[SmartCat]

Originally Posted by Saanil

I have got a very basic question. Why is the US thinking of increasing their interest rate? I read that they have stopped printing currency as and when they say better economic data coming out of US (like employment numbers, inflation etc). But what is the justification for increasing interest rates in US?

Let's say you have $10 million surplus cash to invest. When the interest rates are close to zero, what will you do? You will invest that money in stocks & real estate. Companies will $100 million or $1 billion surplus cash will think about setting a new factory or spend money on R&D rather than keep it in the bank. So central banks keep interest rates low when there is low growth to stimulate the economy this way - it drives the money towards stocks, real estate, investments, R&D etc, thereby increasing the economic activity & hence growth.

But if there interest rates are kept low for a long time, especially when there is good continuous GDP growth, there is a risk of asset bubbles (stock market, real estate bubbles) because money chases them. So central banks raise interest rates.

Now, if you have $10 million to invest, and if bonds offer 6% guaranteed returns, you will probably invest $8 million in such bonds. This diverts money from bubbly assets like stocks & real estate - thereby avoiding an asset bubble.

[Latheesh]

+1

Here is a video by Ray Dalio - How The Economic Machine Works

https://www.youtube.com/watch?v=PHe0bXAIuk0

[PatienceWins]

Aswath Damodaran on valuation:

https://www.youtube.com/watch?v=Z5chrxMuBoo

[S_U_N]

Originally Posted by PatienceWins

Aswath Damodaran on valuation:

Thanks for sharing.

I went through the entire talk:
Key takeaways for me:
1. If you don't have time to do your valuation, don't invest.
2. Investment will not make you rich.
3. He himself could go wrong with valuations, despite his knowledge and experience. So, I should not listen to him?

[Saanil]

Originally Posted by S_U_N

Thanks for sharing.


3. He himself could go wrong with valuations, despite his knowledge and experience. So, I should not listen to him?

On your last point, you need to keep in mind that valuing something is not a precise science like Newton's Law. Even Buffet himself has said that his estimate of true value of a company can be a lot different than that of other equally knowledgeable people. The only way we can be safe is to have a Margin of Safety i.e. being conservative in your assumptions. This does not guarantee 100% success but will increase your chances. Valuation should also be looked as a particular range of values rather than a precise number.

[PatienceWins]

Originally Posted by S_U_N

Thanks for sharing.

I went through the entire talk:
Key takeaways for me:
1. If you don't have time to do your valuation, don't invest.
2. Investment will not make you rich.
3. He himself could go wrong with valuations, despite his knowledge and experience. So, I should not listen to him?

I agree with what Saanil said above. Valuation can be used as a rough estimate to have enough margin of safety. Do not look at valuing a business unless you understand the business very well. Take a piece of paper and write the reasons why you find the company attractive.

Valuation is much more than just looking at financial metrics. Look at companies within your circle of competence (the business that you really understand) so that you will have an idea of what the business will become in the future. This is important to have conviction in your investment and hold it for long term. Do not just go by metrics like PE and P/BV to see if the stock is overvalued. If you think that the business has an enduring moat (aka competitive advantage) that will help it to keep on growing for a long time, you can invest in it at a fair price so that the power of compounding will make you rich in the long term. As Buffett says "It is better to invest in a great company at a fair price rather than to invest in a good company at a great price".

[rki2007]

All Metal stocks have shown good signs of recovery due to the coal block auction by the Govt.

My prediction is to hold onto these stocks if one is already invested and others may invest in these companies with a frame time of 3-5 years.

Suggestions/comments are welcome.

Thanks in advance..

[RoadTiger]

Originally Posted by RoadTiger

Am fairly bullish on infrastructure (roads, bridges, ports, building) companies, at this point of time. Reasons are
1. Govt's focus on infra is likely to come through in the next few months & years
2. With the current PM and the roads/transport minister - both of whom have excellent credentials for getting things done - orders are likely to flow in for companies
3. NHAI has already announced tender process for nearly Rs 5000 crore of road projects, which will be awarded by March 2015

My top picks are companies with a proven track record of profitability even in bad years, decent managements, low debt on their books & with reasonable valuations.

