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Muhurat Trading


wealthymatters.com

The  festival of Diwali is associated with Laxmi, the goddess of wealth; it is considered an auspicious time for spending and earning money. The customary trading tradition on the day of Diwali is unique to India where markets open for a short duration in the evening to pay obeisance to Lakshmi, the Hindu goddess of wealth and prosperity. This Muhurat Trading is a centuries old tradition. The day holds significance as it marks the beginning of the New Year, as per the Marwari tradition.Also the Gujarati new year begins a day after Diwali.

More often than not, the benchmark indices have ended higher, albeit by a small margin. The time for trading is specified by the exchanges and usually takes place for about an hour.This year,the  Muhurat trading  happened on 13 November between 3:30pm and 5:15pm.

Muhurat trading happens not only in stock markets but also commodity exchanges. Major commodity exchanges like MCX, NCDEX and others were open for trade from 5:30 pm to 8pm. Read more of this post

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Safer Bets


 The return of capital is more important than the return on capital.So it is important to avoid the pump and dump operations of promoters and market operators. Here is a list of safer promoters compiled by jigs of  BSE India Market View

Indian promoter groups:

Birla(founded in 1861),
TATA (founded in 1868),
Dabur(1884),
Kirloskar(1888),
Godrej (1897),
Murugappa (1900),
TVS(1911),
Singhania(1918),
Bajaj(1926),
Ramco(1938),
Mahindra(1945),
Hero (1956),
Kalyani(1964),
HDFC(1977),
Jubilant (1978). Read more of this post

Strategies To Make Money In The Stock Market


wealthymattersFirst, remember Benjamin Graham’s mantra “The essence of portfolio management is the management of RISKS, not the management of RETURNS. Well-managed portfolios start with this precept.”

Second,remember what Baron Rothschild said – “I never buy at the bottom and I always sell too soon.” Trying to squeeze the last drop of profit from every deal might not be such a great idea.

Third,consider doing what Bernard Baruch used to do. Some 70 years ago, he would research a stock, buy it, and then each time the stock rose 10% from his purchase price, buy an additional amount equal to his first purchase. If the stock began declining he would sell everything he had bought when the drop equaled 10% of its top price.

 

 

Edward Zajac – 94 year old investor


This is a story I came across in the Economic Times.It seems to be a reprint from Bloomberg.I have this story pinned to my notice board just to remind me how Dumb Money can become Smart Money.Here is a person who seems to have made good money without trying to become an expert at investing.He has accepted his lack of expertise and found a way to benefit from the expertise of the “smart money”.His method involves just looking at some basic facts before putting his money in a company.The skills required are really basic.The rest of his magic merely seems to be a result of compounding due to his Time in the Market and the wisdom that comes from experience.To follow him we don’t need to understand financial statements or master technical analysis.

 Buy & hold strategy not dead yet for 94-year-old investor

wealthymatters.comNEW YORK: Stick with stocks, says investor Edward Zajac. He should know. The 94-year-old has been trading for 72 years and said he’s made about $2.5 million.

“I am a live, open-hearted investor,” said Zajac. “I’m willing to hold that stock 5, 10 years, if I have to.” Zajac, who lives with his daughter in Henderson, Nevada, bought his first stock, Petroleum & Resources, in 1937 while attending the University of Illinois. He’s invested full-time since 1968, after retiring from installing computer systems to travel the US in a recreational vehicle with his wife. Read more of this post

The Ascent of Money


wealthymatters.comThe Ascent of Money by Niall Ferguson is a fantastic book.I was drawn to read it after watching the TV series based on the book and I have no regrets.It’s time and money well spent.

The book describes how banks, joint stock stock companies, bond markets, insurance companies, etc. originated at different places, at different points in time, in response to specific needs .While I was reading the book I had many aha moments and I heartily recommend the book to anyone who wishes to understand our modern financial world better.

