AREN’T YOU FED UP OF THE FED?

    (Cartoonist: Mike Baldwin; Cartoonstock.com) We all know that rates in the U.S. are going up. When – Sep or Dec doesn’t matter. Markets seem to be ‘fed up’ with the lack of clarity from the Federal Reserve. What the markets want, is for the debate to end.   Which rate is the Fed expected to hike? The U.S. Federal Reserve at its meeting on September 16-17, 2015 will take a decision on increasing interest rates. A rate hike […]

HOW TO TRADE THE EMERGING MARKETS SELL-OFF?

(Source: www.shutterstock.com/cartoonresource) Pursuant to Chinese devaluation, Emerging Markets as an asset class experienced a sell-off. Is the selling done with or is there more to come?   Chinese Devaluation and Emerging Markets Emerging markets account for roughly half of the world economy. Of late, due to the commodity meltdown, Emerging Markets have been suffering from slow growth and weakening currencies. Hence, it seems, they can no longer be considered as the growth engines of the world. Within the Emerging Market space, […]

GREED, FEAR & GOLD

(Sketch Credit: Carl Richards – Reproduced under a Creative Commons License) Gold is making headline news. Unfortunately for the wrong reasons. The recent fall in the price of Gold presented an opportunity to highlight a couple of behavioural biases which are inherent in all of us. In markets, they say that the four most dangerous words are ‘this time it’s different’. In reality, it’s different every time. However, human behaviour remains the same at all times.   Greed, Fear & Gold […]

HIGH PE RATIOS – MYTH OR REALITY?

(Cartoonist: Doug Pike; Cartoonstock.com) For the layman investor, the most commonly used method of stock valuation is the Price to Earnings multiple or the PE ratio. The current market price divided by the latest earnings per share of the company in question gives us the PE multiple for the stock. From a historical perspective, the benchmark is currently trading at a high PE multiple.   PE ratios and Value Investing The strategy of buying stocks based on low PE multiples […]

DIVIDEND GROWTH INVESTING IN A SIDEWAYS MARKET

(Cartoonist: Jim Naylor; Cartoonstock.com) The fact that dividends create value in the hands of the receiver is one of the least appreciated features in the investment business. The only time dividends make headlines is when it is skipped. In sideways markets, like the one we seem to be in, dividends can be put to good use.   Sideways Markets – Big Moves Little Change The benchmark is locked in a tight trading range. The image below says it better than […]

PSU BANKING – IS IT THE RIGHT TIME TO INVEST?

(Cartoonist: Lindsay Foyle;Cartoonstock.com) The PSU Banking Index is the worst performing Sectoral Index in the current calendar year. There has always been a valuation gap between the public sector and private sector banks. This is despite the fact that, for both the sectors, the end customer remains the same. Since the beginning of 2015 the gap has widened.  In my opinion, this widening of the valuation gap is an opportunity for buying PSU banks.   Why Banking is the key to economic […]

HOW LOW CAN THE RUPEE GO?

The Rupee dollar parity is the single most determining factor for the prices of stocks in India. It is ahead of the economy, earnings, global cues, etc. It seems that as per the REER (Real Effective Exchange Rate) calculation the Rupee is overvalued. The Big Mac Index suggests that it is one of the most undervalued currencies in the world. Surely, one of them is wrong. I have tried to make sense out of this apparent dichotomy.   Real Effective […]

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 […]