Rational Behavior in Investing: Some practical points

Investors many times take unnecessary risk. They tend to buy stocks pricey due to fear of losing opportunity and being left out of the rally. But why should at all investors rely on rally? This is wrong approach. You buy first and then let the markets justify it for you. If you have invested right it will eventually come up. Remember: Value investing always beat everything.

Always wait if you are not finding any value picks. Remain on cash. Remember your investment would only reap returns if you follow your value-investing strategy. And otherwise not. So then why invest when you are not sure, and it is like taking unnecessary risk?

If some stocks are going up today and you don’t own many of them or most of them, so what? They were the very stocks that were not going up in past while others were. So you thing to shift to the rising stocks or some others stocks because your stocks are not in the rising or 52-week high list is not rational thinking. They will be some day. You can not predict it. Also see by how much volume this whole lot of mid-cap and small-cap stock are rising. How much is the market float. Many stocks rise with thin volume and in a way to benefit a very few who are on the inside rather than the general investors community like you and me or our friends. Just ask yourself that looking at the given volume or sudden erratic rises how many could have been able to earn out of it? How many could have taken position before not many day? This kind of rational thinking will help you overcome your fear of losing opportunity and being left-out of the market or that your strategy is not right or thoughts that your picks are wrong and so on.

Gems for Value Investors: Parag Parikh's lessons on "Growth Stocks"

               Here are some of the gems from Parag Parikh’s book Value Investing and Behavioral Finance. The views on so-called “Growth Stocks” are very interesting

• Seasonal investors chase the fancy opf the markets in the name of growth stocks, and call themselves growth investors.
• Growth stocks investing is based on hunches, dreams, illusions or popular opinion. They are better termed as ‘dream stocks’.
• Growth stocks investing is more of a philosophy of buying what is popular.
• When one can not justify the high valuation of a stock one would argur\e that is is a growth stock and hense expensive.
• For any stock to be a growth stock it has first to be value stock, value and growth are inseparable.
• The concept of growth stock is a product of bull market. It dies when the bear market sets in. Bear markets create value.
• The term ‘growth stock’ is meangless since ‘growth stocks’ can be identified only in retrospection; it is merely stock that went up.
• When a stock becomes a fancy and fad in the market, it is chased by one and all. The sharp rise in the stock price makes it growth stock. Before the rise how many would call it a growth stock? It is only when the price move very fast it is evident that it has found fancy and is thus termed as a growth stock.
• It is the value of mastery that excites investors. It is the lure of the newand the unknown that fascinates the investors. Investors are always looking at something new, as they believe that novelty can fetch them more money. This novelty becomes a fancy when more and more investors chase it. This mixes with behavioural biases. Thus, a fad and fancy start quoting at fancy prices. This is termed as growth stock as there is no available explanation to justify the steep rise in price.
• Growth investing is investing in new ideas, new technology, new sectors, new initial public offerings, new additions to the indices, new fada and fancies etc.
• Value investing is knowledge and growth investing is mystery.

There are a lot more gems from India's own value investing veteran. We will update more later on. 
Investors with a 2 year horizon can buy our "Emerging 7-Star Portfolio". Click HERE for details.

Advantage Of Early Investments

Dear investors,
Many Times you all have read about multi-bagger stock or rising stars and many investments companies gives example about early investments that how small companies became big corporate and successful business. Let’s see some example of the same,


Change in share prices over the past 10 years:

Stock	Price of 15/12/1999	Price of 15/12/2009
Aban Offshore	6.7	1191
Era infra	1.2	197
Shriram transport	4.5	451
Kalpataru power	20	1020

      Now tell me are you a person who has invested in any of the company for the above given period? Ask the track of analyst who is suggesting you to invest in stock market.
      Let me give you track of our research team who has experience of more than 7 year and his family has experience of 40 years ,how they spot the long opportunity at low levels or early stage of the business or early stage of economy.

