Equities vs bonds
Equity pundits have long maintained that this is the best instrument for the long term. But now they face an unexpected contender bonds. The median 10-year return for a sample of 978 stocks that were listed and traded in 1998 is 10.5%, while the average return is 11.4%. This compares with the 10-year bond yield of 12.2% in December 1988, say Ridham Desai and Sheela Rathi, who penned a recent Morgan Stanley report on 10-year returns. The phenomenon is not limited to the Indian markets. Even the Dow Jones has listed zero return in the past 10 years. As primary market observer Prithvi Haldea puts it, Buy and forget was the rule of the past. As it was an era of physical share certificates, often the next generation discovered them and made fortunes, he says. Such a lottery is no longer possible, given the nature of the markets.
Source
http://www.indiainfoline.com/news/innernews.asp?storyId=89307&lmn=1
Wednesday, January 7, 2009
Satyam Accounting Lapses and Manipulations
7.1.2009
In a letter to the board, CEO Ramamlinga Raju has given balance sheet details. In a shocking revelation, he has said that the balance sheet details over the years was fictitious.
The balance sheet has inflated cash balances of Rs 5,040 crore (Rs 50.40 billion) and accrued interest of Rs 376 crore (Rs 3.76 billion) is non-existent. Rs 1,230 crore (Rs 12.30 billion) was arranged to Satyam and is not reflected in the books.
He admitted that second quarter numbers were inflated to Rs 2,700 crore (Rs 27 billion) when the actual figure was Rs 2112 crore (Rs 21.12 billion). He also said that other board member were unaware of the real numbers.
The Satyam balance sheet, as on September 30, 2008, had an accrued interest of Rs 376 crore (Rs 3.76 billion) which is non-existent. It also had an understated liability of Rs 1,230 crore (Rs 12.30 billion) on account of funds arranged by Ramalinga Raju. The balance sheet showed an overstated debtors position of Rs 490 crore -- Rs 4.90 billion -- (as against Rs 2,651 crore -- Rs 26.51 billion -- reflected in books).
The gap in balance sheet has arisen purely on account of inflated profits over a period of last several years.
Source:
http://www.rediff.com/money/2009/jan/07ramalinga-raju-resigns.htm
In a letter to the board, CEO Ramamlinga Raju has given balance sheet details. In a shocking revelation, he has said that the balance sheet details over the years was fictitious.
The balance sheet has inflated cash balances of Rs 5,040 crore (Rs 50.40 billion) and accrued interest of Rs 376 crore (Rs 3.76 billion) is non-existent. Rs 1,230 crore (Rs 12.30 billion) was arranged to Satyam and is not reflected in the books.
He admitted that second quarter numbers were inflated to Rs 2,700 crore (Rs 27 billion) when the actual figure was Rs 2112 crore (Rs 21.12 billion). He also said that other board member were unaware of the real numbers.
The Satyam balance sheet, as on September 30, 2008, had an accrued interest of Rs 376 crore (Rs 3.76 billion) which is non-existent. It also had an understated liability of Rs 1,230 crore (Rs 12.30 billion) on account of funds arranged by Ramalinga Raju. The balance sheet showed an overstated debtors position of Rs 490 crore -- Rs 4.90 billion -- (as against Rs 2,651 crore -- Rs 26.51 billion -- reflected in books).
The gap in balance sheet has arisen purely on account of inflated profits over a period of last several years.
Source:
http://www.rediff.com/money/2009/jan/07ramalinga-raju-resigns.htm
Saturday, December 13, 2008
Trading Forms
Scaling - is for extremely small durations. A dealer or jobber is essentially a scalper. He buys in this instant and sells in the next instant for even a one tick profit.
Day trading: Day traders do their trading within a day and go home without any outstanding trading positions. They may have some inventory of shares. But they are not trading positions. Strictly they may not have any inventory also.
Position trading: Position traders carry their trading positions for number of days.
Momentum trading: It identifies very short term trends and tries to trade in the direction of the trend
Swing trading: It extend from one to four days.
Trend trading: It identifies intermediate trends which may last up to three to four months. But identification takes time and hence average time of a position can be a month.
Day trading: Day traders do their trading within a day and go home without any outstanding trading positions. They may have some inventory of shares. But they are not trading positions. Strictly they may not have any inventory also.
Position trading: Position traders carry their trading positions for number of days.
Momentum trading: It identifies very short term trends and tries to trade in the direction of the trend
Swing trading: It extend from one to four days.
Trend trading: It identifies intermediate trends which may last up to three to four months. But identification takes time and hence average time of a position can be a month.
Monday, October 27, 2008
Where is the market headed?
Some market guru informally talks of 5000 for sensex.
Economic times carried 7500 level. It was touched yesterday.
My strategy remains the same. Buy in small lots and acquire a big holding in this downtrend for long term portfolio.
I wrote my 400th knol yesterday on bearmarket side speculation using longterm equity portfolio.
http://knol.google.com/k/narayana-rao-kvss/narayana-rao-kvss/2utb2lsm2k7a/400
Economic times carried 7500 level. It was touched yesterday.
My strategy remains the same. Buy in small lots and acquire a big holding in this downtrend for long term portfolio.
I wrote my 400th knol yesterday on bearmarket side speculation using longterm equity portfolio.
http://knol.google.com/k/narayana-rao-kvss/narayana-rao-kvss/2utb2lsm2k7a/400
Monday, October 20, 2008
Stay Safe, Don’t Trade
Stay Safe, Don’t Play is the caption that Shakti Shankar Patra (shakti.patra@timesgroup) gave to his commentary on the derivatives market on 2010.2008 in the ET Investor’s Guide.
