Been a while since i updated my equity portfolio. Some of the stocks were already at their highs; and i felt it was appropriate time for me to liquidate them and invest in others.
Bought the following
Sold the following
Hoping for the markets to correct sharply once the much expected double dip recession hits the US economy. There would be lots of great bargains out there then.
Above stock price history courtesy: Yahoo Finance
+++
The author has perfected a formula that he has used to beat the market consistently and earn more returns than what the index has provided. He calls it the Magic Formula Investing. The formula is explained in the book in relatively easy language. According to Greenblatt what you need to be concerned is just 2 things about a company:
- A company’s earnings yield
The rationale is straightforward: buy shares in good businesses, measured by returns on capital, only when they’re available at bargain prices, defined as a high earnings yield.
The magic formula looks for companies that have the best combination of earnings yield and return on capital, with each input weighed equally. An outstanding company with an expensive stock ranked, say, first for return on capital but 1,999th on earnings yield, would have the same combined ranking of 2,000 as a low return on capital company within expensively priced shares, ranking 1,999th in return on capital but first on earnings yield.
Using this approach to create a regularly updated portfolio of about 30 stocks with the highest combined rankings, Mr Greenblatt tested his formula between 1988 and 2004. The results were remarkable: with only one down year, the magic portfolio would have returned 30.8 per cent a year, against a 12.4 percent annual return for the S&P 500. Rather than using the latest 12 months’ earnings to calculate earnings yield and return on capital, Mr Greenblatt and his analysts try to improve on the rote application of this formula by using earnings estimates in a “normal” year, one in which nothing unusual is happening within the company, its industry or the overall economy.
source: Amazon
The Little Book That Beats The Market
Author – Joel Greenblatt
Pages – 176
Publisher – Wiley
After having nurtured the telecom sector of his company and the carving of the business meant that the business went to younger brother Anil, the elder brother Mukesh Ambani seems to be in a tearing hurry.
Mukesh Ambani-led RIL’s foray into the telecom sector will entail an investment of about $5 billion, for which it is open to sharing infrastructure of younger brother Anil’s group firm Reliance Communications, company officials said. The flagship firm of Ambani, who is known for making ultra-mega projects, would invest about a billion dollars for rolling out broadband services to attain a target of 100 million subscribers through the just acquired Infotel in five years, RIL top officials told analysts last night.
RIL acquired Infotel for Rs 4,800 crore on the day the Nahata group firm emerged as the sole player to have bid successfully for all-India spectrum at the end of the 16-day-long auction conducted by the government on Friday.Apart from this, the cash-rich RIL will have to pay Rs 12,872 crore to the government as the licence fee for spectrum bagged by Infotel, which would become the subsidiary of the Mukesh Ambani group’s flagship company.
Incidentally, the second largest largest telecom player, RCOM, bagged the highest number of circles along with Bharti Airtel for the 3G license auction, which concluded recently.
Read the full article here
+++
Its been a year since i moved this blog to my own domain. Didnt realise till the other day when i was searching something about my domain and found that it was to expire in a few days. That’s when i remembered about a mail i got from Justhost explaining that since i have hosted my blog with them, they will continue to renew my domain name for free.
The past year of hosting has been really wonderful and the guys at Justhost have been a great help. Havent had any downtime of this website. Touchwood. On the 24th of this month, i would have completed 6 years of blogging. When i started, i never realised that i would last so long. Moving to my own domain has taught me a lot of things about hosting and stuff. Hope to blog till there are news which will prompt me to comment. And i hope such news never stops.
Meanwhile will start writing more about finance and investing as these are the interests that i plan to pursue further. I started investing in the Indian stock markets in 2005 for fun. TCS was coming out with its maiden IPO and i applied for it. That was my first ever investment in equity. I had been investing in mutual funds before that through Systematic Investment Plan (SIP). I was allotted 7 shares of TCS for around Rs 850 each. I sold them off a few months later around Rs 1250. I tasted blood and havent looked back ever since 
After reading Equitymaster for a few years, I signed up for their service and till now they have given me superb advice on stocks to pick up. I have seen few people complaining about the advise provided by Equitymaster, but for me their advice has mostly been positive. On an average, 8 out of 10 of their recommendations have worked for me. And i would advise anyone to subscribe to them. Its surely not cheap, but they have lots of small options that you can subscribe for. Their reports are comprehensive and constantly updated.
Sometime in future, i plan to write the NCFM exams of the National Stock Exhchange and also get certified as a Certified Financial Planner (CFP). Those are my long term plans.
+++
The Indian economy roared past estimates to post a whopping growth rate of 8.6% in the January-March quarter of 2010. The quarter’s strong showing also helped India end the fiscal year with 7.4% growth, beating the earlier estimate of 7.2%. Manufacturing led the way, with a whopping 16.3% growth in the quarter and 10.8% overall, while even agriculture, which was expected to decline, ended with marginal growth of 0.2% year-on-year after growing 0.7% in Q4.
