Last Week Performance (22.08.11 to 26.08.11)

From Last week’s stock future weekly recommendations (22.08.11 to 26.08.11)”, Mcdowell touched 972 from our reco price 937 (Gain of Rs. 35 per lot), ACC touched 1018 from our reco price 1000 (Gain of Rs. 18 per lot), Bata touched 738 from our reco price 663 (Gain of Rs. 75 per lot), Yes Bank touched 284 from our reco price 263 (Gain of Rs. 21 per lot), Chambal touched 107 from our reco price 101 (Gain of Rs. 6 per lot), Petronet touched 186 from our reco price 170 (Gain of Rs. 16 per lot), KFA touched 27.40 from our reco price 25.50 (Gain of Rs. 1.90 per lot), Hotel Leela touched 40 from our reco price 37.85 (Gain of Rs. 2.15 per lot), Arvind touched 77 from our reco price 67 (Gain of Rs. 10 per lot) in a single week only in this kind of market also….Those interested to get paid services in only intraday stock future, positional stock future, 2-3 days stock future can call us for details only after market hours…

From Last week’s Delivery recommendations (22.08.11 to 26.08.11)”, TTML touched 19.30 from our reco price 17.45 (Gain of Rs. 1.85), GVK Power touched 18.35 from our reco price 17.10 (Gain of Rs. 1.25), Alok touched 18.25 from our reco price 16.55 (Gain of Rs. 1.70), IDFC touched 115 from our reco price 107 (Gain of Rs. 8) Nagajuna Ferti touched 28.80 from our reco price 26.25 (Gain of Rs. 2.55), HCC touched 28.75 from our reco price  26.35 (Gain of Rs. 2.40 ), R Com touched 83 from our reco price 74 (Gain of Rs. 9), Sun TV touched 325 from our reco price 300 (Gain of Rs. 25), in a single week only in this kind of market also….

# Nifty Future(4748.70) : Above 4833,we may see 4869, 4892, 4923,…Below 4703 we may see 4685, 4662, 4631... Readers may please, Trade On Breakout side only according to own financial capacity & at risk & on your own decisions.

# Hot Positional Stock Futures:

1)    M & M (704.50): Rs. 690 stoploss…It may touch 720 to 738…

2)    HPCL (361.10): Rs. 348 stoploss…It may touch 369 to 378…

3)    TVS Motor (53.75): Rs. 50 stoploss… It may touch 57 to 59…

4)    UniPhos (136.35): Rs. 134 stoploss..It may touch 140 to 143…

5)    Crompton (136.85): Rs. 130 stoploss…It may touch 140 to 144…

# Hot Weekly Stock Futures:

1)    Petronet (169.50): Rs. 164 stoploss… It may touch 174 to 180...

2)    Bhushan (306.75): Rs. 295 stoploss.. It may touch 315 to 323…

3)    Tata Motor (699.45): Rs. 685 stoploss….It may touch 716 to 730…

4)    TCS (948.15): Rs. 933 stoploss…. It may touch 959 to 972…

5)    REL Capital (338.50): Rs. 326 stoploss..It may touch 351 to 370...

# Hot Short Term Delivery based Calls :

1)    GMR Infra (532754) (26.35): Near term it may touch 29 to 32…

2)    NHPC (533098) (23.90): Near term it may touch 26 to 28…

3)    Onmobile (532944) (55.65): Near term it may touch 59 to 64…

4)    Great Offshore (532786) (130.05): Near term it may touch 136 to 144…

5)    SCI (523598) (80.25): Near term it may touch 84 to 90…

6)    Vijaya Bank (532401) (54.25): Near term it may touch 57 to 62…

7)    Godrej Consumer (532424) (416): Near term it may touch 432 to 450…

8)    REI Agro (532106) (23.45): Near term it may touch 25 to 28…

9)    Bajaj Hind (500032) (51): Near term it may touch 54 to 59…

10) Usher Agro (532765) (126.60): Near term it may touch 136 to 144….

How to Invest? Understanding Risk & Return....

By now you would be aware of the need to invest and also the different avenues of investing. Well done! You are progressing well. While going through the blogs you must have come across two terms- Risk & Return. I am sure most of us have heard these terms. Let’s take a look at what actually they mean.

Risk is involved in every aspect of life. It is basically the possibility of something going wrong or contrary to our expectations. How many times have you crossed the road running or driven rashly to reach work on time? When we do this, we run the risk of meeting with an accident Well one risk I always live with is uttering something foolish in front of my boss (more on that some other day!!).

