and gets me extremely excited. I know most normal people don’t get excited looking at balance sheets and seeing the cash and book value. But then as I always say people who create wealth do things that others don’t. Being friendly with financial statements and understanding business is very important to succeed as an investor.
A part of me wants to jump in and buy as much as I can with whatever money I have, as such opportunities don’t come everyday. But of course experience (losses in the past due to over exposure) have taught me to never do that and to always buy gradually and never ever allocate all your funds to a single stock, because most probably than not after you buy it, there are chances of it going down.
However I feel that every investor should study this company and see how assets truly get mis-priced. A regular investor can buy these assets at much cheaper prices than even what big Mutual Funds and FIIs have bought it at. Anybody who calls himself an investor and hasn’t noticed or studied this company yet, will probably read about it three to four years down the line and how it was a great investment picked up by a few during the stock market crash of 2008.
Study history and it has always been this way. At the moment the stock might be ignored and down in the dumps, but one of these days it is going to have every Tarun, Dinesh and Harjeet running after it. That day will be the time for me to start thinking about selling it and making a nice hefty profit.As in the past I’m going to share this company with you. However I feel more than from just an investment angle please look at it from an educational angle.
Happy Wealth Creation!
Saturday 18 October 2008
Sensex breaches 10K, no bottom in sight
It was an absolutely dismal close to this week. The worse nightmare is in, we are in four digits now for the Sensex, the psychological level of 10,000 has been broken for the first time since July 2006 marking a new low for 2008, a multi year low actually and even the Nifty has plunged below its leaning support level of 3,100. So whichever way you look at it, the lows are not holding, fresh lows have happened this week and psychologically important levels have got broken up. 10,000 may just be a level but it makes a lot of difference to see the Sensex at four digits after seeing it at 21,000 just a few months back. So, this bear market is in full flow right now. There are no signs of a bottom yet and we are crumbling with every passing day.
We had a big sell off on Friday and that was led by the power sector with stocks like NTPC, Reliance Infra, Suzlon, Siemens, BHEL, L&T all of them are breaking down. ICICI Bank took a huge knock, Unitech and DLF continue their bottom less fall and other largecap names like Reliance have got hammered up with not too many places to hide, the breadth on Friday has also been quite bad as well.
We had a big sell off on Friday and that was led by the power sector with stocks like NTPC, Reliance Infra, Suzlon, Siemens, BHEL, L&T all of them are breaking down. ICICI Bank took a huge knock, Unitech and DLF continue their bottom less fall and other largecap names like Reliance have got hammered up with not too many places to hide, the breadth on Friday has also been quite bad as well.
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