[Shortsell]

Originally Posted by S_U_N

OK. I get the picture now.
But for someone like me, I am not interested in trading.
I am trying to follow my maternal grandfather.
He invested in L&T, Reliance and a few others several decades ago and then simply did nothing about that investment. He watches news and reads the news paper - now he is 85+.
His advise to all his grand-children: stay way from the stock market.
This, despite the fact that he is a multi-millionaire thanks to the stock market. He does not spend any time/ effort at buying/ selling shares or reading books related to trading. I doubt he has ever read any books related to trading.

So, reading these books does not help you find the next Reliance or L&T, right?
Sorry if you feel I am going on a tangent, but as I said, I am trying to follow my grand father here and see if I can duplicate his almost zero effort success.

No Sir. This is not a 'how' to book on picking stocks. it won't elaborate on individual stocks. Though some stock market traders do tell what are the typical characteristics they look for before buying.

A lot of our existing notions about stocks and real-estate emanate from what happened in the past. Things like "buy a house, it will always give returns" etc etc. To an extent a lot of the earlier generations bought stocks/real estate and held on to it to reap great rewards. They were helped by the fact that India opened up its economy in 1991 and the stock market rallied multiple times from then on. They just happened to be there. Not taking away from anyone's success, but to just buy and hold for years, one has to be at the right time at the right place. It has an in built element of market timing that people sometimes miss.

Its not true however that stocks and real-estate always go up. our country is still in it's infancy as far as markets are concerned and hence we have not had the time to experience the full cycle. Nikkei- The Japanese index had been in a bear market for 35 years! So on an average most investors would have fared very badly there had they stuck to a buy and hold approach.

Finally i think, i'm not qualified enough to say that a particular approach won't work or will definitely work. Market knows best. So in fact there may be an approach which you like, which may be great. So i would say keep looking, start small and take it up from there. Hope i made sense.

[eq24]

Originally Posted by S_U_N

Just curious, would this book give tips? And would this not contradict your earlier statement? Will they give in their trade secrets?

No book in the world can give you investment advise on stocks, unless it is written by a stock operator and then either he knows you well or he is gonna charge you a lot.

Originally Posted by S_U_N

OK. I get the picture now.
But for someone like me, I am not interested in trading.
I am trying to follow my maternal grandfather.
He invested in L&T, Reliance and a few others several decades ago and then simply did nothing about that investment. He watches news and reads the news paper - now he is 85+.
His advise to all his grand-children: stay way from the stock market.
This, despite the fact that he is a multi-millionaire thanks to the stock market. He does not spend any time/ effort at buying/ selling shares or reading books related to trading. I doubt he has ever read any books related to trading.

My father used to be like that, he had bought most of the big names today back in the day and has earned handsomely but at the same time he bought some very big names back in the day and those names are all but gone today.
Stocks are very risky and today no stock is worth keeping for more than maximum three months. You get a profit you move on. Reason being stocks are now not only just controlled by the simple reason of demand and supply.

There are institutions, FII, HNI's, macro data, micro data and so many other things to look out for that unless you really KNOW, you wont know. Did you know that last month a big Indian brokerage due to a system error sold a major stock, said stock fell over 6% intraday. Such a sudden move sparked chaos and panic and before you know it the stock is down around 20%. Who is to blame and what happens to the poor small investors.

You see the news these days that how the markets are on fire and everybody is trying to get in. But little has changed in the macros. This is nothing but speculative FII play, what happens when they move out.

Your grandfather is right, stocks are very risky investment vehicles. Trading is still OK because you are out by the end of the day like me and even positional traders who are out by max a month. But even trading Intraday or Positional has its own demons. If you still want to invest do so but in a company you can bet your life on, otherwise it is still always a gamble.

[vina]

Originally Posted by sgiitk

The insurance thumb-rule is that the percentage of your money in debt/money should be your age in years. With your daughter you can safely go for mid-caps or diversified funds with significant midcap exposure.

My favourite is IDFC Premier except that they are only accepting SIP inputs.

Did you ever invest outside India (with your Indian earnings?); Liberalized Remittance scheme came out a few years ago and I was thinking about investing outside India thanks to the fact that our stockmarkets are pretty expensive (Unilever sells for a smaller P/E than HUL) and corporate governance pretty much non existent.

Any pointers will help.

[SmartCat]

Originally Posted by vina

Did you ever invest outside India (with your Indian earnings?); Liberalized Remittance scheme came out a few years ago and I was thinking about investing outside India thanks to the fact that our stockmarkets are pretty expensive (Unilever sells for a smaller P/E than HUL) and corporate governance pretty much non existent.

Any pointers will help.

Take a look at these mutual funds -
http://www.valueresearchonline.com/f...t=21&exc=close

Most of them are "fund of funds". They collect money from Indian investors and invest in a foreign mutual fund. This is the simplest way to invest in USA, Latin America, Europe & Emerging Asia. Avoid "sector funds" that invest in international commodities, real estate or precious metals shares.

