A load of crap from an idle brain

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

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Mahindra & Mahindra Ltd said Wednesday it expects to complete the acquisition of South Korea’s Ssangyong Motor Co. Ltd in four months and that the two auto makers may share vehicle platforms, helping reduce vehicle development costs.

“While we will maintain a distinct identity between Mahindra and Ssangyong vehicles, there is a potential for sharing platforms,” Pawan Goenka, president incharge of Mahindra’s automobile and tractor business, told reporters at a news conference.

Mahindra was selected as the preferred bidder by Ssangyong’s creditors on Aug. 13 to acquire a majority stake in the Korean firm, which has been under court-led bankruptcy protection since early last year after experiencing a severe cash shortage due to a slump in sales of its mainstay SUVs.

Goenka said synergies between the two companies might help bring down vehicle development costs. He refused to elaborate on the likely deal size or on the stake it plans to buy in the Korean auto maker.

But Goenka said Mahindra may consider introducing in India Ssangyong’s new sport-utility vehicle, Korando C, which goes on sale in South Korea by December.

Ssangyong is likely to sell between 70,000 and 75,000 of its vehicles in its home market this year, more than double of the 35,000 units it sold in 2009, Goenka said.

Read the full article here

Above pictures courtesy: Businessweek & 4theloveofjeeps

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Iam a strong believer in the theory that the government has no business doing any business.  The government has no business running steel companies, textile mills, condom companies etc.  All that the government has to do is to manage the law and order machinery, keep the country safe and to create laws and an environment that is conductive for its people do do business and prosper.  The government exists so that the common man can use his skills to run his own business and employ people.  More than 60 years ago when the country got its independence, it was ok for the government to get into all the industries so as to kick start the process of industrialisation.  As time went by, the citizens of the country got into the business of making money and it was time for the government to sell off the businesses and do what it was mandated to….and that is to govern the country.

But under the socialist regime of our succesive governments, the economy has been screwed up badly and sadly even 63 years after independence, we have millions of our citizens going hungry every day while millions of tons of foodgrains rot in open grounds for lack of storage space.

Meanwhile we have a food and agricultural minister who is busy hobnobbing with the glamour of industry and entertainment and involving himself in cricket. Not to mention monopolising the sugar business in his home state of Maharashtra. All this at time when foodgrains have no place to be stored and are left to the mercy of rains and heat in some open lands.

Even though the Supreme Court has woken up late, its good to see that the apex court has now come out with a ruling stating that not a single grain should be wasted and if the government cant do the needful, it must distribute the food to the poor free of cost.

The Supreme Court has observed that not a single food grain should be wasted. In a strongly-worded ruling, the apex court has told the government that foodgrains are rotting and if you can’t do anything about it then distribute it among the poor. The court has also sought government’s response on this.

Meanwhile, as the government faces flak over letting close to 30 lakh tonnes of foodgrain rot across the country, the Empowered Group of Ministers (EGoM) on food has reportedly decided to sell an additional 30 lakh tonnes of rice and wheat to 11.5 crore Above-Poverty-Line (APL) families through ration shops.

Didnt such a though occur to the incompetent government and the food minister earlier?

PS: Remember the days of waiting for 2 years for a land line, booking periods for a Bajaj scooter or a Maruti car?  That’s the kind of pathetic performance only our government can do.  That’s why agriculture, retail and everything to do with logistics needs to be deregulated.  So that the private sector can do in a few years what our government hasn’t been able to do in decades.

Picture courtesy: Poonam

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The jury has given its verdict: the rupee will retain its Indian character with an international flavour. The five-member panel has chosen IIT post-graduate D Udaya Kumar’s design from among five shortlisted symbols and recommended it for Cabinet approval.

Kumar’s symbol (on the left) is an amalgam of the Devanagari ‘Ra’ and the Roman capital ‘R’ without the stem, very much in line with what Finance Minister Pranab Mukherjee had envisioned. “We intend to formalise a symbol for the Indian rupee which reflects and captures Indian ethos and culture,” Mukherjee said in his Budget speech this year.

The chosen symbol has the Finance Minister’s approval, said a Ministry official.

The Ministry had organised a symbol design competition with a prize money of Rs 2.5 lakh with the condition that it should be applicable to the standard keyboard, be in the national language script or a visual representation and should represent the historical and cultural ethos of the country.

Full news here

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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

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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

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

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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.

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