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 
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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.
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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.
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