STOCK	INV.PRICE	CURRENT PRICE
Tata power	25	1300
Tata steel	25	500
Larson	20	1600
Reliance ind (demerger)	10	1000
Values adjusted for merger/	Demerger/bonus/split etc

      Now see the gain after long term, many analyst or economist including we believe Indian economy will grow but which stock or companies are worth to buy and beat the stock market in the long run? Like warren buffett, rakesh junjunwala, ramesh damani, ramdeoo agrawal.
      Try and find out the Companies with negligible revenue from core operation but with mega plans under implementation are worth a look.
      Few companies have little or nothing to show by way revenue and profit from their core business operations. Many of these companies have mega future plans that could completely transform the company, its business profile and size of operations.
Investing in such stocks makes sense before their core business goes on stream and start contributing to the top line as immediately after this it is most likely that such stocks would witness re-rating and rise further.
       Before investing in such companies, investors can try to reduce risk by focusing on various aspects of the industry and company. Such as management credentials, project implementation skills and experience, corporate governance norms, financial backing by group, industry dynamics and size of the business opportunity etc
We don't have to tell that in past we have find out HIDDEN GEMS of the future at early stage of the business like tata power, tata steel, reliance group, larson and tubro and more.

        Now if you feel that you or your family not enough lucky like , ramesh damani,rakesh junjunwal, ramdeoo agrwal who always find out "diamond" at early stage of the business/economy like gillette, mcdowell, find out by ramesh damani, praj ind or beml find out by rakesh junjunwals, hero honda and bharti find out by ramdeoo agrwal or hdfc bank find out by sameer arora of Helios capital then don.t worry we have find out the next"HIDDEN GEMS"or "DIAMOND" at early stage of the business and ready to become big business in terms of revenue and profit in the next decade .
AND THEY ARE THE 4 ACE for ANY INVESTORS PORTFOLIO.
You can SUBSCRIBE IN OUR NEW PMS SERVICE-4 ACE for above long term opportunity.




Manager,
MEGHA INVESTMENTS AND RESEARCH TEAM,
Please feel free to contact me on,
09377008708
Profit.megha@gmail.com

3 Essential MUST HAVE Strategies for Investors

3 Essential MUST HAVE Strategies for Investors:

1. Entering strategy

2. Exiting strategy

3. Re-entering strategy

1. ENTERING STRATEGY

It about buying

It about making portfolio

Right kind of diversification

Choosing right sectors. avoidng wrong sectors for e.g. fmcg and pharma and not telecom.

Avoiding all-time unfavorable sectors such as pulp and paper, plantations etc.

Use of technical analysis if/while investing in a bull market.

A review of situation and impact of other markets, for e.g. bond market, commodities market etc.

-why to invest?

Target/goal of investing, gains, speculative gains, dividend.

Deciding whether Economic recovery in sight or more pain for capital markets?

Comparison with other asset classes

Are valuations cheap or there is bubble element.

-Where to invest?

Sectors to pick and sectors to drop

Intra sector and stock selection i.es to chose between an l and t and bhel.

-how to invest?

Allocation of capital amongst stocks, sectors, intrasector and other classification.

2. EXITING STRATEGY

When to book profits.

Of What use the paper profits are?

When markets are fundamentally over priced and technically also.

The best way is to look for macro factors for overheating signals.

Also look for behavioral indicators such as excessive euphoria such as p/e ratios soaring to 50-100 and even more. And floods of IPOs over subscribing by several times with no justification for such a valuation of its business.

How much return should be a threshold for booking profit-50% or less  or more? How much for individual stock and how much for the combined portfolio?

Oh oh …you may miss 20-30 pc market rise, but if you know the top, please let us know too.!

-

Your targeted return has arrived or not.

Better opportunity in other sectors/stocks/asset class or shifting to debt or bank fd.

Valuations entering into bubble zone.

Strategy to exit NEAR top (and not AT top, which is not possible for all)

Making sure of your bull market PROFITS DOESNT remain ONLY ON PAPERS. (which happens with more than 70 percent of retail investors.)

3. REENTERING STRATEGY

When will you reenter into stocks?

May be you just wait and watch with cash during the bear market or you may invest into commodities or other asset class during this period.

Time for value buying.

Buying stocks at real real throw away prices in a completely distressed and panic driven markets. Having courage, confidence, vision and insight to do so.

The new economic policies, new themes of investing.