They are :
1. J Kumar Infra - good, Mumbai-based company - roads, bridges etc in Mum-Pune belt
2. MBL Infra - East based company, solid track record of profitable growth
3. KNR Constructions - Hyd based company, excellent record with execution of road projects

I believe the next 2-3 months leading upto the budget should see these companies appreciating 20-25% while over the next 3-4 years, one should see them appreciating multi-fold.

In the vein of tracking one's gut-feel and predictions, here's an interim report card for the 2-3 month period.

1. J Kumar - 430-odd in Dec .. now at 530 odd ... about 25% up
2. MBL Infra - 380 in Dec ... now at 515 ... about 35% up
3. KNR - 300 in Dec ... now at 360 ... about 20% up

Still retain a bullish long-term view. The road story is likely to play out over the next few years. Hope to report back next year

Also, gut-feel about the budget to track later. I sense a reformist, progressive budget that creates some buying power for individuals (some tax cuts etc), thrust on infra and housing development, no radical change in subsidies, fiscal deficit target of 3.6 to 3.7% or so, some disinvestment etc. However, markets may be expecting more on subsidy cuts etc

I would expect the markets to be positive post budget on infra & housing sector - to be in the 8500 - 9300 range over the next month or so, but don't think there would a tear-away rally tomorrow. Happy to be proved wrong on that one

[Jimmy_u]

Hello Friends,

Greetings !

I am a newbie at the Stock Market however and planning to take the plunge and invest in the ratio of 40 % intraday trading + 60 % long hold stock options.

currently my wife is undergoing professional coaching to understand the nuances of this Big Bull and will be the main person working the trades.

I wanted to get advice from the experts here as to which online portal should we opt for ? We are new to this industry and are looking for reliability and good customer services. Also the portal should be able to provide technical upgrades in terms of mobile apps, ticker services, etc.

I leave it to the experts on this forum to advice further,Thanks in advance.
Jimmy

[alpha1]

Originally Posted by Jimmy_u

I am a newbie at the Stock Market however and planning to take the plunge and invest in the ratio of 40 % intraday trading + 60 % long hold stock options.

I have my reasons, but I believe that a person should get full time into intra-day and even momentum trading stuff only after being thoroughly familiar* with the stock markets for at least one bull and one bear period.

It is only after you experience the complete idiocy of stock market movements that you realize how to make sustainable money via non-emotional systems.

*Thoroughly familiar means you should invest/trade but not as a full time activity. And you MUST lose some money in this learning experience, otherwise you will never learn.

[Jimmy_u]

Originally Posted by alpha1

I have my reasons, but I believe that a person should get full time into intra-day and even momentum trading stuff only after being thoroughly familiar* with the stock markets for at least one bull and one bear period.

It is only after you experience the complete idiocy of stock market movements that you realize how to make sustainable money via non-emotional systems.

*Thoroughly familiar means you should invest/trade but not as a full time activity. And you MUST lose some money in this learning experience, otherwise you will never learn.

Hello alpha1,

Thanks for this advice, received similar thoughts from couple of friends trading for the past few years.

I have decided to opt for a class by Share khan to understand the basics and will decide on the strategy later.

still looking for recommendations on the portals. both my friends trade through Share khan and have given good reviews.

[RoadTiger]

hi Jimmy - As a bit of a market veteran, I would not advise a newbie to pick stocks - leave alone do day-trading. At best, create a 'notional' buy-sell in an excel sheet and see how you do first.

Not sure what your motivation is to do day-trading or select stocks. But if its about making money, I would strongly recommend you start with investing in good mutual funds, before jumping into stock investing.

ICICIdirect is ok. HDFC's trading platform can be considered if you bank with them.

[humyum]

Originally Posted by Jimmy_u

Hello Friends,

Greetings !

I am a newbie at the Stock Market however and planning to take the plunge and invest in the ratio of 40 % intraday trading + 60 % long hold stock options.

currently my wife is undergoing professional coaching to understand the nuances of this Big Bull and will be the main person working the trades.

I wanted to get advice from the experts here as to which online portal should we opt for ? We are new to this industry and are looking for reliability and good customer services. Also the portal should be able to provide technical upgrades in terms of mobile apps, ticker services, etc.