Prof.Ferguson also tells the fascinating stories of how time and again with every financial innovation there have been abuses and excesses.These stories are great to remind us that neither good nor bad times last forever,that frauds and scams are par for the course and that no financial crisis is the end of the world though it might end the world as we know it. Read more of this post

Stock Market Joke


wealthymatters.com

I found this joke here : http://globalshtf.wordpress.com/2011/03/11/you-have-to-love-capitalists/ Pretty apt considering what happened in our markets today.

You Have To Love Capitalists

“Large Earthquake destroys part of Japan”

“Hmm”

“People die” Read more of this post

Dealing With The Shortcomings Of The Human Brain


wealthymatters.comSince we can’t overcome the tendency of the human brain to make mistakes while working through heuristics , here is a list of things we can do to reduce the effects of the shortcomings of the human brain.The more we can incorporate these points into our investing procedures and systems , the better the quality of our returns.The checklist is form Whitney Tilson’s ‘How to Avoid – and Profit From – Manias , Bubbles and Investor Irrationality’.

•Be humble–Avoid leverage, diversify, minimize trading

•Be patient

–Don’t try to get rich quick

–A watched stock never rises

–Tune out the noise

–Make sure time is on your side (stocks instead of options; no leverage)

•Get a partner

–someone you really trust –even if not at your firm Read more of this post

Some Assumptions To Check Before Investing


wealthymatters.comThe human brain is fascinating in the way it can use a rough form of inductive logic to help us make sense of our very complex world.But the human brain is not infalliable.Mental heuristics in the form of common sense,educated guesses,rules of thumb,intuitive judgments,etc.can help us find a good enough solution fast, when an exhaustive analysis is impractical.But at the same time such heuristics can lead us to over-generalize and make mistakes.Here is a checklist of some common traps to avoid falling into while investing:

  • Correlating GDP growth and market performance. High GDP growth rates don’t always translate into stockmarket outperformance. This may be due to three reasons—(a) unlisted companies may contribute to a large part of GDP growth; (b) while the listed companies’ net profit may grow, dilution of capital through periodic issuances will adversely affect earnings per share (EPS) and return-on-equity (RoE), thereby, impacting stock prices; and (c) the nature of stockmarkets, which serve as leading indicators, resulting in prices surging ahead well ahead of the actual GDP growth and, then, plateauing out for a long period once the growth actually materialises. Read more of this post

Some Financial Thumb – Rules


wealthymatters.com

Financial thumb-rules are rough guides for making sensible financial decisions .However they have their  infirmities and so need to be used in the right context.Following are a few basic financial thumb-rules:

  1. Pay yourself first rule: From any money you make, put away atleast 10% first before you pay any bills or debts or do anything else with the money i.e. make your investments the first obligation on your money.The general idea is that this money will start working for you by earning interest , gaining in capital value or giving you rents etc. and in time you will need to work less and less as your money starts working for you.
  2. The emergency fund rule: Build a corpus equal to 3-6 months worth of expenses of your household.Life is uncertain and you never know when somebody might meet with an accident , fall sick , suffer losses in business , lose a job or suffer loses due to fires or natural calamities ,war, civil strife etc.The money is to take care of immediate expenses,provide a cushion to fall back on till you find your feet again and if necessary provide a small stake to start over again.The money needs to be kept in a safe place where there is no chance of loss of capital and where it can be withdrawn immediately and without hassles.
  3. 100 minus your age rule:This is a thumb-rule to determine how much of your paper assets should be in equities.The general idea is that as you grow older and wealthier you want less volatility and less risk of capital loss.Volatility might complicate withdrawls from the corpus in retirement and lost capital might not be so easily made up for later in life, after retirement.
  4. The 10,5,3 rule : This rule states that you can on an average expect returns of 10% on equities,5% on bonds and 3% on liquid cash and cash-equivalent accounts in the long run.It’s important to remember this rule before reaching for that extra half percent that might lead to capital loss. Read more of this post
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