[DieselFan]

Investing needs patience and strong heart. Stock market is not for faint heart folks. having said that each one of us would have faced those faint heart moments at some point in time. Those who braved those tides are sailing through the seas as of now and those who didn't are stuck with lot of cash in fixed income assets or real estate. Real estate, I believe, is thing of past and stock market is the future.

I have been investing since 2000 and still have not understood the market to time it. I have come to the conclusion that if you try timing the market then you are just gambling and not actually investing. for those who are not into stock market and cant invest time to study the stocks, mutual funds are the way to go. Here are some of my learnings that I would like to share. Take it with a pinch of salt.

1. One can NEVER time the market. Please DO NOT attempt doing it.
2. Investing constantly into the market through the thick and thin
3. Always draw up a plan with short/medium and long term goals. According to me short term is <3 years and medium term is 3 to 8 years and long term is > 8 years,
4. Invest into debt mutual funds for the short term. large cap equity funds for the mid term and mid and small cap funds for the long term.So, at any point in time one should have about 20% of investment in debt and about 30% in large caps and rest in mid and small caps. This might sound aggressive but this is the right way to go.
5. Invest and sit tight never enter or withdraw from the market because of change in macros. On long term market will grow. Take any 10 year period and market has always provided good positive returns.
6. Always save 40-50% of your earnings. Spend post your savings. DO NOT save in bank FDs or any tax saving avenues. Never treat insurance as a saving avenue always take term insurance (If needed).
7. Have a plan for early retirement. Each one of us should strive to retire by 45 years post which we should follow our passion. Very few of us are lucky to have our jobs matching with our passion.
8. Save at least 50 times your current annual expenses (other than some watershed expenses like children education and marriage) before thinking of retiring.

One should aim to retire before 50 years and live next 30 years following your dreams.

All the best.

[BaCkSeAtDrIVeR]

https://www.thehindubusinessline.com...le25653550.ece


Will Horlicks boost HUL? (Pun was irrestible).



Will Crocin alleviate GSK shareholder's "partial entitlement" headaches? The swap ratio is a frustrating 4.39. So unless you have holdings in exact multiples of 100, you end up with fractional entitlement, and they pool such fractions, convert to cash and send you the NEFT. Sigh.

[SmartCat]

Originally Posted by BaCkSeAtDrIVeR

Will Horlicks boost HUL?

Good for HUL shareholders. Instead of paying cash (for which they need to take a bank loan), they are giving HUL shares to GSK consumer shareholders. Now, HUL is trading at 67 times earnings and using their overvalued equity to buy cheaper GSK Consumer (40 times earnings). Hence, HUL has got itself a great deal.

Both HUL and GSK Consumer are overvalued stocks.

[audioholic]

I needed some info on the Cairn Vedanta merger. My mother and grandmother had some shares of Cairn India before the merger. Since they are pretty much long term investors, they have never tracked the changes. However, in the statement it showed 1:5 non redeemable preference shares given to them. Can anyone explain what this is about? I initially thought they got five extra shares for each share owned. However, now those shares have been brought back at face value. So can someone explain what exactly was done in the merger deal to investors?

[SmartCat]

Originally Posted by audioholic

I needed some info on the Cairn Vedanta merger. My mother and grandmother had some shares of Cairn India before the merger. Since they are pretty much long term investors, they have never tracked the changes. However, in the statement it showed 1:5 non redeemable preference shares given to them. Can anyone explain what this is about? I initially thought they got five extra shares for each share owned. However, now those shares have been brought back at face value. So can someone explain what exactly was done in the merger deal to investors?

Redeemable preference shares are like fixed deposits. You get certain percent returns after sometime - 7.5% in Cairn/Vedanta case. Unlike fixed deposits, these trade in the markets. So depending on supply/demand for such shares, you would have got slightly higher or lower returns if you had sold in the stock exchange. Since you never sold, you got cash for those shares.

But you would have also got shares of Vedanta plus one time dividend. If you had 100 shares of Cairn in your DP account, you would have got 100 shares of Vedanta.

These stunts are made because share prices of two stocks (cairn and vedanta) will always be different. You cannot set a nice round number for share swap. If you do a 1: 1.17 type of share swap, you need to pay all shareholders of Cairn in cash for the decimals. If a company does have cash to pay out all shareholders immediately, they adopt this model but pay interest on it.

[sunilch]

Originally Posted by audioholic

I needed some info on the Cairn Vedanta merger. My mother and grandmother had some shares of Cairn India before the merger. Since they are pretty much long term investors, they have never tracked the changes. However, in the statement it showed 1:5 non redeemable preference shares given to them. Can anyone explain what this is about? I initially thought they got five extra shares for each share owned. However, now those shares have been brought back at face value. So can someone explain what exactly was done in the merger deal to investors?