I leave it to the experts on this forum to advice further,Thanks in advance.
Jimmy

Originally Posted by alpha1

I have my reasons, but I believe that a person should get full time into intra-day and even momentum trading stuff only after being thoroughly familiar* with the stock markets for at least one bull and one bear period.

It is only after you experience the complete idiocy of stock market movements that you realize how to make sustainable money via non-emotional systems.

*Thoroughly familiar means you should invest/trade but not as a full time activity. And you MUST lose some money in this learning experience, otherwise you will never learn.

Originally Posted by Jimmy_u

Hello alpha1,

Thanks for this advice, received similar thoughts from couple of friends trading for the past few years.

I have decided to opt for a class by Share khan to understand the basics and will decide on the strategy later.

still looking for recommendations on the portals. both my friends trade through Share khan and have given good reviews.

Originally Posted by RoadTiger

hi Jimmy - As a bit of a market veteran, I would not advise a newbie to pick stocks - leave alone do day-trading. At best, create a 'notional' buy-sell in an excel sheet and see how you do first.

Not sure what your motivation is to do day-trading or select stocks. But if its about making money, I would strongly recommend you start with investing in good mutual funds, before jumping into stock investing.

ICICIdirect is ok. HDFC's trading platform can be considered if you bank with them.

Jimmy, firstly congratulations for entering this amazing world of share market. I say congratulations because with the right learning and experiences over time, it is a phenomenal money making tool.

Secondly I agree with each and every word alpha1 and Roadtiger have said. Intraday is such a dangerous game when you are new to the share market that you will panic like no one's business when things don't go your way. Observe, learn over time, do paper trading, experience the volatility of the market, see a bear run, a bull run, watch the news everyday and see what makes the market go down, go up.

For example, A simple war in Ukraine, might hurt the sentiments of of a stock market so much that you can see a 400 to 500 point fall. Slowly overtime you will realize all this and start exiting and entering positions at the right time. Comes with a lot of experience and yes if you do take the plunge, with losing money too.

Just remember one thing, what is lost in intraday, can be gained in intraday too. Don't take too much tension, take this as a learning phase and after a year or two of share market university (yes that's what I call it) you will start being confident and minting money for the rest of your life.

[Jimmy_u]

Thanks RoadTiger / humyum.

Appreciate the frank advice and wisdom from you gentlemen. This is the reason why this Forum is so valuable , we share and guide our fellow members and post real life experiences.

I have been told by many in my circle that I should be willing to loose money which eventually i will regain but as rightly said this is will be a long innings in case i want to make sensible money.

Here is the plan of action which i have planned.
1.identify approx 30 stocks based on the reading and recommendation of people i trust, pick 3 from each sector of the market (finance/infra/banking/auto/pharma,etc)

2.using rediff money i can have an account and create my portfolio which i will track for another 3 months

3.in the interim open an account with Share Khan which came highly recommended from a family friend

4.based on the conclusions of the point 2, start investing in stocks with a return margin of 8%-10% over a period of 3-6 months

5.invest 40 % of the profits earned back into the stocks, hold any loss making script till such time that i can recover my investment

6.DO NOT DO INTRADAY till about a year

7.Once the money starts rolling "Live Life Kingsize" :-)

I leave this post open to feedback from the experts.

[Jimmy_u]

Thanks ,
Appreciate the frank advice and wisdom from you gentlemen. This is the reason why this Forum is so valuable , we share and guide our fellow members and post real life experiences.

I have been told by many in my circle that I should be willing to loose money which eventually i will regain but as rightly said this is will be a long innings in case i want to make sensible money.

Here is the plan of action which i have planned.
1.identify approx 30 stocks based on the reading and recommnedation of people i trust, pick 3 from each sector of the market (finance/infra/banking/auto/pharma,etc)

2.using rediff money i can have an account and create my portfolio which i will track for another 3 months

3.in the interim open an account with Share Khan which came highly recommended from a family friend

4.based on the conclusions of the point 2, start investing in stocks with a return margin of 8%-10% over a period of 3-6 months

5.invest 40 % of the profits earned back into the stocks, hold any loss making script till such time that i can recover my investment

6.DO NOT DO INTRADAY till about a year

7.Once the money starts rolling "Live Life Kingsize" :-)

I leave this post open to feedback from the experts.