Monday, 13 February 2017

Panic of 1901: First stock market crash of New York Stock Exchange

The Panic of 1901 was started because E.H.Harriman and James Hills, titans of rail road industry, wanted to control of Northern Pacific Railroad.
In those days they started buying share of Northern Pacific Railroad from open market quietly and as there was no regulation on such buying no one have any idea of it. In April 1901, E.H. Harriman started buying Northern Pacific Railroad stock quietly and stock rose 25% in a month time.
Since overall market is raising no one predict that takeover is happening in Northern Pacific Railroad. Some trader thought that Northern Pacific Railroad stock rising to fast and they started shorting it.
When someone short stock, he in fact borrowing security from someone else and selling it.  When price of security goes down person who shorted it, goes to market and buy at lower price.
But in this case as there are secretly buying was happening , stock continue it run and when on May 7, stock reach $143 and news floated what was happening behind the scene. When news came that Harriman is in race of buying, Hill and J.P Morgan try to stop him by putting in bids to buy stock as much as they could. Now it was open to all that it was race between Harriman and Hill, and sometime there are many people out there holding short position.
No one was selling and big buyers were forcing the price through the ceiling. Now shorter was caught in trap , they has to deliver the stock to whom they sold else the buyer can go to market and buy at market price and come back with bill to shorter. By the May 8 stock was trading $180 a share.
Next day fear and panic started in shorter and by noon shorter has bid the stock at $1000. When you have to have it, you have to have it.
Now at same time interesting thing was started in market, as shorts caught in very dangerous situation, they started selling other holding to raise money to cover their short position. Most of the other stock was down 10 to 20 points.  Panic continues on next day and most of the other stocks were down 40 to 60 points.
This was the classical example that single stock created rest all stock on down journey.  Same time there were few intelligent investor who has complete understanding of situation and got the opportunity to buy the stock that all are dumping because of their stupidity.
Article Inspired from book “Buffettology 
Be Smart. Invest Smartly.

Sunday, 12 February 2017

Life Lesson from RICH DAD

Lesson of RICH DAD from the book RICH DAD POOR DAD by Robert Kiyosaki
  • There is difference between being poor and being broke. Broke is temporary. Poor is eternal.
  • The poor and the middle class work for money. The rich have money work for them.
  • People’s lives are forever controlled by tow conditions: Fear and Greed.
  • It’s not how much money you make. It’s how much money you keep.
  • Rick people acquired assets. The poor and the middle class acquire liabilities that they think are assets.
  • Cash flow tells the story of how a person handles money.
  • Financial struggle is often the result of people working all their lives for someone else.
  • If you work for money, you give the power to your employee. If money work for you , you keep power and control it.
  • Often in real world, it’s not the smart who get ahead, but the bold.
  • It is not gambling if you know what you’re doing. It’s gambling if you’re just throwing money into the deal and praying.
  • Job is an acronym for “Just Over Broke”.
  • Worker work hard enough to not be fired, and owners pay just enough so that worker won’t quit.
  • You can’t teach old dog new tricks.
  • Give and you shall receive.
  • The primary difference between a rich person and a poor person is how they manage fear.
  • Failure inspires winners. Failure defeats losers.
  • There is gold everywhere. Most people are not trained to see it.
Get your copy of  “RICH DAD POOR DAD” and add money in our and author assets column.
Be Smart. Invest Smartly

