For some time now I've been contemplating on building a portal where people other than me can contribute articles and share their investment ideas.
Essentially a portal where people can share investment ideas, not lofty sales pitches from salesmen.
I've been working on it for a while and you can see the beta of the website at http://indiainvesting.amieo.com
I'm hoping for contributions from members of the RichDad Club... and other investors.
If you'd like to contribute to the site feel free to drop me a note.
Thursday, October 13, 2005
Monday, July 25, 2005
Buying gold coins in India
A couple of weeks back I started investigating at various shops in Mumbai on the price of gold and the transaction cost incurred etc. in purchasing gold coins. I thought I'd share my experiences for everyones benefit.
I first talked to a friend of my wife's who works at a banks bullion department. His words of advise were to purchase from some popular jewellery store notably, Tribhovandas Bhimji Javeri(TBZ) as he said the bank rates of gold are typicall much higher than the actual cost of gold. So promptly I went down to TBZ. What I wanted to purchase was gold coins in denominations of 10gms and 5 gms.
So here's the deal;
Gold coins are charged for in the following way. An X sum is the current gold price and a Y sum for making the gold coins. I looked up the gold price for the day and went down to TBZ. The price was around 6150 for 10gms. One thing to note is that gold price keeps fluctuating thru out the day. Just like prices of scripts in the stock market. However I was told at TBZ that the price of gold was 6400 now that was a huge difference in the current price compared to the price being quoted. I verified by calling a jeweller friend of ours. Interestingly TBZ quoted a coin making charge of approximately Rs. 60 initially, which after negotiation they came down to about Rs. 35. I had no clue that one can bargain on making charges but as usual I did bargain and was pleasantly surprised.
Did I buy gold there, well no cause their price of gold was too high.
Next stop was Ghanasingh which is on Linking road. Here the price of gold quoted was around 6150 but strangely the making charges were quoted at approximately Rs200. My jaw almost fell to the ground. They were charging the same making charges as are prevalent for high end jewellery.
Well this certainly wasn't working out. Next stop I visited an old childhood friend of mine who had a relatively smaller jewellery store. He quoted prices close to the gold price of around 6150 + a meagre Rs. 30-35 for making the coins, this certainly seemed much more reasonable.
Incidentally all the jewellers suggested that one should buy bars of gold instead of coins as the making charges are much lesser. I however had a facination for coins which is fast changing :-)
One more aspect of buying gold I realised was the 1% charged as a service or transaction or sales tax. I forget which one, but just keep that in mind while purchasing gold.
Well the overall experience was overwhelming indeed. But it was a great learning experience about the nuances of buying gold. Especially for a person like me who doesn't really like the color of gold.
Interestingly I heard different versions on the standardisation of gold. Gold comes in two broad quality categories.
1. 22 Carat or 99.5 % purity
2. 24 Carat or 99.99 % purity (also known as pure gold)
(Incidentally, I later discovered that there are more such categories)
However what I found strangely there seems to be no overall certifying authority for gold. That was certainly strange to know about. There is however an agency (Bureau of Indian Standards -BIS) which supposedly is a standard. I'm searching for more information regarding that.
Interestingly I briefly inquired about the value of precious stones. Gold seems to be a better bet in terms of retaining value than precious stones... I frankly however need to do more research on this.
I would surely like to hear about experiences others might have had. It will surely help increase my financial intelligence.
Sanjay Shetty
I first talked to a friend of my wife's who works at a banks bullion department. His words of advise were to purchase from some popular jewellery store notably, Tribhovandas Bhimji Javeri(TBZ) as he said the bank rates of gold are typicall much higher than the actual cost of gold. So promptly I went down to TBZ. What I wanted to purchase was gold coins in denominations of 10gms and 5 gms.
So here's the deal;
Gold coins are charged for in the following way. An X sum is the current gold price and a Y sum for making the gold coins. I looked up the gold price for the day and went down to TBZ. The price was around 6150 for 10gms. One thing to note is that gold price keeps fluctuating thru out the day. Just like prices of scripts in the stock market. However I was told at TBZ that the price of gold was 6400 now that was a huge difference in the current price compared to the price being quoted. I verified by calling a jeweller friend of ours. Interestingly TBZ quoted a coin making charge of approximately Rs. 60 initially, which after negotiation they came down to about Rs. 35. I had no clue that one can bargain on making charges but as usual I did bargain and was pleasantly surprised.
Did I buy gold there, well no cause their price of gold was too high.
Next stop was Ghanasingh which is on Linking road. Here the price of gold quoted was around 6150 but strangely the making charges were quoted at approximately Rs200. My jaw almost fell to the ground. They were charging the same making charges as are prevalent for high end jewellery.
Well this certainly wasn't working out. Next stop I visited an old childhood friend of mine who had a relatively smaller jewellery store. He quoted prices close to the gold price of around 6150 + a meagre Rs. 30-35 for making the coins, this certainly seemed much more reasonable.