The GDP growth rate had slowed to 6.7% in 2008-09 following the global economic crisis, after topping 9% in the previous three years. On Monday, finance minister Pranab Mukherjee reiterated his confidence that the economy would grow at 8.5%-plus in 2010-11.
Finance secretary Ashok Chawla also pegged economic growth at 8.5% in 2010-11. “The growth numbers are pleasant but not really surprising, because we were expecting them to be robust which they turned out to be. This clearly indicates the momentum which is in the economy and the expectations that the 8.5% estimation for 2010-11 is going to be a clear possibility,” he said.
Full article here
Above picture courtesy: Moneymint
+++
The stock markets have been on a free fall for some time now ever since the Greek debt crisis blew up. The Euro has been going down vis-a-vis the US dollar. The dollar has been gaining in strength even against gold. Does that mean all is hunky dory and that all the problems are over with the US dollar and the American economy? No. Whenever there is a crisis in the world economy, the money takes a flight to the US dollar. And that’s what we are seeing now. It doesnt mean that all the weaknesses inherent to the dollar have vanished
The situation now is mirroring the famous words said by some great soul “In the land of the blind, the one-eyed is the king“.
So, what does this crisis mean to people who want to invest for the long term? Its the ripe time to buy. Dont pump in all your money at once. Buy good companies in small quantities. The market might go down further from here. Buy some now and some more when the markets go down further. Never try to time to market. The markets might not go down further from here, and if you buy now, you would have still got some great stocks for cheap.
Am a big follower of Warren Buffett when he says “Buy when there is blood on the streets“. It might not be complete mayhem now, but there are some great companies available for cheap.
I have bought a few more shares of the following companies
Alok Industries
Bharti Airtel
MIC Electronics
Punj Lloyd
I really hope that the markets fall further so that i can pick up some more good stocks at some great prices.
Important Note: Please dont follow my buy/sell advise blindly. Do your own research or follow the advise of a certified financial planner before investing. Iam not responsible for any profits or losses you make by following my investment strategy.
Above price charts courtesy: Yahoo Finance
+++
Godrej Consumer Products (GCPL) said that it had entered into an agreement to buy Argentina-based Issue Group for an undisclosed amount. The latter has a strong leadership position in the Argentine hair-colour market with a market share in excess of 20% and had revenues of over $33 million in 2009.
Apart from Argentina, the Issue Group enjoys market leadership position in hair colours in Peru, Uruguay and Paraguay including a presence in Brazil.
The deal estimated to be around Rs.230 crore provides a self-sustaining platform for GCPL’s ambitions in haircare and household insecticides segments in Latin America, GCPL said.
Full article here
Jindal Steel and Power (JSPL) on Thursday announced the acquisition of the Oman-based Shadeed Iron & Steel for $464 million.
Its project at Sohar in the sultanate is setting up capacity to produce 1.5 million tonnes of hot briquetted iron a year.
The Indian company’s director, Sushil Maroo, told media the acquisition was part of plans to expand operations overseas. “The Sohar plant is a gas-based unit. We are also setting up some gas-based steel units. It is a strategic fit for us,” he added. The acquisition was made through JSPL’s subsidiary, Jindal Steel & Power Mauritius.
Full article here
+++
After a spectacular 100% rise from 2008 levels, the markets moved into a bubble territory. The Greece debt downgrading to junk status might be the needle that would prick the bubble.
For an ordinary man on the street, its a disaster. For the newscasters, its breaking news. For a long term investor, its a good time to buy some great stocks at fabulous prices.
A leading credit agency lowered Greece’s rating to junk status, dealing a blow to an international rescue plan for the country and hammering U.S. and European stock markets.
The junk rating, unusual for a developed nation, deepened fears that big fiscal deficits and debt burdens elsewhere could threaten the economic recovery in Europe. Stock markets on both sides of the Atlantic tumbled about 2 percent or more after the downgrade by Standard & Poor’s.
The downgrade fanned investors’ doubts that the proposed economic reforms in Greece will go far enough to prevent the country from spiraling into even deeper trouble. It also presented a new obstacle to the planned $60 billion bailout from European governments and the International Monetary Fund.
Full news here
As i write, the BSE Sensex is more than 250 points down from yesterday’s close. Portugal also has been downgraded. With Ireland, Italy, Spain also in the line, there seems to be long dark days ahead.
Hope the Sensex collapses some more over the next few weeks to settle around 15-16k. So that i can do some bargain hunting
Above picture source: Tribune
+++
Twitter
LinkedIn
Facebook
RSS
Delicious