Saturday, 11 February 2017

Suzlon: The Wind is started Flowing…

Suzlon, Pune base Wind energy Turbine manufacture  and operate in 19 countries across the globe with around 22 years of presence in the renewable energy sector
Due to high debt and less demand in global market company lost its way after 2008 crisis but now it seems it is coming back to get it title back in Renewable energy sector.
In last couple of months there is many things happen in Suzlon.  Here we have mentioned few event which happened which made noise in Suzlon:
  • On 17 January 2017 – Suzlon Energy achieved 10,000 megawatts installed wind energy milestone in India. Suzlon’s 10,000 MW of wind installation is capable of powering over 5 million households per annum.
  • On day of Vibrant Gujarat Summit Mr Tulsi Tanti, MD of Suzlon Said that Suzlon Energy plans to add 1,500 megawatt of power capacity. Out of this 1,500 megawatt, 500 megawatt will be wind and solar, the hybrid solution in next 3 years. The current debt of the company is around 7,000-8,000 crore and the payment of debt is going, according to the schedule. Tanti added that company is in the final stages of discussion with the banks from exiting the corporate debt restructuring (CDR) and hoped to exit from CDR this financial.
  • Company Secured 8 MW wind power project in AP.
  • Company Secured 105 MW from Axis Energy Group.
  • Company Secured maiden order  of 50 MW from Oil India.
  • Suzlon bags 63-MW wind power order from THDCI.
  • Rating Agency CARE assigned A rating to Suzlon. The rating has been assigned for its proposed long term and short term bank facilities. CARE ‘A’ ratings are considered to have adequate degree of safety regarding timely servicing of financial obligations, carrying low credit risk,”
  • Outstanding Q3 results of 274 cr.
Suzlon is big beneficially of interest rate cut which help the company in lowing interest on its debt.  In last year company has delivered better result and significantly reduces it debt. Few thing that don’t work for company is that we find is that company has promoter holding is very low to around 20 percent only. But we have  to look out for this result as many thing get clear and future path of company will be decide.
Currently Suzlon is trading at 17.10 INR on 10th Feb 17 on BSE with market cap of 8k Cr. With long term view one can enter in Suzlon.
Be Smart. Invest Smartly

Tuesday, 18 October 2016

Top 5 Dividend Stocks of last 10 year

When Investor was looking for good stock , dividend would be the very important factor to be consider. Stock go up down but consistence dividend make your investment worth. For conservative investor with low risk profile good dividend paying stock would be the best to invest.
Here we have try to bring few very good stock with great dividend payout over the last 10 year.
Infosys
 IT giant Infosys is always giving handsome dividend to its investor since inception.Even for last 2 year Infosys is facing growth issue because of the slow down in spending of BFSI client but for conservative investor Infosys is paradise. Study stocks growth with good return that what all they need. Let have look into infosys 10 year stock and dividend data.
Jan 2006 Infosys was trading at around 360 INR and now it is around 1027 INR.  Stock has given 185 % return with CAGR of 10.19%. Now let’s have look at dividend data. In last 10 year Infosys has declared 438.5 INR as dividend. This make total dividend of 121 % if stock brought at 360 in 2006. So 10 year average dividend yield is 12% around. If you have PPF or any other such investment time to think again.
Manappuram Finance: 
Manappuram finance is India’s Largest Listed and Highest Credit Rated Gold Loan Company.It Currently trading at 94.4 INR as on 14th Oct 2016. It is very hard to believe but this stock was traded at just 0.63 INR back in 2006. In 10 year stock price surge 149 times.
  If investor has invested in Manappuram Finance in Jan 2006 then he would had received  11.06 INR dividend till date.Now with investment price 0.63 INR , 10 year dividend payout would be stand 1755% with average of 175%. If you still not believe please read our last post: Stock with 150% average yearly dividend yield since 10 Year

 Clariant Chemicals India Ltd

Clariant Chemicals India Ltd is largest producer of Pigments, Textile Chemicals & Leather Chemicals in India. Also it is one of the highest dividends paying company we found.  Stock Price on 2006 was 333.75 INR which raise staidly to 805 INR today.  CAGR of stock for last 10 year is 8.5% but stock has paid 491.5 INR as Dividend in last 10 year and its average Yearly Dividend Yield is 14.72 % for 10 years.
NMDC
NMDC is state-controlled mineral producer of the Government of India. NMDC is one of the consistence dividend players in Indian stock market. NMDC was traded at 45 INR around in 2006 while it is now 117 INR.  So stock has given 160% ROI with 10% CAGR. Sometime in last 10 year NMDC has given 56.17 INR as Dividend which make it 124% yield and 10 year average Dividend yield is 12.4% .
Hindustan Zinc Limited
Hindustan Zinc Limited (HZL) is an integrated mining and resources producer of zinc, lead, silver and cadmium. It is a subsidiary of Vedanta Resources PLC.  HZL is consistence growth stock with healthy dividend. Stock raised from 25 in Jan 2006 to 245 INR today. With ROI 880% and CAGR of23% Hindustan Zinc makes valuable investment. Stock has paid total 46.7 INR as dividend in same period which make total 10year yield 186 % and annual average of 10 year yield 18.6%. No doubt it make in our list.
Remember Good stock come with great dividend. Don’t forget to look at dividend while you are investing next time. Also please do share  this and comment your view.
“Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.”
–John D. Rockefeller
Be Smart. Invest Smartly