Incidentally all the jewellers suggested that one should buy bars of gold instead of coins as the making charges are much lesser. I however had a facination for coins which is fast changing :-)
One more aspect of buying gold I realised was the 1% charged as a service or transaction or sales tax. I forget which one, but just keep that in mind while purchasing gold.
Well the overall experience was overwhelming indeed. But it was a great learning experience about the nuances of buying gold. Especially for a person like me who doesn't really like the color of gold.
Interestingly I heard different versions on the standardisation of gold. Gold comes in two broad quality categories.
1. 22 Carat or 99.5 % purity
2. 24 Carat or 99.99 % purity (also known as pure gold)
(Incidentally, I later discovered that there are more such categories)
However what I found strangely there seems to be no overall certifying authority for gold. That was certainly strange to know about. There is however an agency (Bureau of Indian Standards -BIS) which supposedly is a standard. I'm searching for more information regarding that.
Interestingly I briefly inquired about the value of precious stones. Gold seems to be a better bet in terms of retaining value than precious stones... I frankly however need to do more research on this.
I would surely like to hear about experiences others might have had. It will surely help increase my financial intelligence.
Sanjay Shetty
Wednesday, July 06, 2005
When to book profits?
A recent interview of a mutual fund manager on a TV channel threw up an interesting question from an investor who had called in.
The caller said he had made a handsome return on an earlier mutual fund investment. He wanted to know whether he should book his profits.
Pat came the reply of the mutual fund manager. No stay invested for the long term. If you don't require the money now why book profit.
I was quite taken aback by this reply. Some questions which came to mind,
what happens if when the investor(caller) wishes to book profits the market isn't doing great?
why shouldn't he book profits now when he is making handsome profits?
I conculded the reply given by the mutual fund manager is just the standard sales pitch given by them(mutual funds) to all people. Stay invested for the long term, always...
Frankly giving a reply to the callers question is kind of difficult cause one doesn't know the exact nature of the investment. i.e. the quantity of money invested, the amount of profits he's making etc. But going by the callers statement that he's making handsome returns, common sense would be to book profits.
Infact the best investment advisors say, that before getting into an investment one needs to decide, the profit/loss target which one is ready to accept and then stick to it.
For e.g. if you think that you're going to be happy with a 40% return; when your investment reaches that stage, BOOK profits. Don't wait hope and pray that you will get more.
Moreover don't be disappointed if that investment in time yeilds a higher return. Be happy that your investment has met your target. Greed is often the reason for one's downfall. Quite a few investors who've made handsome gains in their investments often are left high and dry when situations reverse and end up in a loss... waiting for that further upmove in markets and their profits.
Well let me add that sometimes one might be in a situation where circumstances have changed in a very favorable way, at that stage it might make sense to set a further higher target and wait for that. But most of the times it makes most sense to book profits when one's targets are met.
Sanjay Shetty.
The caller said he had made a handsome return on an earlier mutual fund investment. He wanted to know whether he should book his profits.
Pat came the reply of the mutual fund manager. No stay invested for the long term. If you don't require the money now why book profit.
I was quite taken aback by this reply. Some questions which came to mind,
what happens if when the investor(caller) wishes to book profits the market isn't doing great?
why shouldn't he book profits now when he is making handsome profits?
I conculded the reply given by the mutual fund manager is just the standard sales pitch given by them(mutual funds) to all people. Stay invested for the long term, always...
Frankly giving a reply to the callers question is kind of difficult cause one doesn't know the exact nature of the investment. i.e. the quantity of money invested, the amount of profits he's making etc. But going by the callers statement that he's making handsome returns, common sense would be to book profits.
Infact the best investment advisors say, that before getting into an investment one needs to decide, the profit/loss target which one is ready to accept and then stick to it.
For e.g. if you think that you're going to be happy with a 40% return; when your investment reaches that stage, BOOK profits. Don't wait hope and pray that you will get more.
Moreover don't be disappointed if that investment in time yeilds a higher return. Be happy that your investment has met your target. Greed is often the reason for one's downfall. Quite a few investors who've made handsome gains in their investments often are left high and dry when situations reverse and end up in a loss... waiting for that further upmove in markets and their profits.
Well let me add that sometimes one might be in a situation where circumstances have changed in a very favorable way, at that stage it might make sense to set a further higher target and wait for that. But most of the times it makes most sense to book profits when one's targets are met.
Sanjay Shetty.
Thursday, June 30, 2005
Liquidity and the dollar crisis.
The Indian finance ministry and the RBI launched the Market Stabilisation scheme in March 2004 to stem the flow of excess liquidity into the economy due to the build-up of foreign exchange reserves.
According the the Hindu Business Line :
"During the current fiscal, an aggregate amount of Rs 1,12,000 crore has been "sucked out" from the market so far under MSS, which includes Rs 25,000 crore through dated securities, Rs 21,000 crore from 364-day T-bills and Rs 66,000 crore by way of 91-day bills."