Rise of some sectors while fall of few others.

Reentering in wrong sector may give bitter experience at the start such as investing in telecom in this new bull market began in 2009.

Invest more and more when markets have corrected beyond 40 percent of its previous bull market high.

-

Market trading at or below fair valuations like average p/e, historic p/e, historic low earnings, etc.

Worst and pain coming to be over

Valuations becoming attractive

Your targeted downside in prices and valuations achieved.

Readiness to bear notional loss up to 20 percent and readiness to average at further declines.

Strategies of entering NEAR Bottom (and not bottom)

Readiness to take contrarian call.

Readiness to go against the crowd.

Close observation of macro economic cariables, monetary policy hanges, and your targeted companies for investment.

Remaining ready with a list of your targeted companies and their prices at which you will buy,

Making sure we may be early but not late in the bull party.

3 STRATEGIES APPLIED TO AN INDIVIDUAL’S INVESTMENTS:

Portfolio building strategy.

Portfolio monitoring strategy.

Diversification strategy. Within asset class i.e. equity.

Asset allocation strategy. Between asset classes.

Portfolio shuffling strategies.

...and you thought LOMG-TERM INVESTMENT was always right:

And You Thought LONG-TERM Investment Was Always Right

3 STRATEGIES- THAT INVESTORS MUST HAVE

THREE STRATEGIES THAT INVESTORS MUST HAVE:
The Most Rewarding Things Are Many Times The Most Simple Ideas! 

Below are the 3 Strategies:
1. Entering Strategy.
2. Exit Strategy.
3. ? Send us email what could be the 3rd one @ profit.megha@gmail.com. or calll/sms on 09377008708 and win rewards.

Issued in the interest of investors and traders: ANONYMOUS dotcom tips advisory companies and SMS tips:With Ref to A RECENT PROGRAMM ON CNBC TV.

Avoid BUY/SELLING in stocks based on recommendations through promotional SMS. Focus on financial performance and corporate governance track record of the company.

             Many investors in equities receive text message on their mobile phones at regular intervals. Indeed short message service (SMS) is a very inexpensive and easy option to spread rumours and communicate recommendations to the target audience. Dispatching text messages over mobile phone cost as low as seven paisa to five paisa per message. Moreover, getting the database of investors is also not a very difficult. Another advantage of using text messages over mobile phone is the speed at which information, or rather mis-information, can be spread among the target population.


It is common for investors to receive SMS providing price-sensitive information or rather rumours. In most cases, the objective is to drive up stock prices and to hammer them down. Usually this is the work of small operators with limited clout in the equities market as they do not have the financial clout of big operators.  
Many business people use TEJI IN MARKETS to make such easy money by operation tips or advisory dotcom and sms service. When you go to their ABOUT US page in website they all have almost common texts. You don’t see any responsible persons’ name or name of owners or analysts. Most never give any type of charts or research report or original analysis. Why? Smiply Because they don’t have any analyst!


                 A RECENT PROGRAMM ON CNBC CHANNEL EXPOSED SUCH COMPANIES AND PEOPLE DOING SUCH UNETHICAL AND UNFAIR PRACTICE which has caused many people lose several thousands and even lacks of rupees, just in hope to earn more money out of trading.


                 The point is don’t go behind every dotcom company/website and sms service providing tips or trading recommendation WITHOUT INQUIRING REGARDING THE OWNERS OF THE DOTCOM SITE/COMPANY OR SMS SERVICE AND MORE IMPORTANTLY THE ANALYSTS THERE. ALSO CHECK THEIR BACKGROUND. (also read this article in this regard). Further it is our personal suggestion to take advise of only such people who also do fundamental analysis on regular basis and are not just providing only intraday trading tips, because with the advent of advanced soft wares, several online portals, broking companies’ inbuilt charting and trading software it is easy to issue trading calls and tell oneself an analyst. Many text messages are carefully drafted. Though these messages are spreading rumors, they generally attribute the news to “value-buy”, "sources", "rumors", "market talk”,” big-order win” take over buzz”.” bonus issue”, private placement”, and so on. Certain SMSs are typically market pitches that go to advertise particular scrip’s aggressively. 

