WHY IS THIS MARKET DEVOID OF A CORRECTION?

  (Source : Cartoonresource/Shutterstock) Why is this market devoid of a correction? Is it a phenomenon of ‘this time it’s different’ (the four most dangerous words in the stock market). The Nifty closed at a 8086.85 on Friday, 05 Sep,2014. The speed and momentum have taken most market participants by surprise (including me). The technical analysts, fundamental analysts and economists are in the same category as the retail investor. I proceeded to analyse the reasons for this, and came up […]

THE ‘MAGIC’ FORMULA FOR STOCK SELECTION

    (Source : Cartoonresource/Shutterstock)   Stock Selection   Is there a ‘magic’ formula for selecting stocks? I came across one in a book titled ‘The Little Book That (still) Beats the Market’ .  We have all heard of the methods of the legendary investors like Warren Buffet, Charlie Munger, Seth Klarman. How they buy stocks quoting well below their intrinsic values. Concepts like ‘margin of safety’ while buying any stock have been talked about and written about almost everywhere. Also the […]

WILL THE FED TAPER DERAIL THIS BULL MARKET?

  (Credit:James Patterson,The New Yorker Collection/The Cartoon Bank) FII flows and the bull market I had said in one of my earlier posts that Foreign Institutional Investor (FII) inflows are the single largest determinant of market direction. It follows that flows are dependent upon the U.S. Federal Reserve (Fed). In May 2013 the Fed announced that it will start tapering its Quantitative Easing (QE) program and what happened is history.  So what happens when the taper is done with in […]

HOW MANY NEW ALL TIME HIGHS WILL THE NIFTY MAKE?

  (Credit : Bernard Schoenbaum The New Yorker Collection/The Cartoon Bank) The Gamblers Fallacy As per Wikipedia “The Gamblers fallacy, is the mistaken belief, that if something happens more frequently than normal during some period, then it will happen less frequently in the future, or that if  something happens less frequently than normal during some period, then it will happen more frequently in the future. In situations where what is being observed is truly random, this belief though appealing to the […]

HOW CORRELATED ARE NIFTY STOCKS?

  Source : Aaron Bacall The New Yorker Collection/The Cartoon Bank   In any portfolio diversification is essential. How does one go about it? As long as an investors portfolio consists of companies whose businesses are not correlated, diversification is possible. The idea behind having a diversified portfolio is primarily to reduce risk. The reason is that, since the businesses are not correlated, when one company is doing well the other is likely to be doing poorly. This correlation ensures […]

IS IT TOO LATE TO ENTER THIS BULL MARKET?

  (Source : Cartoonresource/Shutterstock) The stock market is at an all time high. Is it too late to enter? In my opinion, it’s just late, not too late. Many investors who cashed out feel that it is too late to buy, since they have missed out on the initial blast. In the first place, they decided to cash out because they felt valuations were unjustifiable. Those valuations, which they considered unjustifiable, have been stretched further. It is basically impossible to answer the question […]

HOW YOUR PORTFOLIO CAN BEAT THE NIFTY

  Nifty as a benchmark The importance of having a benchmark cannot be understated. Investing is a way of life and your benchmark is an investing lifeline. Its a road map showing you the way. One can also take a detour if and when it is necessary. It lets you know how your portfolio is performing and can help you to stay disciplined. Since having a benchmark is so important, the selection of one is critical. In the Indian context, […]

EARNINGS & MARKETS

  How many times have we heard that markets slip on weak earnings? We are already into what is popularly called the earnings season. It is mandatory for Corporate India  to report their earnings every quarter. The results, as reported, do bring about a fair bit of volatility in the prices of the respective stocks. How the prices eventually move is more a function of earnings expectations before they are announced. The media run a poll of ‘expectations’. You then have […]

IS THIS THE TOP OF THIS BULL MARKET?

  We finally had a meaningful correction in the Nifty last week. The inevitable correction which most investors have been waiting for has thus begun. Since many investors had been left out of  a rising market, I presume there must be a sense of relief at the onset of a correction.  When the market goes up everybody wants a correction. When it goes down there is the usual post-mortem of the ‘why’. What surprises me is that when a market […]

BUDGET & MARKETS

The Union Budget is to be presented on Thursday, 10th July, 2014.  In my student days Nani Palkhiwala used to give a budget speech which was superb. In those days, there was no internet and communication systems were nowhere near what they are today, yet his speech was a massive draw. I wish someone could do something similar today. There is one constant between listening to the budget then and listening to it now and that is the fact that […]