The above quote is from an article dated 8th of March 2005.
Amazingly today the Economic times reported that the government will be releasing 13,751 crore of liquidity into the money market. Why are they doing that at a stage when amazing amount of foreign exchange is entering the stock markets in India and in various investments?
From the looks of the above it's apparent that massive steps are being taken by the government to manage the excesses in foreign exhchange which it has been accumulating.
Based on what Robert Kiyosaki had mentioned on his Rich Dad Website and what a friend Vishal at the Richdad-Mumbai club and me were discussing a couple of days ago I decided to read the book the Dollar Crisis.
It explains how world over countries are struggling due to excessive liquidity i.e. tons of excess foreign exchange or high powered money entering their countries.
A typical reaction to high powered money entering any economy is sudden increases/bubbles in stock markets, real estates and almost everything...
Is India, a country which is considered to be managed by shrewd and closely monitoring financial experts (currently our Prime Minister Dr. Manmohan Singh and P.C. Chidambaram are considered to be top financial wizards) currently facing what is known as a Dollar Crisis?
Just yesterday, Deepak Parikh chairman of HDFC said that property prices in quite a few areas in the country are very high and un-sustainable. A similar boom is is currently underway in the United states as well.
Now one might say that Indian companies are doing good and hence the market is going up. Well yes our companies are doing well, and this in turn is earning good foreign exchange and building up our reserves. Thereby creating more liquidity. But is the stock market's current high of 7000+ justifiable? Frankly who knows :-) maybe it will be at 8000 or more a couple of months later and I might think that is the tipping point?
One thing though is extremely clear, Excessive liquidity is indeed causing these bubbles.
Sanjay Shetty
According the the Hindu Business Line :
"During the current fiscal, an aggregate amount of Rs 1,12,000 crore has been "sucked out" from the market so far under MSS, which includes Rs 25,000 crore through dated securities, Rs 21,000 crore from 364-day T-bills and Rs 66,000 crore by way of 91-day bills."
The above quote is from an article dated 8th of March 2005.
Amazingly today the Economic times reported that the government will be releasing 13,751 crore of liquidity into the money market. Why are they doing that at a stage when amazing amount of foreign exchange is entering the stock markets in India and in various investments?
From the looks of the above it's apparent that massive steps are being taken by the government to manage the excesses in foreign exhchange which it has been accumulating.
Based on what Robert Kiyosaki had mentioned on his Rich Dad Website and what a friend Vishal at the Richdad-Mumbai club and me were discussing a couple of days ago I decided to read the book the Dollar Crisis.
It explains how world over countries are struggling due to excessive liquidity i.e. tons of excess foreign exchange or high powered money entering their countries.
A typical reaction to high powered money entering any economy is sudden increases/bubbles in stock markets, real estates and almost everything...
Is India, a country which is considered to be managed by shrewd and closely monitoring financial experts (currently our Prime Minister Dr. Manmohan Singh and P.C. Chidambaram are considered to be top financial wizards) currently facing what is known as a Dollar Crisis?
Just yesterday, Deepak Parikh chairman of HDFC said that property prices in quite a few areas in the country are very high and un-sustainable. A similar boom is is currently underway in the United states as well.
Now one might say that Indian companies are doing good and hence the market is going up. Well yes our companies are doing well, and this in turn is earning good foreign exchange and building up our reserves. Thereby creating more liquidity. But is the stock market's current high of 7000+ justifiable? Frankly who knows :-) maybe it will be at 8000 or more a couple of months later and I might think that is the tipping point?
One thing though is extremely clear, Excessive liquidity is indeed causing these bubbles.
Sanjay Shetty
Tuesday, June 28, 2005
Investing in India - Economic Survey
I've been hunting around for some official data on the state of affairs in India. Especially from a financial/economic perspective. My concern basically being on the high's reached in the stock market, real estate, commodities almost everything. Incidentally the stock market dipped a 100 points today.
A good source of information is the Economic Survey 2004-2005 made available by the Ministry of Finance, Government of India. http://indiabudget.nic.in/es2004-05/esmain.htm
I found some good information our here, especially the Statistical Tables.
Giving data on among a host of interesting items... things such as:
India's Share in World Exports by Commodity Divisions and Groups
Foreign Exchange Reserves
Exports Imports and Trade Balance
An interesting observation I made was that we seem to be steadily increasing our foreign currency assets almost at a rate 30% per annum over the past 4-5 years.
It's extremely interesting to read the data here, it really helps to get a better picture of the scenario in India.
Unfortunately it didn't tell me exactly what I required in terms of the financial health of the India... my search continues, I will update, once I get more solid data or am able to do a more detailed analysis.
