Theory | wealthymatters

Volatility and the Indian Stock Markets

June 19, 2011 8 Comments

wealthymatters.com The volatility of the Indian market which is above 26% is one of the highest in the world. So though the long-term CAGR of the Indian market is 15.60%, there have been specific points in time when the market returned 1.25% pa for a 10-year period as well as 19.98% pa for another 10-year period.

One of the biggest impacts of this volatility is that it increases the entry-point and exit-point risks in investing. The simplest way of tackling this risk is to invest in the market at regular periods of time, irrespective of its levels to achieve cost averaging and also participate in the long term upward trend of the Indian markets. Also it is better to stick to the stable large-cap blue-chip companies. Read more of this post

Filed under Paper Assets, Theory Tagged with blue chips, Bullion, CAGR, commodities, correlation, cost averaging, debt, diversification, entry point risk, exit point risk, Gold, Indian Stock Market, low corelation, negative corelation, postaday2011, RandomBlog2011, stock market, volatility

The Ascent of Money

June 19, 2011 1 Comment

wealthymatters.com The 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

Filed under Theory Tagged with banks, bond markets, bonds, book, book review, finance book, financial crisis, financial history, frauds, insurance companies, joint stock companies, Niall Ferguson, postaday2011, RandomBlog2011, scams, stock markets, stocks, The Ascent of Money A Financial History Of The World, video

Rakesh Jhunjhunwala In His Own Words

June 12, 2011 4 Comments

wealthymatters.com Below is a favourite but somewhat dated Rakesh Jhunjhunwala interview.I frequently revisit the article to read about how he started out.Every time I wonder how I might be able to do what I want to do with so few resources,I find reading his story inspiring.Also I like his way of limiting risk,dealing with loss , having flexible targets and dealing with unfavourable opinions.The red ink is mine.It’s to highlight the parts I find interesting.As a side note,I also like reading the account of the 1993 blasts,if for no other reason than to remind myself about the spirit of Mumbai and the grit of all Mumbaikars. Read more of this post

Filed under Entrepreneurship, Theory Tagged with ACC, Aptech, billionaire, Bombay Bomb Blasts, Bombay Stock Exchange, BSE, bull of the bourses, capital, crores, Dalal Street, Economist, flexible targets, future trading, human achievement, India Today, interview, limiting risk, loss, market cycles, Money, net worth, portfolio, postaday2011, Rakesh Jhunjhunwala, RandomBlog2011, regulators, Reuters, sensex, stock trader, Wellington Club

Rakesh Jhunjhunwala On Why India Is A Great Place To Invest

June 12, 2011 3 Comments

wealthymatters.com

Following are a list of reasons why Rakesh Jhunjhunwala believes India is a great place to invest:-

India owes its progress to the following factors:

Efficient capital allocation
Sustained earnings expansion driven by growth and productivity
8 per cent+ real GDP growth + 4 per cent + Inflation = 12 per cent + Nominal GDP growth
Corporates to grow faster than unorganised sector
Operating and financial leverage to kick in
Corporate earnings to grow at more than 18 per cent
Favourable framework for equity investing
Rising savings, yet low equity ownership — significant potential
Corporate governance
Transparency
Effective regulation Read more of this post

Filed under Theory Tagged with capital allocation, corporate governance, corporates, dematerialization, domestic consumption, earnings expansion, equity investing, equity ownership, favourable demographics, financial leverage, GDP Growth, India, Inflation, operational leverage, postaday2011, productivity, Rakesh Jhunjhunwala, RandomBlog2011, regulation, savings, small scale industry, STT regime, tax paradise, unorganized sector

Rakesh Jhunjhunwala Quotes

June 11, 2011 3 Comments

wealthymatters.com “If a girl is beautiful a suitor will come. If a stock is beautiful, a suitor will come. So I don’t search for suitors when I buy the stock.”

“I have learnt two things about the press and wives. When they say something – don’t react.”

“India will remain in a phase of very good economic growth for the next 30 years.”

“Markets are like women — always commanding, mysterious, unpredictable and volatile.”

“Anticipate trend and benefit from it. Traders should go against human nature.”

” Successful investors are opportunistic and optimistic ones.”

“The mother of bull all runs is still to come.”

“I have two-three dreams in life. The first dream is that when I die and only truth of life is death, how many people come to my funeral and say, a good man has died. That is the greatest ambition in my life. Second thing is I want to earn the greatest wealth of the world in the most legitimate manner; practical legitimate manner and leave the largest part of it to charity.”

“Respect the market. Have an open mind. Know what to stake. Know when to take a loss. Be responsible.” Read more of this post