Saturday, 14 October 2017

3 Deadly Sins of Stock Market.

Have you ever think why new investors most of time failed in market.  ? Why only few make real money in stock market? What new person in stock market should do or should not do?  If yes I have answer to the root of this problem.

There 3 common mistakes that most investors do. I call them 3 Sins of Stock Market. 

1.Losing Money:
Most Investor knows this basic rule “Never Lose Money”. But still they end up losing money.  Because they keep holding the looser in hope of recovery. Simply say if you have purchased stock and it went down by 20%. And you wait as you not want to lose money. But this same stock has capability to go more 20% down. Not taking loses in market is biggest mistake most of investors do. Short term downside is normal, but if stock is going down for years or not moving for years then this is also one kind of loss as you are missing opportunity to allocate this money to some other good stock.  Remember there is no Successful investor who didn’t book loses. Taking lose is part of Journey and Investor must accept it.

      2. Buying Quantity then Quality:  
      Every new investor does this mistake.  They like buy 100 stocks of 10 over 1 stock of 1000.  Cost is same but he thinks he will get better chance with 100 stocks then 1. But in market price doesn’t matter.  In both case investment amount is 1000. And in both cases if stock goes up 10% you make 100 profits. So your buying decision should not be just on price factor. I have seen stock worth of 5000 in my career which I didn’t added because of price and same stock is now 22000 in 4 years and still going up. And I also seen stock which was 20 buck 4 years ago and still around 20 odd today also. Yes I am taking about Eicher Motors and Suzlon.

         3. Selling Winners:
       This is where successful investor standout form ordinary investor. Buy Right and Sit Tight. When you get stock which has shown potential to go up, you should not sell it for ordinary profit unless it’s really necessary. Stock which went up 50% has capability to go 100%. Smart Investor is one who adds stock on raise not on fall. Averaging should be done for stock which has shown its potential to go up not for stock which has shown its potential to go down.  Buy correct stock and let compounding do its magic.

     "To make money in stocks you must have the vision to see them, the courage to buy them   and         the patience to hold them. Patience is the rarest of the three." — Thomas Phelps

                                                            Be Smart. Invest Smartly. 

Friday, 12 May 2017

Tax Saver Mutual Fund is not just Tax Saver.

Around April most people seeking  for tax saving option and ended up buying product like PPF or Money Back Insurance plan which might the not need at all. Better planning ahead could give you better option to save tax also get good return on your money. Equity Link Saving Schema(ELSS) is the finest way to save tax and generate handy return.

ELSS Mutual Fund investment give you tax benefit under Section 80-C of the Income Tax Act. Also ELSS funds come with locking period of 3 year which minimum of any tax saving option available in India.

ELSS Fund just not tax saver but also great option to generate good return over the period of time.
Let have look of ELSS fund return vs. PPF return.

SBI Magnum Tax Gain SchemaPPF
Date of Investment01-05-200001-05-2000
Investment Amount1000010000
Return %Market Driven8.8 %approx. (average of 17 years)
RiskModerateAssured Return
Current Investment value13916031946
Total Return on Investment1391.6%319.6 %

Just look at the numbers, ELSS beat PPF by huge margin. With SIP option one can reduce the amount of risk in ELSS and generate better than average return. There was time when PPF come with 12% return but now it’s come down to 8.1. So investing in PPF now is not wise.
Reliance Tax Save Fund(G) is our pick from all fund.  Its high performance fund in ELSS category. One can start with minimum 500 INR SIP in ELSS fund. Investor can directly invest in Reliance MF from link: Reliance Mutual Fund.  Start your journey of Investment with Tax saving today.

Not taking risk is the biggest risk in life
Be Smart. Invest Smarty.

Learn To Earn: A Beginner’s Guide

Learn to Earn is book by Peter Lynch, one of the Best Fund Manager of all time. He has given a gift on knowledge of Investment in his book.  Unlike The Intelligent Investor, this book for beginner in Stock market.   Today I have completed it and find it quite good for someone to get basic clear.

Chapter one was on History of Capitalism and I didn’t find much interest while reading that. One can skip it if do not have interest on history

Second chapter the basic of investing was quite useful for readers. In this he explains very clearly how to invest in individual stocks and how to gather information about them. It details what a brokerage is, how it functions, why you may or may not want an expensive stockbroker, how to gather information about companies and decide whether to invest in them, what dividends are and how they work, and so on.
In one part Mr Lynch Mentioned:

“You many not triple your money in stock very often, but   you only need few triple in life time to build up a sizeable fortune. Here’s the math: If you start with $10000 and manage to triple it five times, you’ve got $2.4million, and if it ten times you’ve got $590million and 13 times, you’re the richest person in America”

In next chapter Mr Lynch has given information of how company’s life cycle works. At each stage of the company’s life, the risks and rewards of investing were different – it was a growing stock, a steady stock, a value stock, and a growth stock again at various points along the way. Lynch does a great job of explaining this relationship of a company to its stock, making the connection very clear.

