HOW TO USE DISPERSION FOR STOCK SELECTION?

“(Credit: Robert Mankoff/The New Yorker Collection/The Cartoon Bank) We have had a reasonable correction on the Nifty. The index returns as compared to the sector-wise returns show a high level of dispersion. Have a look: INDEX JAN 01, 2015 JUN 05, 2015 % GAIN/LOSS CNX NIFTY 8284.00 8114.70 -2.04 CNX PSU BANK 4294.65 3280.15 -23.62 CNX METAL 2693.25 2315.50 -14.03 CNX REALTY 203.05 182.25 -10.24 CNX MEDIA 2378.30 2137.15 -10.14 CNX BANK 18750.45 17549.25 -6.41 CNX FINANCE 7449.95 7129.80 -4.30 CNX […]

BRAND VALUE INVESTING – BUY TATA GLOBAL

(Cartoonist: John McPherson;Cartoonstock.com) Tata Global Beverages Limited (TGBL) and Starbucks Corporation, an American global coffee company, are 50:50 partners in the joint venture called Tata Starbucks Limited. This is common knowledge. Why is the brand value being largely ignored by the market? Is it a buying opportunity? I have tried to answer these questions.   Definition of Brand value Brand value is the ‘monetary premium that results from having customers who are committed to a particular brand and who are […]

DEFLATION

DIAL D FOR DEFLATION?

(Cartoonist: Harley Schwadron;Cartoonstock.com) Has the media been scaring investors into thinking that we are in a deflationary spiral and that deflation spells disaster?  Should we factor this while taking investing decisions?   Deflation v/s Disinflation There is a fair bit of confusion on the terms ‘disinflation’ and ‘deflation’. Deflation is a sustained fall in prices, just as inflation is a sustained increase in prices. We are all used to inflation. Disinflation is a period of falling inflation. Most of the world […]

STRAY THOUGHTS – LIKE ALICE IN WONDERLAND

Alice in Wonderland – Alice Meets the Cheshire Cat (Illustration by Sir John Tenniel under license from Cartoonstock.com) And, for a Monday morning, a few stray thoughts and a few general observations and a few points of view ( all my own work): Like I have been reading  Alice’s Adventures in Wonderland. The book is written by Charles Lutwidge Dodgson in 1865 using the pseudonym ‘Lewis Carroll’. In the book Alice, a seven-year-old English girl, has a dream. In her dream, […]

WILL OIL @ US$ 80 MAKE INDIA FRAGILE?

(Cartoonist: Guy & Rodd; Cartoonstock.com) India has been dropped from the Fragile Five in the second week of March 2015. Why was India dropped? Are oil prices making us anti-fragile? If it is indeed so, is our anti fragility ephemeral? In this post, I have tried to find answers to these questions.   What is Fragile? Nassim Nicholas Taleb’s book Anti fragile: How to Live in a World we Don’t Understand contains a very succinct definition of fragility. He describes it […]

HOW TO PREPARE FOR A FED RATE HIKE – BUY STAN

  (Cartoonist: Doug Pike; Cartoonstock.com) Prepare don’t predict seems to be the dictum that the smart money is following. The behaviour of world markets in the last two weeks seems to suggest this. The upcoming results season and the fact that the smart money seems to be preparing for a rising rate scenario, are getting factored into stock prices. It is difficult to pick a stock in a richly valued market. The Indian Depository Receipts (IDR’s) of Standard Chartered PLC., […]

WHY WE ARE UNABLE TO BUY THE DIP?

(Cartoonist: Harley Schwadron;Cartoonstock.com) Last week, most of us were contemplating whether the Fed would surprise. It didn’t. However, the dip in the indices was surprising.    Why we are unable to buy on the dip? It has been very easy for me to frequently use the words ‘wait for the dip’ in many of my previous posts. Now that the ‘dip’ is well and truly upon us, how many of us are buying? Not many. It is, in fact very […]

ARE NEGATIVE INTEREST RATES THE NEW Y2K?

  (Cartoonist: Paresh Nath; Cagle Cartoons) Negative interest rates –  the thought or the utterance of such a phenomenon would have been scoffed at, as recently as a year ago. They are now, a reality. The implications are confusing, and that is putting it mildly. In the meanwhile, market volatility has been rising. Volatility is the only factor that has played out as expected. Non-Mandatory Disclosure Last week I was reminded of Behram Contractor who wrote under the pseudonym of […]

WILL 2015 BE THE YEAR OF STRESSED ASSETS?

(Cartoon Credit: www.lastlemon.com/harolds-planet/)   “Success in investing is not a function of what you buy; it’s a function of how much you pay for what you buy.” That is Howard Marks of Oaktree Capital Management – the world’s largest stressed assets investor.   What is a Stressed Asset? The Reserve Bank of India (RBI) has issued a paper titled ‘Early Recognition of Financial Distress, Prompt Steps for Resolution and Fair Recovery for Lenders: Framework for Revitalising Distressed Assets in the Economy’ […]

INVESTING IN SIN – THE RECESSION PROOF PORTFOLIO

  (Cartoonist: Doug Pike: Cartoonstock.com) (Anheuser-Busch is the company that manufactures Budweiser beer, and Philip Morris makes Marlboro cigarettes) Warren Buffet investing gospel has always been – invest in what you know and what you understand. Looking at Indian demographics the CNX FMCG Index will always continue to do well irrespective of economic and political considerations. Is it a sin to invest in this sector?   What is Sin-investing? To understand that one must know what a vice is. A vice […]