Friday, 19 February 2016

Investment starts with Saving.


Hi All, 
Some of my reader ask me I don’t have money at first place to start investment. I told it’s not about you don’t have money it’s about your spending habit. And I thought to write something about how to save little in daily life and get maximum.

“Penny saved is Penny earned.”

Below are the few idea which I point out for saving and which I also personally used successfully:

  • Make monthly budget: Make your monthly essentially spending budget like spend of EMI, rent, Utility bills, and transportation. Once it done try to figure out is any possibility to cut the spending like now days online portal like PayTM providing discount on Electricity bill, DTH bill, and mobile bills.  Using Paytm only I am monthly saving 200 to 300 on utility bills 
  •   Avoid using credit cards: I have seen the people who spend too much while they are using credit card. But when people spend less when they need to pay by cash. Specially in supper market people buy unnecessary thing forgetting at the end of the month they need to pay credit card bills. Credit card is good in some case like buying electronic online with good discount offers of cards. 
  •  Less outing: Going every weekend out for dinner or lunch is not necessary. Eating unhealthy pizza and burger really not worthy. Eating outside will not only effect your pocket but also your health. Also not all movies required to watch. Before spending 250 to 300 in movie, get review of movie from friend or online and decided is it really necessary to watch ? You can buy good book in 300 and many can read it as well.
  • Exercise: I know you are thinking what the exercise is has business with saving. Daily exercise will keep you fit and healthy. How many times you go to doctor? A single visit for fever can cost you 1000 buck. To avoid it stay fit.  30 min of daily exercise or yoga is enough.
  • Research before you buy: Go and do proper research before you buy things like mobile, TV etc.  As there is many online as well as offline sellers are available which offer different price. There are many festival season offer available where you can get maximum discount, just you need to wait. Like I want to purchased Asus Zenphone2 -64 GB which was at 23k on flipkart. I delay my purchased and get it on discount price at 19k (2k discount by flipcart+10% discount on credit card.). Saved 4000k by waiting for a month.
  • Save power: Yes, save electricity. Switch off your light, AC , fan when not required. Make it habit. Little daily saving can make a difference and at the end of month you can see it in the bill.
  •  Use public transport: If you are not in rush, then use public transport. Why you need car to go office? If you can walk to place then avoid vehicle.
  • Be happy with what you have:  Don’t go on peer pressure. Don’t compare your life with other. Be happy and live happy.
 Following above basic thing in day to day life can help you to save at least 1000 buck.
Now once you have saved, don’t go and party. Invest your saving in Equity Mutual Fund through SIP and you can see your saving grow over the period of time.
Read the previous blog to know magic of compounding


Be Smart. Invest Smartly.





Thursday, 18 February 2016

Equity Index Fall: Oppertunity or Risk.


Hello Reader, last couple of month is been very hard time for investor across the globe. Most of the world equity indices fall 15-25 % in short spam.  Current oil crisis  triggered the panic button .

So, question is do you wait or start investing ? What should be strategy to not only sustain but also get maximum advantage from this situation.

As many world major Fund Analyst and fund manager said that India is better than any other emerging market in current situation. Currently India is in position where it could be recover faster than other .
FII outflow is the major reason for the fall in Indian market. Major stocks like SBI, L&T, Axis are almost 40-60% low from its 52 week high. So don't you think its actually a opportunity for investor to get maximum advantage. 