And in last chapter he mentioned very important point about investing. Success of companies depends lot on Leadership. And what does that mean to the investor, or the person learning about personal finance? A great leader means you’ll have a valuable stock – a bad leader means you’ll have an under performing stock. Lynch puts a lot of value in this, and he provides a lot of interesting examples and evidence for the argument.

For someone who doesn’t know ABC of Investment, this book is good guide to start. You can get this book from any library or you can buy it for your personal collection from here:
Click to get your copy: Learn to Earn by Peter Lynch

Be Smart. Invest Smartly

Thursday, 13 April 2017

The Warren Buffett Way

Appearing on the PBS show Money World in 1993, Buffett was asked what investment advice he would give a money manager just starting out.  “I’d tell him to do exactly what I did 40- odd year ago, which is to learn about every company in the United State that has publicly traded security. “
Moderator Adam Smith protested,  “But there’s 27,000 public companies”
“Well”, said Buffett, “start with the A’s “

Para above is from the book The Warren Buffett Way. One of the great book of Investment one can have on   his/her Library.  Though book talk about Mr Buffett Investment philosophy which might not suite to many Investors today still I believe the core idea display in book will help individual investor to look the business from eye of Mr Buffett.
We here try to highlight essence of book in few words:
Author has classified Mr Buffett all investment in four core principles:
  1. Business
  2. Management
  3. Financial
  4. Value
With above four principle you would find how Mr Buffett has discovered his greatest investments like Coco-Cola, Washington Post  , Gillette, Wells Fargo  etc. The idea of finding successful business is still applicable but after Mr. Buffett no such a great investor came who have applied it with such a ease.
Later part of book displays how to manage portfolio and psychology of money. Robert Hagstrom,the author , did true justice to the idea of Warren Buffett in the book. Writing book on such a topic is not easy. He had kept the thing simple that reader can connect with it. Get your copy today if you have not yet read it from here:   The Warren Buffett Way
“We don’t need to be smarter than rest, we have to be more disciplined than the rest” ~WAAREN BUFFETT

Be Smart. Invest Smartly

Thursday, 9 March 2017

Man behind D-Mart: Radhakishan Damani.

D-mart is very well known in India.  Retail market chain which is changing the future of Indian retail market with its sound business model.  Since 2000 when D-mart is started, it has not shut a single store of it. This only justifies strategy and sound business model of it.  And the brain behind this successful business model is Indian Stock Wizard RK Damani.
Rakesh Jhunjhunwala consider Mr Damani as his Guru in his success journey of stock market. Mr RK Damani himself is on of value investor. He has made big fortune in Indian stock market by investing in great Indian corporations in late 80’s. At last known equity portfolio value of Mr RK Damani is around INR 2665cr.
Mr Damani started from almost nothing. At age of 32 with absolute no knowledge of Stocks , he enter the family  business of stock broking. He began as a speculator at the stock market. within no time, he understood that watching was not the best way to make or grow capital, and hence, taking inspiration from the legendary value investor Chandrakant Sampat, he started playing for the long term. His philosophy was long term, say 5 to 10 years. He would see if the product has the potential that far in the future. Gradually, his judgement began getting right, and within the next couple of years he was standing at par with the ranks of the biggies on Dalal Street.
As his nature Mr Damani in 2001 , entered in new unknown space which he has no knowledge about, Retail Business. In a market where more recognized and larger counterparts such as Spencer’s (RP-Sanjiv Goenka Group), More Store (Aditya Birla Retail), Star Bazaar (Tata Group-owned chain of hypermarkets) and Hypercity (Shoppers Stop-owned). In such a competitive market   D mart has successfully managed to crack the code in just about a decade.
Now there is an unsaid rule in the market that – “one must not open any store within a 1km radius of Dmart, simply because, no one can beat them on prices.”
As now   D- Mart is coming with IPO on 8th March , Mr Damani stake of  90 percent will be valued around INR 1600 Cr.  All broker house has given high rating to Dmart IPO so as we also consider it good buy even if one not get hand on IPO,  Investor can buy it after listing long term.
Be Smart. Invest Smartly.