Women! Assert Yourselves In Money Matters


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Legitimate marketers,con artists and stockbrokers make lots of money off people’s irrational behavior.Behavioral economics tries to figure out why people consistently make irrational financial decisions and a load of recent research in behavioral economics suggests that men’s portfolios and pocketbooks would be a lot better off if they listened more to women.

Terry Odean, a University of California professor, has studied stock picking by gender for more than two decades. A seven-year study by him found single female investors outperformed single men by 2.3 percent, female investment groups outperformed their male counterparts by 4.6 percent and women overall outperformed by 1.4 percent. Why? The short answer is overconfidence. Men trade more, and the more you trade, typically the more you lose — not to mention running up transaction costs.Male investors traded 45 percent more than female investors. Read more of this post

The World’s Greatest Investors


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Rakesh Jhunjhunwala-The Rare(ing) Bull


wealthymatters.comRakesh Radheysham Jhunjhunwala is a famous Indian stock investor.He lives in Malabar Hills with his wife Rekha ,daughter Nishtha and twin sons Aryaman and Aryaveer and works from his office at Nariman Point in South Mumbai. He regularly appears on various business channels on television to share his ideas and opinions on the Indian markets. He is well-known in investing circles as ‘Rocky’ and among his close associates as ‘Bhaiyya’.He is considered to be India’s Warren Buffett. In 2010, Forbes rated him India’s 51st and the world’s 1062nd richest man with a net worth  of $1.0 billion.He is the first dollar billionaire from India to have made his fortune primarily from the stock markets.

He considers Mr Radhakrishnan Damani as his guru (mentor) and best friend.He counts Kamal Babu, Ramesh Damani and Kamal Kabra as friends.He manages his own portfolio as a partner in his asset management firm, Rare Enterprises (Ra-Rakesh Jhunjhunwala, Re- Rekha Jhunjhunwala).“The sheer passion for markets and the ability to do what I enjoy is what inspires me,” says Jhunjhunwala. He has been asked to manage other people’s money, but prefers the freedom of not having to answer to anybody, and has thus turned all offers down.Rakesh does not try to beat the market as opposed to investment managers who have to answer to a lot of people, and hence look at indicators like how much alpha — or returns in excess of the general market — they are generating. “The only person that I have to answer to is my wife, and she just wants to know what the absolute returns are, not whether I am beating the market”. He expects the market to do very well as he believes that India is at the beginning of an unprecedented multi-decade bull run.Obviously he believes in putting his money where his mouth is as he owns only Indian equities.There are 7-8 stocks that make up 80% of his portfolio, and his holding period stretches from 3 years to 10. Read more of this post

6 Investment Rules


wealthymatters.comThe secret to doing well in stocks over the long term is to avoid making big mistakes rather than being spectacularly right a few times in one’s career.After all it just takes just one big enough mistake to wipe away all the gains of the previous years.The following checklist is to help avoid making major mistakes.

1. Avoid following the crowd.
Avoid the hottest stocks in the hottest sectors, which are invariably priced high.It’s far safer and more profitable to invest in stocks of companies that are either well-known but currently out of favour or not tracked at all by analysts often simply because they are too small to be of interest to institutional investors.

 2. Look for consistently positive cash flow and beware of debt.
Share holders make money through dividends.The company first needs to throw off cash through its operations to be in a position to reward shareholders consistently.Debt reduces the surplus available for share holders.Excessive debt might kill a company in bad times.

 3. Avoid serial acquirers and if necessary buy stocks of good companies after big acquisitions.
Making many small acquisitions or one big one are both fraught with peril, yet some managements insist on engaging in such behaviour regularly. They often fritter away the resources of their companies and shareholders in this way.If you must buy a company that has just made an acquisition buy after the deal , when the share price has dropped , not in the frenzy before the deal. Read more of this post

The Right Approach To Long Term Investment Success In The Stock Market


wealthymatters.comThere are many ways to make money in stocks. But not every way works well over longer periods of time.There are people who never make any money from stocks and there are others who make significant amounts of money in the stock market only to lose it again.To understand how to make money from stocks and keep it the long term we need t0 study the habits of investors who have remained successful over a long term.Such an exercise shows that the odds of long-term investment success are greatly enhanced with an approach that embodies most or all of the following characteristics:

  • Thinking about investing as the purchasing of companies, rather than the trading of stocks.
  • Ignoring the daily noise of  the market. As Graham wrote in his classic, ‘The Intelligent Investor‘, “Basically, price fluctuations have only one significant meaning for the true investor. They provide him an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times, he will do better if he forgets about the stock market.”
  • Only buying a stock when it is on sale i.e. available at a discount to its intrinsic value.
  • Focussing first on avoiding losses, and only then think about potential gains. “We look for businesses that in general aren’t going to be susceptible to very much change,” says Warren Buffett “It means we miss a lot of very big winners but it also means we have very few big losers…. We’re perfectly willing to trade away a big payoff for a certain payoff.” Read more of this post
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