But what is the risk that we undertake when we invest our hard earned money? Here, risk implies the chance or probability of the actual returns on our investment being different from our expected return. We tend to associate risk with loss. But, if you consider the definition of risk, it also includes the probability of returns being higher than our expectations. We wouldn’t mind this though, would we? Thus, concluding it is quite easy to understand that more the chance of the actual earnings being lower than our expectations, higher is the risk!

Believe it or not when you invest your money, you are exposed to different types of risk. Let’s have a look at a few of these

Capital Risk: As an investor you are exposed to various forms of risk. Now, as a beginner, what is the first fear that you have when you invest your money? I am sure it’s Loss, a complete or partial loss of the value of your investment. Thus capital risk is the risk that you might end up losing all or part of the money that you invested.

Liquidity Risk: Have you ever tried selling a house? Even if you haven’t, I am sure you are aware of the time and energy involved in doing it. It can take anywhere from week, months to even a year. Thus the second type of risk you face is Liquidity Risk. It is the risk that you might not be able to convert your investment into cash, quick enough. With real estate it can take you a long time, but to convert your Infosys stock into cash, it might just take you seconds!!!

Firm Specific risks: Be it through direct investment in stocks or through Mutual funds and ULIPS, quite a few of us invest in stocks. Thus, we get exposed to what are called Firm Specific risks. This can include competition , certain projects not working out (a new product launched which is not accepted by the market), entire sector being affected due to government regulation (the current scenario in the Telecom sector).

Market risk: This is the risk which affects not only a particular sector but the whole economy. For example Change in interest rates, a slowdown in the economy, affect many, if not all, investment options. Some other risks like foreign exchange fluctuations, commodity prices may affect a certain class of investment options but in varying degrees.

This was all about risks. Now let’s talk about returns. Return is the money that you expect to make out of your investment. In the earlier blog you would have seen that there is different level of risk and return associated with savings deposit, fixed deposit, real estate, stocks etc. Certainly, you would expect to earn higher returns if you are taking on higher risk. The chart given below explains the relationship between risk and return.

Thus, where you invest your money depends on your risk-taking capacity as well as your return expectations. You may tend to think that stocks are high risk investment options and may shy away from it. But there is a way that you can lower the risk involved in stock investing without lowering your returns. But before you learn this way, it is important to understand your investment profile which we will do in the next blog.

Bear Market - Upto 70% Off..

Imagine: You are on a Safari trip to Jim Corbett, high on spirits you get down to cherish the serene environment and you see a bear approaching what do you do? Tuck in your arms and play dead. Fighting back can be extremely dangerous. Similarly in a bear market it can be awfully risky because it is quite difficult for an investor to make stellar gains, Right isn’t it? Wait for a moment, this is not really the truth! This is the most common myth you’ll find all around you! Sounds strange and contrary to the common belief? Yes it does because this is how most of us feel during bearish times.

But what is a bear phase? Isn’t it just a downturn in the market or is it something else? Let me help you know it better. Think about this: you have been dreaming about that designer pair of jeans you saw last month. You absolutely loved it, but you believed it was overpriced! So you didn’t buy. This is what most of us do if we think something is overpriced. But a few days later you heard to your surprise about the end of season grand sale – up to 70% off! Hurray! You just rush to grab it. I would do the same. If I get the same pair for its true worth, then why overpay and break our banks to get it?

So have you ever thought of a bear phase in a similar manner? Ever thought of it as a grand end of season sale in the stock market giving you a good discount on your favorite companies? Now think of applying the same logic when investing in the stock market during a bear phase. Sounds interesting? Read on.

But why do people fear a bear phase? I’ll tell you why. There is a two edged sword which is perceived to hang over our necks during a bear phase. On one side, we fear loss of value for the money invested during a boom phase. On the other, we believe if we buy during a bear phase the markets will continue falling further and again we’ll lose money.

I agree. It’s quite a genuine fear. It is risky and no one wants to lose their hard earned money! But as the world’s most famous and successful investor, Warren Buffett, once said, “Risk comes from not knowing what you’re doing”, there is no risk if you know how and when to take advantage of a bear phase!

You must be curious to know how to enter stock markets in a bear phase and benefit? It’s simple – follow the concept of “Value Investing”. It is the technique followed by bigwigs like Warren Buffet, whereby he turned $105,000 into $30 billion.