JIM ROGERS-THE BIG DOLLAR BEAR IS BUYING DOLLARS AND....STILL CONFUSED !!

 http://www.youtube.com/watch?v=zn7PyMUZv60

Above is the link of a recent interview video of Jim Rogers, the in infamous Commodities King. It is world known that he is bearish on dollar and the US economy including the most of the western part of the world and seem to be only and only bullish on Chinese economy even excluding Indian Stock markets.
In this vieo interview he confesses of acquiring dollars in recent past by saying that '..he own more dollars now than few days before..." Jim Rogers is an indisputable commodities king and a finance and investing veteran but his recent attacks on dollar and and the 'bankrupt US economy..and then confusing statements and acts regarding owning more dollars and being a horrible trader...even his body language seems not to be in tune and integrity with his speech. His fundamental ideas on finance and investments are a real gem to any student but his recent comments and activities are bound to raise criticism and doubts.
he also adds that he is still EXTREAMLY BEARISH on US dollar but argues that US dollar is going to get strong may be because every one is bearish right now and normally this leads to rally and short-squeez, meanwhile he also added that he is a horrible trader and a loser trader. we think this all seems to be meaning nothing and even confusing to lay-persons. he mentions to be a macro investor in his books and also says is not a trader, then why is he playing with dollar instead of sitting tight and holding to his point. While his all books are worth a read to all students of finance and investment; his arguements on letting banks and financial institutions go bankrupt and the whole financial market collapse does not get support from any one except the likes of mark fabers of the world.

Beware Investors and traders !: Thodi si to CLICK Kara De...

Will you take services of a restaurant that ADVERTISES other restaurants?

Will you go to an MBBS for treatment who puts banners of ADVERTISEMENT about other doctors and hospitals?

Will you buy a TV, Refrigerator etc. from a company's showroom where you find ADVERTISEMENTS and PROMOTIONS of another Companies similar type of products?

Will you put your kids into a School or College which puts banners of promotions and advertisements of How good/better other schools are and provides addresses and contact details of other schools?

...OBVIOUSLY NO.

..........Then will you take advise from any Analyst, Consultant, advisor or tips provider WHO PUT ADVERTISEMENTS OF OTHER ANALYSTS or ADVISORIES FOR EARNING FEW BUCKS IN CLICKS..?

...we know the answer..It Is Obviously a Bigger NO.

So next time you find any link or advertisement or any other promotional banner etc. on any website/portal of analyst of advisor or advisory company, ASK YOURSELF "WILL THESE PEOPLE GIVE YOU SATISFACTORY SERVICE THAT YOU ARE LOOKING FOR?'

Remember another thing:

Never deal with such people whose honesty, integrity and purpose of service are at doubt.

This we don't write to devalue other but because we felt it a need to put this point before investors and traders. The Final choice will always be yours.

In many ways THIS SEEMS TO BE A MATTER OF APPLYING COMMON SENSE, how can a company put its COMPETITORS' ADVERTISEMENTS AND PROMOTION BANNER AND LINK on its portal...unless (1) getting money for advertisement, or (2) the other portal/advisory also owned and run by him only in disguise.! Simple.

HOW TO DISTINGUISH GENUINE ADVERTISEMENTS/INSTANCES WHERE THE ADVERTISEMENTS CAN BE JUSTIFIED:

(1) The product or service must be different. For e.g., a stock advisor or analyst can put a Broking Company's advertisement for Opening Demate Account, but not the advertisement of research, analysis and tips service of the broking company.

(2) The analyst/website portal must not provide paid tips and advisory service--if it wants to put advertisements or other analysts/tips advisory companies. In such case the portal/analyst/person operating the portal is either (1) doing it for fun or say blogging hobby, or (2) the person/portal has been completely made and operated for generating advertisement revenues. And there is nothing wrong in trying to earn revenues from advertisements. BUT REMEMBER IT WITHOUT FAIL THAT THEN SUCH PERSON SHOULD NOT HIMSELF PROVIDE PAID SERVICE.

send your views/comments to us on-profit.megha@gmail.com.

or can also sms/call on-09377008708.