-Sanjay Shetty
A good source of information is the Economic Survey 2004-2005 made available by the Ministry of Finance, Government of India. http://indiabudget.nic.in/es2004-05/esmain.htm
I found some good information our here, especially the Statistical Tables.
Giving data on among a host of interesting items... things such as:
India's Share in World Exports by Commodity Divisions and Groups
Foreign Exchange Reserves
Exports Imports and Trade Balance
An interesting observation I made was that we seem to be steadily increasing our foreign currency assets almost at a rate 30% per annum over the past 4-5 years.
It's extremely interesting to read the data here, it really helps to get a better picture of the scenario in India.
Unfortunately it didn't tell me exactly what I required in terms of the financial health of the India... my search continues, I will update, once I get more solid data or am able to do a more detailed analysis.
-Sanjay Shetty
Monday, June 27, 2005
Demographics
One of the key trends to watch for while evaluating and researching investments is demographics. Robert Kiyosaki specifically mentions this in his book "Who took my money".
An interesting piece of information I picked out recently is the popluation of the earth currently at 6.5 billion inhabitants. The interesting part of this is that more than half of them live in just six countries. This six most populus being - China, India, USA, Indonesia, Brazil and Pakistan. Collectively they have between them 3.3. billion people.
Another interesting tidbit is that life expectancy in Japan is longest at 82 years, followed by Iceland and Switzerland at 80.
Overall it seems population growth has slowed down but it seems the numbers will rise to between 9-10 billion by 2050.
Ok now why is demographics important.
Well as one knows there are 3 basic investment classes:
Business
Real Estate
Paper Assets
Out of these one of the key factors affecting Real Estate is demographics. Before buying a property for investment purposes it's a good idea to know the demographics of the location.
Well India is definitely high on the list in terms of the no. of people.
Infact as I mentioned in one of my earlier blogs real estate in India seems to be on an incredible high. I'll update the blog with more info. I'm currently looking for demographic data specifically with respect to Mumbai. If you're reading this an have information on some accurate sources of current data, do let me know.
Sanjay Shetty
An interesting piece of information I picked out recently is the popluation of the earth currently at 6.5 billion inhabitants. The interesting part of this is that more than half of them live in just six countries. This six most populus being - China, India, USA, Indonesia, Brazil and Pakistan. Collectively they have between them 3.3. billion people.
Another interesting tidbit is that life expectancy in Japan is longest at 82 years, followed by Iceland and Switzerland at 80.
Overall it seems population growth has slowed down but it seems the numbers will rise to between 9-10 billion by 2050.
Ok now why is demographics important.
Well as one knows there are 3 basic investment classes:
Business
Real Estate
Paper Assets
Out of these one of the key factors affecting Real Estate is demographics. Before buying a property for investment purposes it's a good idea to know the demographics of the location.
Well India is definitely high on the list in terms of the no. of people.
Infact as I mentioned in one of my earlier blogs real estate in India seems to be on an incredible high. I'll update the blog with more info. I'm currently looking for demographic data specifically with respect to Mumbai. If you're reading this an have information on some accurate sources of current data, do let me know.
Sanjay Shetty
Friday, June 24, 2005
Black gold.... the oil mania
Nikhil Gupta a friend at the RichDad-Bombay club sent out an interesting link Life after the oil crash.
It's an interesting read on the Oil crisis faced by the world.
In order to understand this more I started hunting on the web for more data.
Here's what I found on MSNBC
"Oil prices are 58 percent higher than a year ago, though still below the inflation-adjusted high above $90 a barrel set in 1980." - Source http://www.msnbc.msn.com/id/5612507/
So why all this concern about Oil prices?
Well the issue is that the world needs about 83.5 million barrels of oil per day.
In 2005 the demand per day is to be an average of 84 million barrels per day.
The problem? there is not enough of a supply cushion, or excess production capacity to prevent the market from a prolonged output disruption.
Ok so what happens then, well chaos is supposed to break out if the gap between demand and supply increases beyond about 6-7 %
A history lesson teaches us that in early 1970s - shortfalls in supply as little as 5% drove the price of oil up near 400%. Demand did not fall until the world was mired in the most severe economic slowdown since the Great Depression.
Well here's one thing which I think, it seems like oil prices are on the upmove and are certainly going to stay that way. Looks like an interesting time to invest in oil futures.
Incidentally besides this black gold. Real gold prices are also at a considerable high.
Sanjay Shetty
It's an interesting read on the Oil crisis faced by the world.
In order to understand this more I started hunting on the web for more data.
Here's what I found on MSNBC
"Oil prices are 58 percent higher than a year ago, though still below the inflation-adjusted high above $90 a barrel set in 1980." - Source http://www.msnbc.msn.com/id/5612507/
So why all this concern about Oil prices?
Well the issue is that the world needs about 83.5 million barrels of oil per day.
In 2005 the demand per day is to be an average of 84 million barrels per day.
The problem? there is not enough of a supply cushion, or excess production capacity to prevent the market from a prolonged output disruption.