Value Investing is all about doing a little bit of fundamental analysis before buying a business. A business that promises to grow in the future, which would make us rich and wealthy, is worth holding onto forever. Thus we can then be sure that we won’t own the business for ten minutes unless we’re willing to own it for ten years! For owning such a business you also need to be sure that you buy it at the right price and don’t overpay i.e. buy it during a sale! Isn’t it wonderful? Would you not like to do the same? I’m sure you would as any sensible investor would want to.

Warren Buffett while lecturing to a group of students at Columbia University when he was 21 years old, said, “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” This reiterates the fact that you don’t need to fear the bear phase. Most Value Investors like Warren Buffett, Benjamin Graham, and many others, all often build up their position in some of their favorite companies during less than cheery times in the market. This is so because they know that the market’s maniac-depressive nature can punish even good companies more than warranted.

If you follow a few simple rules, you can be rest assured that you don’t have to play spectator or sell in panic when the market crashes or as we mentioned earlier when the grand sale is on.

“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” Okay, I know that’s easier said than done. But this is exactly why value investing exists. The big grand sale is for the very same purpose. It is there so that you buy fundamentally strong businesses at discounted prices which will always follow the rules! Doesn’t it seem to be having some magical powers? Take a deep breath, and then hang on for the ride!

One word of caution: if you enter the stock market during a bear phase and start buying anything and everything you find cheap is not going to make you rich. Again quoting the World Guru of investment, Warren Buffett, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”, just reiterates our point.

So what are you waiting for? Go ahead and grab your favourite companies…they’re selling for a heavy discount. It’s time I welcome you to the world of value investing.

* No conditions apply….lol!

Disclaimer: A few of the ideas here have been contributed by my friends… thanks.

Top 5 Mistakes in the Stock Market.

This is a guest Article from Manish Chauhan who writes on Jagoinvestor . He writes on Personal Finance and Financial Planning and his aim is to empower Indians on taking informed decision in their financial life .

Lets see in this quick article what are the top mistakes investors do in Stock markets . Once an investor controls these mistakes he can see great improvement in results .

1) Buying on recommendation

Never buy just on recommendation, Do your own study and analysis . When you buy on others recommendation , you will don’t take responsibility on your own if there is any loss , which is dangerous in markets . Hear others but listen to your self . See other things like markets trend , sector view , global markets , future prospects . Once you are fully confident that its a correct trade and you feel comfortable with it … go for it .

2) Being too Greedy

Stock market is just like our life , You need to have satisfaction in your life and stock markets , If you want more and more and more , you might not get anything , in fact you can lose . You put everything you have on the trade like i did .. Because of greed one generally invests more than they could afford to lose . Dont take unwanted and unaffordable risk , You have to see potential losses , not just profits . This is a very common and one of the biggest mistake in stock markets , so big that it will be among the top mistakes investor and traders do . Buying more quantity was not a wrong thing .. it was the intention behind it

3) No profit booking

This is a major mistake . Once there is some profit , one does not take that profit back in anticipation of more and more . One has to be satisfied at one point and take some profits out of it and keep safe , irrespective of whats going to happen tomorrow. Situations changes in markets, one never checks back the news regarding the stocks after they buy it . Every time you get some good profits , it’s a wise idea to at least book some partial profits out of it (Unless you have strong reasons to hold it for long)

4) Having a Big Ego , Not accepting that you can be wrong

“When your boat starts sinking , you don’t pray , just Jump “

Once you are doubtful , surrender to markets wish. See what markets is showing you, not what you wanted to see. Markets are supreme and no one can be above markets. Leave you Ego at your home when you go in front of markets. Markets tell you what’s going to happen , Not vice versa. Accept that you are wrong and made a mistake and move on . Once has to understand the difference between Stop loss and when things have gone beyond their calculations .

5) Impatience

Lot of time, prices started falling and once there is a loss, investor feels like there is end to the world . They feel like they are losers to make a wrong decision. this is where one does not understand volatility or have not planned for it before hand. We wait for markets to come back to our levels but it never does and we lose the patience and sell in frustration . one has to wait long enough for markets to show its returns . Obviously if its was that easy to trade in markets everyone would be millionaires .

Conclusion

Fear , Greed , Emotions , Ego , Impatience : These are the elements of Failure in Stock markets. Manage them well and you can do better . These things are still not the most important elements of success in stock markets