Originally Posted by smartcat

Redeemable preference shares are like fixed deposits. You get certain percent returns after sometime - 7.5% in Cairn/Vedanta case. Unlike fixed deposits, these trade in the markets. So depending on supply/demand for such shares, you would have got slightly higher or lower returns if you had sold in the stock exchange. Since you never sold, you got cash for those shares.

But you would have also got shares of Vedanta plus one time dividend. If you had 100 shares of Cairn in your DP account, you would have got 100 shares of Vedanta.

These stunts are made because share prices of two stocks (cairn and vedanta) will always be different. You cannot set a nice round number for share swap. If you do a 1: 1.17 type of share swap, you need to pay all shareholders of Cairn in cash for the decimals. If a company does have cash to pay out all shareholders immediately, they adopt this model but pay interest on it.

To add on top of what smartcat has shared, let me add a bit more info on the same Cairn-Vedanta merger. I too had holdings in both companies before this event. Now since I had no objections to the said deal (rather I kept mum like most small investors and did not object to it) I received equal number of shares of Vedanta + an immediate special dividend. Then I also got these said preference shares that paid a coupon of 7.5% per annul. I held these till maturity (November 2018) and now I received the final value of those preference shares back into my account as cash last month. So you should check the statements again now and see the cash settlement there.

[rishab.k]

Originally Posted by bluevolt

I don't like their system of handling payments. I sell a share, get my funds in their wallet in t+ 2 days and then again I have to wait 1-2 days before I get my money transferred to my account for which a request has to be made.

ICICI Direct is linked to my icici account and offers hassle-free handling of funds.

I know this is an old post but just wanted to check whether you did transfer over to ICICI direct from zerodha. As I understand zerodha has tied up with idfc to provide a 3 in 1 account now.

Was the time involved in payments the only reason you wanted to move out from zerodha.

I am contemplating opening a 3 in 1 account. If zerodha has been able to sort out the payments delay with them having tied up with IDFC, would you have recommended Zerodha now.

I already have a HDFC salary account, so I am trying to figure out whether I should open a trading and demat account with HDFC or open a new account with IDFC and link it with zerodha.

[bluevolt]

Originally Posted by rishab.k

I know this is an old post but just wanted to check whether you did transfer over to ICICI direct from zerodha. As I understand zerodha has tied up with idfc to provide a 3 in 1 account now.

Was the time involved in payments the only reason you wanted to move out from zerodha.

I am contemplating opening a 3 in 1 account. If zerodha has been able to sort out the payments delay with them having tied up with IDFC, would you have recommended Zerodha now.

I already have a HDFC salary account, so I am trying to figure out whether I should open a trading and demat account with HDFC or open a new account with IDFC and link it with zerodha.

I have put this thing on hold for now as I am not using Zerodha for daily trading. It has few holdings which I am not touching for some time. So not thinking of moving the shares from Zerodha to ICICI as of now.

[alexgv]

Originally Posted by rishab.k

I know this is an old post but just wanted to check whether you did transfer over to ICICI direct from zerodha. As I understand zerodha has tied up with idfc to provide a 3 in 1 account now....

I have a Zerodha account which is linked to my ICICI account. I also have IDFC account and now this 3-in-1 account scheme has come. I checked with IDFC bank, they mentioned there is no advantage of linking IDFC account vs ICICI account. So unlike ICICI direct 3 - in -1 account which is a 0 balance account, the IDFC account linked to Zerodha is a regular svaings account.
my 2 paisa from what i experienced.

[ani_meher]

Originally Posted by rishab.k

I already have a HDFC salary account, so I am trying to figure out whether I should open a trading and demat account with HDFC or open a new account with IDFC and link it with zerodha.

You can open Zerodha or any other brokerage and demat account, and transfer money to and from HDFC account.

[Saanil]

Hi,

I wanted to discuss a small query concerning Jet Airways. I am sure you would have come across reports saying that Jet Airways is facing liquidity issues and is being forced to undertake severe cost cutting measures. They key investors of Jet Airways include Naresh Goyal (founder) owning 51% stake and Etihad Airways which has 24% stake. The media reports have been saying that the only way to save Jet Airways from bankruptcy is for Etihad to buy additional stake in Jet as a result of which Naresh Goyal will no longer be the controlling shareholder.

I want to understand how this transaction will help Jet Airways. Do the reports allude to Etihad buying Naresh’s 51% completely? In that case, Naresh will receive the proceeds for his stake sale to Etihad but Jet Airways will not get any cash. How will the founder selling his stake help Jet? The only way the company gets the much required cash is via a rights issue or issuing shares to a strategic investor (Etihad in our case). The latter option would dilute the stake of current shareholders (not just Naresh Goyal).