Ok so what happens then, well chaos is supposed to break out if the gap between demand and supply increases beyond about 6-7 %
A history lesson teaches us that in early 1970s - shortfalls in supply as little as 5% drove the price of oil up near 400%. Demand did not fall until the world was mired in the most severe economic slowdown since the Great Depression.
Well here's one thing which I think, it seems like oil prices are on the upmove and are certainly going to stay that way. Looks like an interesting time to invest in oil futures.
Incidentally besides this black gold. Real gold prices are also at a considerable high.
Sanjay Shetty
Thursday, June 23, 2005
Making money when the market goes up or down
StockOptions or Derivatives are an area which have certainly caughy my fancy. Infact to the extent that I hardly if ever trade in equities now.
Kiyosaki says one needs to know how to be able to make money when the stock market goes up or down.
Frankly for quite some time I didn't understand how this was possible. As most people I was aware you can make money when the market goes up. But making money when it goes down sounded like outright crazy. Well soon enough I realized that I had a closed mind.
I soon learnt that there are numerous ways to do that. Two of which I'm aware of are Short Selling and Put options.
Well I recently tried an options strategy called straddle. Basically I bought a call and put for the same strike price and expiry date of a scrip "Cipla".
Strike price: 290
Call price(premium):6.8 Rs/option
Put price(premium):7:00 Rs/option
Lot size: 1000
So effectively the call cost me Rs 6800 and the put cost me 7000. My total investment was Rs. 13800/-
Ok now why did I buy both a call and a put.
The market was crossing new highs... Cipla was trading close to 290 and pharma stocks were not doing too great. I felt the market could go in either direction pretty fast. Which way it would go that I was not sure off but I certainly didn't want to loose out. In addition the cost of the call and the put were nearly the same amount. Since I was quite sure there would be a decent fluctuation in the market I used the straddle so that at the least my cost of investment would be recovered.
In normal cirumstances if I was sure that the trend was upwards only I would have bought a call option, or if alternatively I thought the trend was downward only I would have bought a put option.
Sure enough in about 3 days Cipla went below 290 and touched about 283 and my Put option sell price was about 9.05 which meant I was making approximately Rs. 2250(9050-6800) on it. But the general market was trending up. So I sold my Put option and made approximately 33% gain on it. Sure enough with the rest of the market Cipla started moving up. It reached approximately 305 and thats when I now sold my call option whose price was now Rs. 12.5 netting me 5500 (12500-7000) or a return of 78.5% on my investment of 7000.
Note1: I've not taken into account brokerage charges, nor I'm taking into consideration tax.
So totally on an investment of Rs. 13800 I made approximately 56% return on investment.
Note2: Post my selling the call option the Cipla scrip went up even further to almost Rs. 311. Now common logic might prompt one to say "hey you should have hung on to it you would have made a ton on money" But frankly I'm glad I got my money off the table. This way I have the money in my pocket and don't count my money while it's still in the market.
Resources:
Investopedia: Stock Options basics
I would love to hear of how anybody reading this might have used options or other interesting strategies.
Sanjay Shetty
Kiyosaki says one needs to know how to be able to make money when the stock market goes up or down.
Frankly for quite some time I didn't understand how this was possible. As most people I was aware you can make money when the market goes up. But making money when it goes down sounded like outright crazy. Well soon enough I realized that I had a closed mind.
I soon learnt that there are numerous ways to do that. Two of which I'm aware of are Short Selling and Put options.
Well I recently tried an options strategy called straddle. Basically I bought a call and put for the same strike price and expiry date of a scrip "Cipla".
Strike price: 290
Call price(premium):6.8 Rs/option
Put price(premium):7:00 Rs/option
Lot size: 1000
So effectively the call cost me Rs 6800 and the put cost me 7000. My total investment was Rs. 13800/-
Ok now why did I buy both a call and a put.
The market was crossing new highs... Cipla was trading close to 290 and pharma stocks were not doing too great. I felt the market could go in either direction pretty fast. Which way it would go that I was not sure off but I certainly didn't want to loose out. In addition the cost of the call and the put were nearly the same amount. Since I was quite sure there would be a decent fluctuation in the market I used the straddle so that at the least my cost of investment would be recovered.
In normal cirumstances if I was sure that the trend was upwards only I would have bought a call option, or if alternatively I thought the trend was downward only I would have bought a put option.
Sure enough in about 3 days Cipla went below 290 and touched about 283 and my Put option sell price was about 9.05 which meant I was making approximately Rs. 2250(9050-6800) on it. But the general market was trending up. So I sold my Put option and made approximately 33% gain on it. Sure enough with the rest of the market Cipla started moving up. It reached approximately 305 and thats when I now sold my call option whose price was now Rs. 12.5 netting me 5500 (12500-7000) or a return of 78.5% on my investment of 7000.