This caption is interesting to me to clearly bring to the notice of investors an example where traders are running away from the market thereby providing bargain offers to investors. Benjamin Graham advises investors to buy when traders are running away from the market. This is a clear example of the possibility that Graham indicated in his book.
Dangers of picking bottoms for traders: Picking a bottom for a trader is risky. Momentum is safer for a trader than a contrary position. The present market is one such where any trader who entered a long position suffered innumerable times. Shakti echoes other technical analysts when he writes all traditional forms of analysis and conventional indicators have become absolutely useless.
Put call ratio was of no use. Analyzing the build-up at various strike prices has become even more redundant. CBOE VIX hit an all time high of 81.17% which means that S&P 500 option contracts are bought or written with an implied expectation that with a 68.2% confidence (one standard deviation interval) a 81.17% move in S&P 500 over the next year. This means S&P 500 can be below 200 or above 1600 in a one year span. In terms of Dow Jones, it translates to 1700 or 15,300.
Shakti says his trading call for the second successive week remains the same – Just stay out of this madness. Don’t trade.
These are interesting times for investors. Fearful times for traders.
Plan and make your investments.
This caption is interesting to me to clearly bring to the notice of investors an example where traders are running away from the market thereby providing bargain offers to investors. Benjamin Graham advises investors to buy when traders are running away from the market. This is a clear example of the possibility that Graham indicated in his book.
Dangers of picking bottoms for traders: Picking a bottom for a trader is risky. Momentum is safer for a trader than a contrary position. The present market is one such where any trader who entered a long position suffered innumerable times. Shakti echoes other technical analysts when he writes all traditional forms of analysis and conventional indicators have become absolutely useless.
Put call ratio was of no use. Analyzing the build-up at various strike prices has become even more redundant. CBOE VIX hit an all time high of 81.17% which means that S&P 500 option contracts are bought or written with an implied expectation that with a 68.2% confidence (one standard deviation interval) a 81.17% move in S&P 500 over the next year. This means S&P 500 can be below 200 or above 1600 in a one year span. In terms of Dow Jones, it translates to 1700 or 15,300.
Shakti says his trading call for the second successive week remains the same – Just stay out of this madness. Don’t trade.
These are interesting times for investors. Fearful times for traders.
Plan and make your investments.
Assets still not cheap; Sensex should be 7,500
Assets still not cheap; Sensex should be 7,500
It is also where you come from. In 2002, it was around 3,000. Six years, we have grown at an average in nominal terms of about 15%. 1f one compounds it will be in the range of 120 or 130%. If one takes this calculation, then the index should have gone to 6,000 or 6,500. Instead it reached 21,000. So we can make ourselves very happy or unhappy. All I am saying is assets even now are not very cheap.(Rahul Bhasin, Barings Equity Partners)
In 2002, average profits after tax as a percentage of sales in India was 1.77% of GDP (gross domestic product). Last year it was 6.77% of GDP. So we are off a cyclical high.
If you look at the liquidity situation globally and you look at how global capital is in India the probability of them pulling out is high and therefore I see more downside.
The real GDP has grown 15-16% a year since 2002, maybe slightly more. Maybe the index should be 7,500.
I am happy to see these statements from Rahul Bhasin. I already wrote in my eariest posts that 7500 could be taken as a fair value level. With this expectation announced by Rahul Bhasin, one can hope for index level to touch fair value level.
But still acquiring a portfolio involves tactical action to do various trades and acquire the portfolio. Mya advice is to start acquiring bits and pieces before the big bang buying at a level considered as very close to the lower level.
http://www.livemint.com/2008/10/19234336/Assets-still-not-cheap-Sensex.html?h=E
It is also where you come from. In 2002, it was around 3,000. Six years, we have grown at an average in nominal terms of about 15%. 1f one compounds it will be in the range of 120 or 130%. If one takes this calculation, then the index should have gone to 6,000 or 6,500. Instead it reached 21,000. So we can make ourselves very happy or unhappy. All I am saying is assets even now are not very cheap.(Rahul Bhasin, Barings Equity Partners)
In 2002, average profits after tax as a percentage of sales in India was 1.77% of GDP (gross domestic product). Last year it was 6.77% of GDP. So we are off a cyclical high.
If you look at the liquidity situation globally and you look at how global capital is in India the probability of them pulling out is high and therefore I see more downside.
The real GDP has grown 15-16% a year since 2002, maybe slightly more. Maybe the index should be 7,500.
I am happy to see these statements from Rahul Bhasin. I already wrote in my eariest posts that 7500 could be taken as a fair value level. With this expectation announced by Rahul Bhasin, one can hope for index level to touch fair value level.
But still acquiring a portfolio involves tactical action to do various trades and acquire the portfolio. Mya advice is to start acquiring bits and pieces before the big bang buying at a level considered as very close to the lower level.
http://www.livemint.com/2008/10/19234336/Assets-still-not-cheap-Sensex.html?h=E
Friday, October 17, 2008
Benjamin Graham Articles on net
A Conversation With Benjamin Graham
http://www.bylo.org/bgraham76.html
http://www.wisertrader.com/watchlistf.php
http://www.moderngraham.com/
What History Tells Us About the Market
http://www.filife.com/stories/what-history-tells-us-about-the-market
http://www.bylo.org/bgraham76.html
http://www.wisertrader.com/watchlistf.php
http://www.moderngraham.com/
What History Tells Us About the Market
http://www.filife.com/stories/what-history-tells-us-about-the-market
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