Sunday 26 September 2010

The big bad credit card companies


The big bad credit card companies

When I find an otherwise excellently written write-up, being a notoriously lazy guy, I am always delighted to send you to the original article by giving the relevant link.

Here's one such piece from Deepak Shenoy's blog, talking about why one should not go in for an "Auto debit" option for paying off credit card bills - Read on:
A quick point - I'll go to the extent of ensuring that if I have a card from XYZ bank, I'll try to ensure that I don't use a cheque leaf from XYZ bank to pay their bill. Why should we let them know proactively the existence of a banking relationship with them that extends beyond credit cards - One never knows what well-hidden term / condition they may use to gain access to your SB account for adjusting some disputed bill / service charge on the credit card?!!??!
Some readers have asked me as to why I offer these links to other blogs and websites.
Some quick reasons:
  • My blog is not an exercise to build my ego and certainly not a tool to gather any income.
  • I have no qualms about giving credit where it is due, by taking you to the original author's blog / website directly. This also takes care of potential "copyright" issues.
  • If you're able to move to another blog and, in the process, gain more valuable inputs, I feel that the purpose of this blog is, to that extent, quite well-served. Enjoy!
Regards,

N

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Thursday 16 September 2010

The Advantage of the Individual Investor


The Advantage of the Individual Investor
(Part of a continuing series of periodic posts)

I read with keen interest an interview with the legendary investor Seth A. Klarman last night (Published in the September-October 2010 issue of the Financial Analysts Journal, Volume 66 No 5). One part that I reproduce below is very relevant for lesser mortals like you and me.
First, read this short paragraph from Klarman:

"Klarman: In our minds, ideal clients have two characteristics. One is that when we think we've had a good year, they will agree. It would be a terrible mismatch for us to think we had done well and for them to think we had done poorly. The other is that when we call to say there is an unprecedented opportunity set, we would like to know that they will at least consider adding capital rather than redeeming. At the worst possible moment, when your fund is down because cheap things have gotten cheaper, you need to have capital, to have clients who will actually love the phone call and—most of the time, if not all the time—add, rather than subtract, capital. Having clients with that attitude allowed us to actively buy securities through the fall of 2008, when other money managers had redemptions and, in a sense, were forced not only to not buy but also to sell their favorite ideas when they knew they should be adding to them. Not only are actual redemptions a problem, but also the fear of redemptions, because the money manager's behavior is the same in both situations. When managers are afraid of redemptions, they get liquid."
What does it mean for retail investors like you and me? Here are a few thoughts:
  • We don't need to outperform either the index or any specific "competing" investor / fund manager
  • We don't even need to outperform our own past performance
  • We don't need to be answerable to anyone other than ourselves
  • Nothing prevents us from holding a significant part of our portfolio in cash If we are either
    • satisfied with the profits already made or
    • scared about the comparitively high index levels
Do think about it!

Regards,
N


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Wednesday 15 September 2010

An Interesting Fact after the sharp move of September 13th


An Interesting Fact after the sharp move of September 13th

On Sept 13, we saw the markets zooming ahead. And I got a mail highlighting the limited number of scrips that outperformed the index on this very day.

What are the implications?

Are we seeing the typical blow-out phase of any bull market?

The real answer - I don't know. The bitter truth - No other persons knows, either.

Hence, what should we be doing at this stage?

My own recommendation from Nifty levels of around 5500 would be as under:
  • For every 5-7% increase in Nifty, keep lightening up your stock portfolio by around 12-15%, in all the stocks which have run up significantly in the past 3 months, thus increasing your cash levels
  • If you have the capacity to be patient, and if you don't mind seeing all your friends, colleagues, etc. making more profits than you in the very short term, sit tight on cash
  • If you are the type of individual who must compulsorily remain invested in shares and don't believe in holding cash, at least try to buy in a staggered manner
  • Also, in these highly risky global environs, if you insist on buying shares at current levels of Nifty,
    • Try not to buy shares which have run up very significantly in the past 3-4 months (After all, I'm recommending that you keep selling such stocks!)
    • Instead, try to buy those fundamentally sound stocks which have not run up already - like Reliance Industries, NTPC, Real Estate stocks, Specific Agri-product stocks, Specific cement stocks, etc. Ideally, stick to large-cap stocks at this moment - AND BE PREPARED TO HOLD FOR A LONG PERIOD!
  • Make sure that unless you are a past master, don't play with futures & options at this stage
  • As always, keep your stock exposure in line with your risk profile and asset allocation norms.
Most importantly, don't ever rely on experts, self-proclaimed experts, including me. Rely on your own individual research - At the end of the day, it is your money - You certainly don't wish to convert it into someone else's money!

An Interesting Fact after the sharp move of September 13th

Posted by: "GV" 

Mon Sep 13, 2010 10:42 pm (PDT)



Yesterday when nifty broke out sharply by about 2.13 % ;

- there were only 26 stocks among nifty category which outperformed the
index and 76 that under performed.

- and among a-z category, there were just 216 stocks that out performed and
as many as 1101 stocks which under performed.

*gv*

Regards,
N

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