Note1: I've not taken into account brokerage charges, nor I'm taking into consideration tax.
So totally on an investment of Rs. 13800 I made approximately 56% return on investment.
Note2: Post my selling the call option the Cipla scrip went up even further to almost Rs. 311. Now common logic might prompt one to say "hey you should have hung on to it you would have made a ton on money" But frankly I'm glad I got my money off the table. This way I have the money in my pocket and don't count my money while it's still in the market.
Resources:
Investopedia: Stock Options basics
I would love to hear of how anybody reading this might have used options or other interesting strategies.
Sanjay Shetty
Wednesday, June 22, 2005
Online Trading woes in India
Online trading advertisements seem to have increased in the Indian marketspace following the current boom.
However my personal experience and information from friends seems to suggest that most of these online trading portals are nothing but a bunch of crap.
I personally use Kotakstreet.com. I chose it as it had a webbased as well as a client interface for trading.
As a friend of mine Krishnan Iyer says, with the stock market boom the trading websites usually go bust. Reaching the main homepage of the sites is not an issue. But using their trading interfaces is a challenge as they either time out, or just don't respond.
Interestingly most of these companies when they approach you to get on to their so callled trading site prefer to demo their site when the market is not trading, like on a saturday or on the weekdays after trading hours. Obviously cause they don't want you to see how pathetic their online or client software is.
It's kind of frustrating, especially for a person like me who uses a 512Kbps link to the internet. I guess for the people using dial up lines the pain is worse.
On the same note another interesting phenomena is the diffferent values of scrips on different T.V. Channels. Say for instance Cipla is trading at 300 on CNBC, it will show up as 301 on NDTV.
Same the story with these websites on ShareKhan.com it might show the price as x and on kotak it will show it as y adding to the confusion of the small trader.
What could be a solution is that you purchase a feed directly of the exchange. This however would be at a hefty price. I hope there is an alternate solution to this issue or a reliable trading site. Would love to hear your experiences.
-Sanjay Shetty
However my personal experience and information from friends seems to suggest that most of these online trading portals are nothing but a bunch of crap.
I personally use Kotakstreet.com. I chose it as it had a webbased as well as a client interface for trading.
As a friend of mine Krishnan Iyer says, with the stock market boom the trading websites usually go bust. Reaching the main homepage of the sites is not an issue. But using their trading interfaces is a challenge as they either time out, or just don't respond.
Interestingly most of these companies when they approach you to get on to their so callled trading site prefer to demo their site when the market is not trading, like on a saturday or on the weekdays after trading hours. Obviously cause they don't want you to see how pathetic their online or client software is.
It's kind of frustrating, especially for a person like me who uses a 512Kbps link to the internet. I guess for the people using dial up lines the pain is worse.
On the same note another interesting phenomena is the diffferent values of scrips on different T.V. Channels. Say for instance Cipla is trading at 300 on CNBC, it will show up as 301 on NDTV.
Same the story with these websites on ShareKhan.com it might show the price as x and on kotak it will show it as y adding to the confusion of the small trader.
What could be a solution is that you purchase a feed directly of the exchange. This however would be at a hefty price. I hope there is an alternate solution to this issue or a reliable trading site. Would love to hear your experiences.
-Sanjay Shetty
more on ...Crossing 7000 BSE Sensex
A friend(Vishal Shrimankar) at the RichDad-Bombay club had a viewpoint to share...
Excess Liquidity.
Basically more $ being printed and available in the Intl market. These $ need a place to get invested and currently Asia and within it India seems a prime candidate.
Hence one would expect event more heights ahead for the sensex and even higher property and other prices. But how long would this party last?
He passed an interesting link to an interview with Richard Duncan the author of the The Dollar Crisis. The interview throws light and shares more information on Excess Liquidity issue. I might pick the book and give it a read. Another similar interview can be found here.
Sanjay Shetty
P.S. The RichDad-Bombay club meets every Saturday with the aim to increase the financial literacy of its members. Feel free to join the online forum and attend the meetings.
Excess Liquidity.
Basically more $ being printed and available in the Intl market. These $ need a place to get invested and currently Asia and within it India seems a prime candidate.
Hence one would expect event more heights ahead for the sensex and even higher property and other prices. But how long would this party last?
He passed an interesting link to an interview with Richard Duncan the author of the The Dollar Crisis. The interview throws light and shares more information on Excess Liquidity issue. I might pick the book and give it a read. Another similar interview can be found here.
Sanjay Shetty
P.S. The RichDad-Bombay club meets every Saturday with the aim to increase the financial literacy of its members. Feel free to join the online forum and attend the meetings.
Mutual Fun(d)
Mutual funds in India seem to be having a whole lot of fun. In the US starting September 2003 many of the funds had a hard time with new revelations of the various crooked ways of these funds. They had caused a few trillion in terms of losses to investors. Even though these funds weren't doing great their managers were handsomely paid :-). The regulators found issues with many of these funds and fined them... Compared to the losses they had caused they were fined peanuts.
