A load of crap from an idle brain

….today since i got married   And am stuck at work

First Anniversary post

+++

Finally, i finished reading this book.  Have been reading it on and off for the past 6 odd months.  In the meanwhile have finished reading a few others too.  Odd, because the book is a very good read and written with lots of historical references.  For someone who loves to know the Roman, Greek, French, British and American history, this book is a treasure trove.

The authors of this book are Bill Bonner & Addison Wiggin who have been writing the free daily newsletter, The Daily Reckoning for more than 10 years now. The newsletter covers a lot about the daily economy, world politics, investment strategies, gold, stock market etc.  Bonner is also the founder and president of Agora Publishing.

The authors believe that the America of today has left the values of its founding fathers far behind and has become an imperial power instead of being a country.  Bonner also believes that the end of America is also coming soon.  The author talks about the dollar crisis, the coming end of the US economy. He writes about how successive US governments have gone to war and wasted all resources, the decoupling of the dollar to the gold standard, the federal reserve under Alan Greenspan with his inflationary policies totally wrecked the US economy.

Quoting from Amazon,

Bonner and Wiggin view ancient Rome as the classical model of empire. Running an empire was an expensive business; the folks in the homeland needed to be mollified with government handouts (bread and circuses), while a large military had to be maintained in the frontier. Rome used its military power to exact tribute from neighboring states; it was a protection racket, no different from the Mafia. Nevertheless, this scheme generally kept the central state solvent and the territories at peace. The United States is also an empire, Bonner and Wiggin maintain, but it does not follow the classical model. It placates its citizens with massive distributions of government largess while using its powerful military to exert influence and keep peace abroad. However, “[i]nstead of getting paid for providing protection, the United States is on the receiving end of loans from its tributary states and trading partners ” (p. 77). This is how the United States became the Empire of Debt.

Empire of Debt: The Rise of an Epic Financial Crisis
Authors – Bill Bonner & Addison Wiggin
Pages – 384
Publisher – Wiley

+++

3 years of hard work…all for this.  Got my MBA convocation certificate. Yay.

Next whole week i will be on course.  After that, a few more certifications…maybe.

Few additions to the blog including my portfolio on the right.  Also the latest BSE / NSE and stock prices updated in real time.  Was sick of logging on to different websites to check for the stock prices.  So, put up all of them here on this blog.

+++

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

• Return on capital

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

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.

+++

Not sure how, but i have managed to do it.  Yup, without any major effort or cutting down on food intake or exercising or even getting any illness, i have managed to cut down 13 kgs since the beginning of this year.  The only thing i have changed on course of my food has been an increase in the amount of water intake.

Earlier i hardly drank much fluids.  At the beginning of this year, i wanted to bring my Body Mass Index (BMI) level below 25 (healthy range) and so started drinking between 3-4 liters of water / juices per day.  What started off as a chore has finally become a normal routine now.

The main reason why i started looking at cutting down my weight was for the simple reason that i felt my weight was increasing and so was my tummy.  But what was the final call was the nagging pain that i started having once in a while in my knees.  It was becoming certain that my knees were unable to carry the weight of my body and something drastic had to be done.  Not to mention that iam on the wrong side of 30 already.

I start off my day with a glass of water and then a glass of tea. At work, i have a 1 liter water bottle which i fill up with water the moment i come to work.  I finish the bottle twice a day. After i go home, i drink another 1 litre plus of water by the time i go to bed.

It has worked well, the trousers are loose, i can finally feel my tummy has flattened.  Now, its time for me to start exercising so that i can build up some muscles.

PS: Overdrinking of water is also dangerous.  It flushes out a lot of important chemicals that are needed for the body.  If you feel giddy or weak, its best to relook at the process.  Losing weight is good  as long as its done in a slow and steady manner.

And now for the hardest part.  Trying to keep the weight constant.

+++

I first saw this book in a bookshop in India. Didnt buy it then as i found the price a bit too high for my pocket.  Also i hadnt read any reviews of the book and i didnt want to spend so much money on a book that i didnt know much about.

Recently i managed to lay my hands on the book and it turned out to be a breezy read.  Mohnish Pabrai of Pabrai Funds who is the author of this book writes about the Dhandho way of doing business.  To do this he quotes examples of the Patels own the majority  of motels in the US, about Richard Branson’s way of doing business and also Laxmi Mittal who owns the Arcelor-Mittal group of steel companies.

According to Pabrai before buying into a company or before buying the stocks of a company, the investor needs to do the following checks

1. Is it a business I understand very well—squarely within my circle of competence?
2 . Do I know the intrinsic value of the business today and, with a high degree of confidence, how it is likely to change over the next few years?
3 . Is the business priced at a large discount to its intrinsic value today and in two to three years? Over 50 percent?
4 . Would I be willing to invest a large part of my net worth into this business?
5 . Is the downside minimal?
6 . Does the business have a moat?
7 . Is it run by able and honest managers?

The mantra always is “few bets, big bets, infrequent bets”—all placed when the odds are overwhelmingly in your favor.

The Dhandho Investor – The Low Risk Value Method to High Returns
Author – Mohnish Pabrai
Pages – 209
Publisher – John Wiley & Sons

+++

Some random pictures taken by me over the Easter weekend here in Singapore.

The world’s largest fountain @ Suntec Singapore

Lit up balls in a pool outside Esplanade

A view of the under construction Marina Sands as seen from the roof of Esplanade

Buildings lighting up the night skyline at Raffles

The Esplanade

A view of the Fullerton hotel with the Maybank building in the background

The Merlion spewing water

+++