 As Mr Buffet said: 
"Games are won by players who focus on the playing field — not by those whose eyes are glued to the scoreboard."

If we stick to the ABCD of investment and keep adding fundamentally good stock then this volatile market could be your best opportunity.
A.    Invest regularly: Start MF SIP or Stock specific SIP monthly. This will help you in rupee cost averaging and you will sail through volatile market.
B.   Stay invested: Longer you wait better the return will be. Let the compounding play its magic. (Read this for magic of Compounding: http://kevaljethi2363.blogspot.in/2016/01/power-of-compounding-investment-magic.html )
C.   Diversify your portfolio: “Don’t keep all your eggs in the same basket?” The same applies for your investment portfolio as well. It is important to diversify your portfolio across various asset classes, financial instruments, sectors, geographies etc. Although diversification does not guarantee you profit, it will help minimize the overall risk of the portfolio. In a diversified portfolio, loss in one asset class can be offset by gains from another asset class.
D.    Keep it Simple: Invest in product which you completely understand. Get Mutual Fund rather than directly investing in stock.

Always remember the quote “The stock market is a device for transferring money from the impatient to the patient.”

Be Smart. Invest Smartly

Saturday, 23 January 2016

Power of Compounding: Investment Magic



Einstein said once “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.” 



Let’s take example of Mr. Early X and Mr. Late Y.

Mr Early X thought to start planning for his retirement on age of 25 and started the 5000/ monthly SIP in Mutual Fund for next 15 years. While Mr Late Y thing 25 is not a age to thing about retirement and its time to enjoy the life but later stage Mr Late Y thing retirement planning is also very important and Mr Late Y started 1000/monthly SIP for next 15 years.
So now here is the comparison between both of our Mr X and Mr Y.



Mr Early X
Mr Late Y
Amount invested
5000*15*12 =9  lakhs
10000*15*12= 18lakhs
Investment Horizon
60-25= 35 years
60-35=25 years
At age of 60 Retirement Corpus
3.88* Cr
2.09* Cr
(Note* : Assuming the average of 14% return from MF Compounding basis. )
 
At age of 60 Mr Early X has 1.85 times more amount than Mr Late Y with half of investment then Mr Late Y. It’s not how much you invest , it how long you invest make a difference.

Let’s take well known example of Wipro's  10000 to 528Cr Journey. 
Let’s just assume that you bought 100 shares of Wipro each at a face value of Rs.100 in the year 1980. Total investment: Rs.10,000. You don’t touch it at all, no profit booking or buying more shares. Wipro has done various bonuses and stock splits in its history of 1980-2014. Here is the list of all such corporate actions:
Wipro Investment growth
Year
Action
Number of Shares
1980
Initial Investment
100
1981
1:1 Bonus
200
1985
1:1 Bonus
400
1986
Stock split to FV Rs.10
4,000
1987
1:1 Bonus
8,000
1989
1:1 Bonus
16,000
1992
1:1 Bonus
32,000
1995
1:1 Bonus
64,000
1997
2:1 Bonus
1,92,000
1999
Stock split to FV Rs.2
9,60,000
2004
2:1 Bonus
28,80,000
2005
1:1 Bonus
57,60,000
2010
2:3 Bonus
96,00,000

After the year 2010, there were no more bonuses or stock splits. But with just that initial investment of Rs.10,000 (100 shares) you now would end up with 96,00,000 shares of the company because of all the stock splits and bonus shares. Current stock price of wipro is about Rs.550 per share, as of 22 Jan, 2016.
INR 550 × 96,00,000 = Rs.528 Cr. That is a CAGR (Compound Annual Growth Rate) of 47.39%. Does any of your bank FD give you 47% annual interest rate.

And we are not even considering dividend pay-out here. Recent dividend declared was 5 per share which make 4.8 Cr as dividend and we have many dividends like this. 
Just Amazing compounding is !!!

Mr Warren Buffet said it correct “Someone is sitting in the shade today because someone planted a tree a long time ago.



 Be Smart. Invest Smartly