Note that you are exposed to "currency risk" when you invest in these funds. If INR gains against USD/EUR, you stand to lose. But conversely, if INR falls against USD/EUR, your International Equity portfolio stands to gain.

Overall, its a good way to diversify your portfolio.

[vina]

Originally Posted by smartcat

Take a look at these mutual funds -
http://www.valueresearchonline.com/f...t=21&exc=close

Most of them are "fund of funds". They collect money from Indian investors and invest in a foreign mutual fund. This is the simplest way to invest in USA, Latin America, Europe & Emerging Asia. Avoid "sector funds" that invest in international commodities, real estate or precious metals shares.

Note that you are exposed to "currency risk" when you invest in these funds. If INR gains against USD/EUR, you stand to lose. But conversely, if INR falls against USD/EUR, your International Equity portfolio stands to gain.

Overall, its a good way to diversify your portfolio.

Very interesting I didn't know these existed in India. Being fund of funds I guess costs will be higher.

How is the tax and FEMA treatment? these look like plain rupee investments (rather than remittance based)

[SmartCat]

Originally Posted by vina

How is the tax and FEMA treatment? these look like plain rupee investments (rather than remittance based)

For tax purposes, international equity MFs are treated like debt funds. You need to pay both short term (if you sell before one year) and long term capital gains tax (if you sell after one year). Do a Google search for "International Equity Mutual fund India tax".

I don't think there is any FEMA stuff involved, because you invest in Rupees and get back the investments in Rupees. The NAV is declared everyday - in Rupees.

But it still works out - over a long period of time, historically, the Rupee has depreciated by 4 to 6% against the Dollar and the Euro. This straight away adds to the gains. As long as India continues to import most of its crude oil, India will have a current account deficit, and Indian Rupee will continue to depreciate against other major currencies.

[Shortsell]

Originally Posted by vina

Very interesting I didn't know these existed in India. Being fund of funds I guess costs will be higher.

Alternatively you can also directly invest in US stocks by opening a brokerage a/c in the US. I use Charles Schwab. The a/c opening process is smooth which takes a grand total of 8 days. Check their website for details. here however you have to do your own research. You can remit USD to that account under LRS--Liberalised remittance scheme, upto USD 75k per financial year.

[vina]

Originally Posted by Shortsell

Alternatively you can also directly invest in US stocks by opening a brokerage a/c in the US. I use Charles Schwab. The a/c opening process is smooth which takes a grand total of 8 days. Check their website for details. here however you have to do your own research. You can remit USD to that account under LRS--Liberalised remittance scheme, upto USD 75k per financial year.

Dear Shortsell

I was hoping somebody with experience will answer. I have several questions:

1. Do I need a (foreign) bank account for this purpose or will a brokerage account do?
2. What kind of paperwork is required to open the account?
3. How hard is the wire transfer of money into the account?
4. what are the tax regulations? Do we have to file the tax returns in US/other countries?
   1. If so, where to file the returns if, for example, the broker is based in Singapore while the stocks were traded on NYSE
5. any other pitfalls you are aware of

[Shortsell]

Originally Posted by vina

Dear Shortsell

I was hoping somebody with experience will answer. I have several questions:

1. Do I need a (foreign) bank account for this purpose or will a brokerage account do?
2. What kind of paperwork is required to open the account?
3. How hard is the wire transfer of money into the account?
4. what are the tax regulations? Do we have to file the tax returns in US/other countries?
   1. If so, where to file the returns if, for example, the broker is based in Singapore while the stocks were traded on NYSE
5. any other pitfalls you are aware of

Sure

1. You don't need to open a savings a/c with a bank abroad. Though RBI allows you to do it. You open something called a 'street account'. That's wall street speak for broking a/c. So your stocks will be held in the street a/c (brokerage a/c) and so will you USD be. For all practical purposes its a bank a/c only. So you will get an intl debit card and can issue cheques as well.

2. paperwork is minimal for brokerage houses abroad.
a. A'c application form. usually 3-4 pages to fill in basic details
b. proof of identity. passport is the best
c. Utility Bill. The address here should be the same as passport
d. A tax application form. For US equities, you will not be taxed on capital gains tax in US (only dividend is taxed there). You will have to pay the entire tax locally.

3. Money transfer is easy. fund you local savings bank INR account. Fill up Form A2( remittance form) and a few FEMA declaration forms. In india these forms are not standardised. So best is speak to your banker and get all the forms needed to execute a USD xfer under LRS

4. You file returns in India only and pay taxes here (Assuming you are trading US stocks). Im not sure about tax issues for trading in stocks across europe, Asia/Pac.

5. Only issue for me is actual trading since the US markets close at 1:30 AM and I have to be up early for India opening.

Most of these houses have fixed brokerage charges. So a minimum of USD 10k-20k is recommended.

