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Recent Posts Tagged With 'stockmarkets'
Book-building at work
Aarati KrishnanPutting your money into a company’s IPO (Initial Public Offering) is now as easy as pie. Three clicks online and you’re done, without needing to fill out all those annoying little boxes in the application form. But what is NOT easy...
Flower power
Adarsh GopalakrishnanWriters who profile financial manias can seldom resist the temptation to start with the Tulip mania of the 1600s. Tulip mania is a tale of how free markets, when not reined in, can wreak havoc on wealth and even society. Popular ...
The long and short of it
Bhavana Acharya“Don’t worry about market fluctuations. Think long term.” Now that’s something that investors, young and old alike, would have been told repeatedly while their equity investments yo-yoed with the ups and down in the stock marke...
Why higher equity allocation is optimal for long-term investors?
B. VenkateshMany investors have carried their exposure to stocks through 2008 in the hope that these stocks would generate positive returns if they hold on longer.If their hopes have indeed come true, there is a lesson for long-term investors: constr...
How to analyse an IPO
Bhavana AcharyaThe year 2008 was one of drought as far as Initial Public Offers (IPO) goes. But with a revival of sorts in the markets, quite a few of these are lined up, with one — that of Mahindra Holiday and Resorts — already through. Investin...
Value or growth
Adarsh GopalakrishnanWatching business channels during a bull market is quite a scintillating experience. The investment community quickly put on their smiley faces and go about explaining the rationale for the current market run. Words that get thro...
Are dividends worth it?
Adarsh GopalakrishnanA friend of mine was gleeful that a 200 per cent dividend had been declared by a company he purchased shares in, a few months earlier. A little while later Rs 4,000 was credited to his account.He recounted this to me and proceede...
Meeting line and separating line
Yoganand D. Meeting line and separating line candlestick patterns seem to be related patterns, but they are not. Meeting line is a reversal pattern while separating line is a continuation pattern. The similarity is that both these are two-candle patt...
The emperor’s clothes
T. C. A. Srinivasa-RaghavanIs it not quite extraordinary that a discipline which had been preening like a peacock in the monsoon should, all of a sudden, be in such panic-stricken disarray? How gratifying that its leading lights are whispering — as...
Top-line and bottom-line
Rajalakshmi SivamSift through any business newspaper or equity research report and it is unlikely that you will not come across the two words — top-line and bottom-line. Well, though the jargon may sound complex, it points to two simple things that...
SIPs: It’s about behavioural investing
B. VenkateshThis column dated January 11, 2009 had discussed about systematic investment plans (SIP).We had a rather interesting debate recently with an investor who refused to see the significance of such investing.He argued that SIP is like rupee-c...
Split-strike conversion
B. VenkateshThat Bernard Madoff was playing a giant ponzi game is now well known. But what is not that well known is the strategy that he claimed to have implemented.This article discusses the Madoff strategy called the split-strike conversion. It ex...
Ponzi scheme
Rajalakshmi Sivam“Ponzi scheme” is a term that has been used to describe many scams and financial frauds — ranging from the failure of large NBFCs in India in the nineties to the recent scam perpetrated by Bernard Madoff on Wall Street.The sche...
You’re stuck with what you endow
D. Sampath KumarIt is a facet of human psychology that charlatans of the stock market have exploited to the hilt. Economists have studied it and labelled it the ‘endowment effect’, no doubt with a disapproving shake of their heads. Now clever ent...
Bubble explained
V. Pattabhi RamIf you have been wondering how the bubble works, be it in the economy or the stock market, the story of this tiny island which has only three inhabitants, two Re 1 notes in circulation and a piece of land will help. This is what happen...
Structured finance for dummies
V. Pattabhi RamStructured finance has been at the leading edge of financial innovation; and of recent financial disasters. At the heart of the transaction is an idea called “securitisation”. Let’s take an example to understand how securitisatio...
CDS for dummies
V. Pattabhi RamSamvit DurgaHe called them “the financial weapons of mass destruction”. ‘He’ was ‘Warren Buffet’ and ‘them’ was ‘Derivatives’. Boy, the world’s smartest investor could not have been more right.For proof, look no f...
Is a concentrated portfolio optimal?
B. VenkateshModern portfolio management is built on the concept of portfolio diversification. A portfolio manager or an individual investor constructs a portfolio with several stocks to diversify the asset price risk. Hedge fund managers, on the othe...
The ‘Beta’ guide
Rajalakshmi SivamBeta is the measure of the volatility of a particular stock in comparison with the market. It indicates the stock’s correlation with the market index and cautions on the risk associated with it. Since volatility is an inherent aspe...
Of markets and selective amnesia
Srividhya SivakumarDoes the letter ‘R’ turn silent whenever you read the word ‘brokeR’? Fretting that you put a chunk of your hard-earned money into the stock market around its peak? Sulking at the fate of your very first ill-timed investment...
Beta exposure: Is direct investment better than index funds?
B. VenkateshReaders may be aware of the core-satellite approach to portfolio management. This involves constructing a core portfolio for the beta (market) exposure and a satellite portfolio for the alpha (excess) returns. There were couple of interes...
Strike an investment bond!
V. Pattabhi RamInvestment in bonds may not appear to be as inviting as investing in equity. If you thought so, you are wrong. Okay, bonds may not give you the kind of returns that equity can offer but bonds don’t sink like a tank the way equity can...
Don’t fall for tips
Srividhya SivakumarThe world of stocks is no different from that of cricket — every second person you meet will have an “expert” opinion on it! While cricket fans would enjoy such an information extravaganza, investors may just end up confused,...
Using MFs for a low cost market exposure
B VenkateshConstructing a portfolio of mutual funds is not an easy exercise. It is important to diversify the portfolio so that a retail investor has exposure to the broad market. Yet, the portfolio should be small for ease of monitoring.This article...
Measuring risk-return value of a stock
V. Pattabhi Ram T. N. MadanYou know, by now, that diversification reduces risk. As you add stocks to your portfolio, the total risk drops. But, alas, beyond a certain number of stocks, the total risk ceases to reduce. No one knows what that number is...
Measuring ‘skill’ and ‘earning’ returns
V. Pattabhi RamAs an investor, this one is going to be a tough call. You want to invest Rs 10,000 today in a mutual fund. Where should you invest? Should you invest in the fund that has given investors a higher return? Or should you invest in the fun...
Three lessons in computing returns
V. Pattabhi RamYou invest Rs 10,000 today in X Ltd, and it grows to Rs 20,000 in five years. Yes, the investment has doubled in five years; yes, the five-year return is 100 per cent; but what is its annual return? Is it 20 per cent per annum? You inv...
Asset hunting
Mukul PalThere are two kinds of investors, one who look at assets and the other who look for assets. When you look at an asset, the chances are that you are already looking late. The conventional belief that one who looks first is a loner, the one wh...
Banking on bonus
Kanu Doshi / Mumbai March 30, 2008TAXING TIMES: Selling of bonus units in mutual funds before nine months can lead to more tax liability, but it does not apply to stocks.In the last few months, the Securities and Exchange Board of India (Sebi) has co...
Is free really so?
B. Venkatesh The other day, my friend and I went to a shop to buy him some formal trousers. He found just one trouser that he liked. The salesperson then told him that he could get two shirts free if he bought another trouser. So, my friend spent Rs ...