In India last year (2004) Business World did an interesting article on the state of affairs in the Indian mutual fund industry and how they are taking consumers for a royal ride. The beauty being that agency SEBI who i guess should look into this, is well with blinders :-)
Currently as I write, the Indian stock market seems to be in boomtown. With the indexes going of the charts or as the experts say into un-charted waters.
I've been watching the mutual fund NAV's and not surprisingly, I'm not aware of any of them doing great. The amazing part is that people are still buying into these funds at amazing rates... No I'm not saying Mutual funds are bad, well most of them ;-) However people shouldn't be buying holding and praying as Rich Dad, Kiyosaki would say.
Would be interesting if BusinessWorld did a followup article... if any of you reading this have more information do let me know.
Sanjay Shetty
In India last year (2004) Business World did an interesting article on the state of affairs in the Indian mutual fund industry and how they are taking consumers for a royal ride. The beauty being that agency SEBI who i guess should look into this, is well with blinders :-)
Currently as I write, the Indian stock market seems to be in boomtown. With the indexes going of the charts or as the experts say into un-charted waters.
I've been watching the mutual fund NAV's and not surprisingly, I'm not aware of any of them doing great. The amazing part is that people are still buying into these funds at amazing rates... No I'm not saying Mutual funds are bad, well most of them ;-) However people shouldn't be buying holding and praying as Rich Dad, Kiyosaki would say.
Would be interesting if BusinessWorld did a followup article... if any of you reading this have more information do let me know.
Sanjay Shetty
Tuesday, June 21, 2005
Thin Air
Airline companies in India have placed orders for 50% of the total airplane orders placed worldwide. (Source TOI http://timesofindia.indiatimes.com/articleshow/1146389.cms and Economic times http://economictimes.indiatimes.com/articleshow/1144332.cms)
The general sentiment seems to be estatic, with numerous new airlines companies springing up. Each spending a few billion $$ and offering the lowest possible flight tickets.
Ok now why the hell did I bother thinking about this or reading about this? Well I'm trying to figure whether it makes sense to invest in airline companies? as in buy their stocks.
Funnily this is an industry which has collectively never made a return on it's collective capital. Supposedly Buffet said this about this industry.
Frankly I don't know whether the above statement was truly made by Buffet.
But here is my simple if stupid analysis:
Cost of investment in buying planes for a new airline company: $ 3-4 Billion ( 1 Billion in America is 1000 Million)
Cost of maintainance of the planes my guess is at least: $ 1 million a year which is approximately (0.1% of the cost of the planes. If I'm not wrong car maintainance is much higher per year)
Note: Here is an interesting site to understand how much a billion or trillilon is.
I have no idea of how much money an airline company makes in a year but I find it hard to believe that the cost of aquiring the planes+maintaining it+operations cost of the company equals profit made by flying people around. Especially with todays latest fashion of low cost airlines.
Lets take the scenario that the airline company has purchased planes worth USD 1 Billion.
In addition lets say that they make a profit of USD1 Million per month by flying people. It would take them close to 83 years to recover the cost of purchase of the planes. Here I'm not including maintainance costs and other costs.
I have made 2 assumptions, one the cost of maintainence which I have no idea about but have assumed at .1% of cost of purchase, and 2nd the profit(USD 1 Million) the airline makes per month(not considering taxes)
I wonder what the actuall maintainance costs are and average profits. If any of you reading this have more information, I would love to know.
Sanjay Shetty
The general sentiment seems to be estatic, with numerous new airlines companies springing up. Each spending a few billion $$ and offering the lowest possible flight tickets.
Ok now why the hell did I bother thinking about this or reading about this? Well I'm trying to figure whether it makes sense to invest in airline companies? as in buy their stocks.
Funnily this is an industry which has collectively never made a return on it's collective capital. Supposedly Buffet said this about this industry.
Frankly I don't know whether the above statement was truly made by Buffet.
But here is my simple if stupid analysis:
Cost of investment in buying planes for a new airline company: $ 3-4 Billion ( 1 Billion in America is 1000 Million)
Cost of maintainance of the planes my guess is at least: $ 1 million a year which is approximately (0.1% of the cost of the planes. If I'm not wrong car maintainance is much higher per year)
Note: Here is an interesting site to understand how much a billion or trillilon is.
I have no idea of how much money an airline company makes in a year but I find it hard to believe that the cost of aquiring the planes+maintaining it+operations cost of the company equals profit made by flying people around. Especially with todays latest fashion of low cost airlines.
Lets take the scenario that the airline company has purchased planes worth USD 1 Billion.
In addition lets say that they make a profit of USD1 Million per month by flying people. It would take them close to 83 years to recover the cost of purchase of the planes. Here I'm not including maintainance costs and other costs.