[VindyWheels]

Hi,

Page Industries looks like a good candidate for fresh entry at 5600 levels.

The com trades in the 30-40 forward P/E band and getting a 40 P/E in next 1.5 years looks like a high probability event. If that happens the price can touch 8500-9000. This is a high quality business with high predictability and almost assured growth. It will trade below 30 only if Indian economy goes further downhill. Even if that occurs you can buy more

Another interesting stock pick at current levels is Ajanta Pharma. Its trading at around 13-14 times FY15 expected earnings. Good track record, company is in a growth phase with robust product profile. They are entering the US market now.

You can read-up on both these companies through their investor presentations/concalls etc.

The idea to share interesting picks is only to get more people interested in taking up equity investments in the right way and is not intended to be recos to be adopted without own research. Without own research you will never be comfortable in your positions and will exit/enter at the wrong price.

Also suggest people to read Basant Maheshwari's book - the thoughtful investor. I am yet to read it, but the preview looks very good. This book should give one decent exposure on long term equity investments in India.

Happy Investing

Vindy

[Saanil]

Originally Posted by VindyWheels

Hi,

Page Industries looks like a good candidate for fresh entry at 5600 levels.

The com trades in the 30-40 forward P/E band and getting a 40 P/E in next 1.5 years looks like a high probability event. If that happens the price can touch 8500-9000. This is a high quality business with high predictability and almost assured growth. It will trade below 30 only if Indian economy goes further downhill. Even if that occurs you can buy more

Isn't the liquidity for Page Industries too low? Stock has been on a free fall since last month - any particular reason for that? Would appreciate your replies.

Not sure if everybody feels the same but I am generally uncomfortable looking at stocks with very high prices i.e >4000/share. No logic behind it but just mentioning a behavioral trait of mine.

[VindyWheels]

Hi Saanil,

No business reason for the 15% slide. Kotak came out with a sell call, but the reason mentioned is P/E contraction. The stock is just taking a breather after very good run-up in the last one year. I do not think liquidity is an issue. Check NSE.

I agree that they should go for a stock split or bonus to bring the stock price down. On a lighter note, they give a Rs 1000 gift voucher to share holders who attend the AGM in Bangalore every year. If the stock price is below Rs 1000 you can buy one share and that will take care of your undergarments budget for the coming years

Originally Posted by Saanil

Isn't the liquidity for Page Industries too low? Stock has been on a free fall since last month - any particular reason for that? Would appreciate your replies.

Not sure if everybody feels the same but I am generally uncomfortable looking at stocks with very high prices i.e >4000/share. No logic behind it but just mentioning a behavioral trait of mine.

[VindyWheels]

Saanil, this article should bust your bias.

http://articles.economictimes.indiat...iss-securities

Originally Posted by Saanil

Not sure if everybody feels the same but I am generally uncomfortable looking at stocks with very high prices i.e >4000/share. No logic behind it but just mentioning a behavioral trait of mine.

[vina]

Originally Posted by Shortsell

Sure

1. You don't need to open a savings a/c with a bank abroad. Though RBI allows you to do it. You open something called a 'street account'. That's wall street speak for broking a/c. So your stocks will be held in the street a/c (brokerage a/c) and so will you USD be. For all practical purposes its a bank a/c only. So you will get an intl debit card and can issue cheques as well.

2. paperwork is minimal for brokerage houses abroad.
a. A'c application form. usually 3-4 pages to fill in basic details
b. proof of identity. passport is the best
c. Utility Bill. The address here should be the same as passport
d. A tax application form. For US equities, you will not be taxed on capital gains tax in US (only dividend is taxed there). You will have to pay the entire tax locally.

3. Money transfer is easy. fund you local savings bank INR account. Fill up Form A2( remittance form) and a few FEMA declaration forms. In india these forms are not standardised. So best is speak to your banker and get all the forms needed to execute a USD xfer under LRS

4. You file returns in India only and pay taxes here (Assuming you are trading US stocks). Im not sure about tax issues for trading in stocks across europe, Asia/Pac.

5. Only issue for me is actual trading since the US markets close at 1:30 AM and I have to be up early for India opening.

Most of these houses have fixed brokerage charges. So a minimum of USD 10k-20k is recommended.

I'm planning to buy and hold for long term, even on my Indian account I trade no more than about once a month (some months more, most months not at all). So the 1:30AM is not much of a problem.

Regarding US taxes - are you sure we don't have to pay any taxes in US? What about dividends and interest on bonds?

[Saanil]

Originally Posted by VindyWheels

Saanil, this article should bust your bias.

http://articles.economictimes.indiat...iss-securities

WoW! Thanks a lot for this! Appreciate it! Page Industries is looking good from the point that it has fallen a lot recently. The street is positive on the stock but seems like the upside is limited now. What I am interested in knowing now is that what will be the catalysts which will re-rate the stock to PE ratio of 40? I guess earnings announcements will be one. Also looking to see what are the downside risks for it.