I am really interested in how analysts are valuing this company. It has negative equity and negative earnings although I am not sure about its free cash flows (most probably should be in a bad shape). Just yesterday, it was reported that Jet has defaulted on its bank debt. For any company, such an event would have caused its stock price to reduce drastically. But Jet is down just 10% over the last two days. What do people think of this stock?

[SmartCat]

Originally Posted by Saanil

I want to understand how this transaction will help Jet Airways. Do the reports allude to Etihad buying Naresh’s 51% completely? In that case, Naresh will receive the proceeds for his stake sale to Etihad but Jet Airways will not get any cash. How will the founder selling his stake help Jet? The only way the company gets the much required cash is via a rights issue or issuing shares to a strategic investor (Etihad in our case). The latter option would dilute the stake of current shareholders (not just Naresh Goyal).

If Naresh sells and Etihad becomes the majority owner of Jet Airways, then its a huge positive for Jet Airways shareholders. Because it means Jet Airways will not go the Kingfisher way. After the purchase, yes, Etihad will either need to infuse capital (via rights issue) or offer low cost debt to Jet Airways. They will ensure that all salaries are paid and all flights run on time. Over a period of time, Jet Airways could get back into the black - thanks to Etihad's money power.

I am really interested in how analysts are valuing this company. It has negative equity and negative earnings although I am not sure about its free cash flows (most probably should be in a bad shape). Just yesterday, it was reported that Jet has defaulted on its bank debt. For any company, such an event would have caused its stock price to reduce drastically. But Jet is down just 10% over the last two days. What do people think of this stock?

Right now, Jet Airways is being valued so because of intangibles like brand name, Mumbai marketshare, slots at various international airports etc.

Avoid stocks like Jet Airways.

[carboy]

Originally Posted by smartcat

Avoid stocks like Jet Airways.

A more general advise would be to avoid most airline stocks in almost all countries. Since the introduction of commercial aviation, airlines have not done well mostly. It's one of the most difficult businesses. Books on investing often use Airline stocks as an example.

[Tjax]

Originally Posted by Saanil

I want to understand how this transaction will help Jet Airways. Do the reports allude to Etihad buying Naresh’s 51% completely? In that case, Naresh will receive the proceeds for his stake sale to Etihad but Jet Airways will not get any cash. How will the founder selling his stake help Jet? The only way the company gets the much required cash is via a rights issue or issuing shares to a strategic investor (Etihad in our case). The latter option would dilute the stake of current shareholders (not just Naresh Goyal).

I've actually wondered along these lines everytime I watch Shark Tank. Many a time when an entrepreneur offers a certain stake to the sharks in return for some X amount of money a question is posed to the entrepreneur as to what the company will do with that X amount of money. So if the Shark is buying a certain stake in the company from the entrepreneur doesn't it mean that the money goes to the entrepreneur and not the company. So how will the company use the money? Unless there is a condition that the entrepreneur pumps the money back into the company. In that case like you mentioned if it's against fresh equity it'll dilute the stake of everyone. Or is it that the investment by the sharks in every case is by way of issue of fresh shares by the company and diluting the shares of existing shareholders?

[vrprabhu]

Originally Posted by Tjax

.... buying a certain stake in the company from the entrepreneur doesn't it mean that the money goes to the entrepreneur and not the company. So how will the company use the money?

Pretty simple actually - if the equity share capital undergoes a change (increase) and/or the promoter doesn't maintain his proportion, then it is the company which gets the money.

Quick example :

Company ABC Ltd.

Issued & Paid Up Capital - Rs. 100 crore

Promoter A (75% holding) - Rs. 75 crore

Public / FIIs etc. (25% holding) - Rs. 25 crore


Scenario 1

Company comes out with a FPO / QIP of Rs. 50 crore, to be subscribed by the public & FIIs and promoter doesn't participate, the result will be

Issued & Paid Up Capital - Rs. 150 crore

Promoter A - Rs. 75 crore, holding will now be 50%

Public / FIIs etc. - Rs. 75 crore, holding will go up to 50%.

In this case, the amount coming out of equity sale goes to the company and promoter's stake gets diluted.


Scenario 2

Company is doing well and promoter wants to sell his stake i.e. he will part with the shares owned by him. If the same amount of Rs. 50 crore worth of shares is offloaded by him, then the result will be like this :

Issued & Paid Up Capital - Rs. 100 crore

Promoter A - Rs. 25 crore, holding will now be 25%

Public / FIIs etc. - Rs. 75 crore, holding will go up to 75%.

In this case, the amount of equity sale (which BTW will have a hefty premium) goes to the promoter and his stake gets diluted. The plus point here is that the 'valuation' of the company will be determined through the premium paid for stake sale, and will aid the increase in share prices of the company....