I have made 2 assumptions, one the cost of maintainence which I have no idea about but have assumed at .1% of cost of purchase, and 2nd the profit(USD 1 Million) the airline makes per month(not considering taxes)
I wonder what the actuall maintainance costs are and average profits. If any of you reading this have more information, I would love to know.
Sanjay Shetty
Crossing 7000 BSE Sensex
I've been ignoring my blog for quite some time. Thought I'd get back into it.
The BSE Sensex is at 7000, most of the media seem to be euphoric about this fact.
I wonder why? Is corporate India doing so well? I have my doubts. But forget me.
One would think with the stock market being at it's all time high, most mutual funds should be doing good. However that is not the case, they seem to be doing badly.
Another interesting phenomena is, it seems to be the first time that the sensex is at an all time high and at the same time property is at an all time high. The mill land sale in Mumbai at an all time high price( The sale of National Textile Corporation's (NTC) sprawling 17-acre Mumbai Textile Mills at Lower Parel at Rs 700 Crore+ )is shocking indeed.
Normally when the stock market is up, the property market heads the other way and vice versa. However this time around it's up as well. Strangely even gold seems to be at an incredible high.
So in short all the different kinds of markets seem to be at their all time highs.
Is this a time to rejoice or to worry? Well if corporate India were doing great I would assume the stock market to be high. But is that the case? I'm really not sure.
I feel one thing is certain we're in for a big time fall. Why am I so certain. Simple Newton's law. For every action there is an equal and opposite reaction. But should one be worried about a fall? It's natural right? there are up's and downs. Well that's true, however with everything being up the fall is going to be greater is what I feel.
If that happens, it certainly is a time for rejoicement. I've been having a really hard time trying to search for any good investment, especially in the real estate market. Nada, zilch, nothing is what my search has come up with.
Hence I feel this is the time to book your profits in all sectors and keep the cash aside for the upcoming bust.
There could be two scenarios. The above statement could turn out to be true or false.
Lets take both scenarios.
Scenario 1 "False": Well if what I conculded is false then, one might loose out on a great upward movement. But I'm sure if one has invested early in these markets one can surely enjoy handsome rewards. That is the only reason to get out currently when everything is so high, else might make sense to wait, depending on your individula situation. In addition lets not forget words of wisdom "Don't count your money while you're still on the table". So lets not think oh we're doing great now, remember if the cash isn't in our pockets it's still on the table and is definitely not ours :-)
Bottomline if we got out at the stage where one is making reasonable profits, one might miss out on the great profit opportunity. A mirage sold to every amateur.
Scenario 2 "True": Well if what I said is true. Then the upcoming bust is a great time to rejoice and find real great deals at really low prices in all the markets.
The BSE Sensex is at 7000, most of the media seem to be euphoric about this fact.
I wonder why? Is corporate India doing so well? I have my doubts. But forget me.
One would think with the stock market being at it's all time high, most mutual funds should be doing good. However that is not the case, they seem to be doing badly.
Another interesting phenomena is, it seems to be the first time that the sensex is at an all time high and at the same time property is at an all time high. The mill land sale in Mumbai at an all time high price( The sale of National Textile Corporation's (NTC) sprawling 17-acre Mumbai Textile Mills at Lower Parel at Rs 700 Crore+ )is shocking indeed.
Normally when the stock market is up, the property market heads the other way and vice versa. However this time around it's up as well. Strangely even gold seems to be at an incredible high.
So in short all the different kinds of markets seem to be at their all time highs.
Is this a time to rejoice or to worry? Well if corporate India were doing great I would assume the stock market to be high. But is that the case? I'm really not sure.
I feel one thing is certain we're in for a big time fall. Why am I so certain. Simple Newton's law. For every action there is an equal and opposite reaction. But should one be worried about a fall? It's natural right? there are up's and downs. Well that's true, however with everything being up the fall is going to be greater is what I feel.
If that happens, it certainly is a time for rejoicement. I've been having a really hard time trying to search for any good investment, especially in the real estate market. Nada, zilch, nothing is what my search has come up with.
Hence I feel this is the time to book your profits in all sectors and keep the cash aside for the upcoming bust.
There could be two scenarios. The above statement could turn out to be true or false.
Lets take both scenarios.
Scenario 1 "False": Well if what I conculded is false then, one might loose out on a great upward movement. But I'm sure if one has invested early in these markets one can surely enjoy handsome rewards. That is the only reason to get out currently when everything is so high, else might make sense to wait, depending on your individula situation. In addition lets not forget words of wisdom "Don't count your money while you're still on the table". So lets not think oh we're doing great now, remember if the cash isn't in our pockets it's still on the table and is definitely not ours :-)
Bottomline if we got out at the stage where one is making reasonable profits, one might miss out on the great profit opportunity. A mirage sold to every amateur.
Scenario 2 "True": Well if what I said is true. Then the upcoming bust is a great time to rejoice and find real great deals at really low prices in all the markets.
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