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Stock Market

noreply@blogger.com (Saveen Kaur Ahuja) — Sun, 27 Dec 2009 13:46:00 +0000

Well if you want to have an experience of a roller coaster ride, you don't need to go too far, just enter the stock market. The craziest place to be in, the only consistent factor about it is the unpredictability. I guess very few can actually beat the market. To be successful you need to adapt to the changes it brings along each day. No preset notions and strategies work out here in this insane platform. You need to have an open mind and play along after trying to analyze the trend because every day is different out here. The plus point, especially for a person like me, is that it does not bore you, it can be exciting and disappointing at the same time. I guess I'm slowly liking being here.

To Advertise

noreply@blogger.com (Saveen Kaur Ahuja) — Wed, 11 Nov 2009 06:57:00 +0000

To advertise on Bizvest.Org mail at advertise@bizvest.org

Articles on Investing

noreply@blogger.com (Saveen Kaur Ahuja) — Fri, 07 Nov 2008 05:44:00 +0000

FUNDAMENTALS

Company Analysis

PORTFOLIO MANAGEMENT

Purpose of Investing

What Type of an investor are you?

INVESTING WISDOM

The Temperament of a True Investor

The Focus Investor's Golden Rules

The Fifteen Points To Look For In A Common Stock

The Richest Man In Babylon

The Temperament of a True Investor

noreply@blogger.com (Saveen Kaur Ahuja) — Wed, 01 Oct 2008 05:23:00 +0000

Well if you want to be like this man loaded with money, you have to have the following characteristics:

1.True Investors are Calm -

According to Buffett, unless you can watch your stock holding decline by 50 percent without becoming panic stricken, you should not be in the stock market. In fact, he adds as long as you feel good about the business you own, you should welcome lower prices as a way to profitably increase your holdings.
True investors also remain calm in the face of what we might call the mob influence. When one stock or industry or one mutual fund suddenly lands in the spotlight, the mob rushes in that direction. The trouble is, when everyone is making the same choices because "everyone" knows its the thing to do, then no one is in a position to profit. His caution seems to be this: True investors don't worry about missing the party; they worry about coming to the party unprepared.

2.True Investors are Patient -

Instead of being swept along in the enthusiasm of the crowd, true investors wait for the right opportunity. They say no more often than yes. Buffett learned that the ability to say no is a tremendous advantage for an investor.

3.True Investors are Rational -

They approach the market, and the world, from a base of clear thinking. They are neither unduly pessimistic nor irrationally optimistic; they are, instead, logical & rational.Buffett finds it odd that so many people feel optimistic when market prices are rising, pessimistic when prices are going down. Sell at lower prices & buy at higher prices - not the most profitable strategy.

True investors are pleased when the rest of the world turns pessimistic, because they see it for what it really is: a perfect time to buy good companies at bargain prices.
Buffett says "Pessimism is the most common cause of low prices. We want to do business in such an environment, not because we like the pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

(Source: The Warren Buffett Way by Robert G. Hagstrom)

What differentiates Buffett's investing approach from others?

noreply@blogger.com (Saveen Kaur Ahuja) — Sat, 06 Sep 2008 19:04:00 +0000

Buffett has amassed a multi-billion-dollar fortune. How did he do it?

When Buffett invests, he sees a business. Most investors see only a stock price. They spend far too much time and effort watching, predicting & anticipating price changes & far too little time understanding the business they are part owner of. Elementary as this may be, it is the root that distinguishes Buffet.
While other professional investors are busy studying capital asset pricing models, beta & modern portfolio theory, Buffett studies income statements, capital reinvestment requirements & the cash generating capabilities of his companies. His hands-on experience with a wide variety of businesses in many industries separates Buffett from all other professional investors.
According to Buffett, the investor & the businessperson should look at the company in same way, because they both want essentially the same thing. The businessperson wants to buy the entire company and the investor wants to buy portions of the company. Theoretically, the businessperson & the investor, to earn a profit, should be looking at the same variables.
If adapting Buffett's investment strategy required only changing perspective, then probably more investors would become proponents. however, applying Buffett's approach requires changing not only perspective but also how performance is evaluated and communicated. The traditional yardstick for measuring performance is price change: the difference between what you originally paid for a stock and its market price today.
In the long run, the market price of a stock should approximate the change in value of the business. However, in the short run, prices can swoop widely above and below a company's value for any number of logical reasons. The problem remains that most investors use these short-term price changes to gauge the success or failure of their investment approach, even though the changes often have little to do with the changing economic value of the business and much to do with anticipating the behavior of other investors.
Buffett believes it is foolish to use short-term prices to judge a company's success. Instead, he lets his companies report their value to him by their economic progress. Once a year, he checks several variables:
Return on beginning shareholder's equity.
Change in operating margins, debt levels and capital expenditure needs.
The company's cash-generating ability.
If these economic measurements are improving, he knows that the share price, over the long term, should reflect this. What happens to the stock price in the short run is inconsequential.
(Source: The Warren Buffett Way by Robert G. Hagstrom)

The Focus Investor's Golden Rules

noreply@blogger.com (Saveen Kaur Ahuja) — Sat, 06 Sep 2008 18:36:00 +0000

Concentrate your investments in outstanding companies run by strong management.
Limit yourself to the number of companies you can truly understand. Ten to twenty is good, more than twenty is asking for trouble.
Pick the very best of your good companies, and put the bulk of your investment there.
Think long term: five to ten years minimum.
Volatility happens. Carry on.
(Source:The Warren Buffett Way by Robert G Hagstrom.)

Purpose of Investing

noreply@blogger.com (Saveen Kaur Ahuja) — Wed, 03 Sep 2008 11:47:00 +0000

What is Investing? In simple terms, Investing is parking your extra funds in some security over a period of time for a return. In technical terms, it is the process of placing money in some medium such as stocks, bonds, real estate, etc., in expectation to receive some future benefits. More specifically, an investment is the current commitment of money for a specific period in order to derive future payments that will compensate for (1) the time the funds are committed (2) the expected rate of inflation and (3) the uncertainty of the future payments.
Before you start investing, you need to be sure of the reason for investing. Different people have different investment objectives and goals depending upon their source of income, spending habits, saving pattern, liquidity requirements and payment obligations. The purpose of investing can be -
To supplement your current income with more income through dividends or interest.
Shelter from taxes.
Saving money for major purchases such as a car or a house.
Planning for retirement.
Children's education.

Financial Quizzes

noreply@blogger.com (Saveen Kaur Ahuja) — Mon, 25 Aug 2008 02:36:00 +0000

To know your Financial IQ and to test your knowledge on aspects related to personal finance, you can take the following quizzes. They are quite interesting and insightful.

10 Financial Myths Quiz - Developed by the staffers at USA Today, it consists of 10 of the most common myths about personal finance.
True/False Quizzes - To test your knowledge regarding the fundamentals of Financial Management, you can take these True/False Quizzes. The quizzes are based on chapters of financial management.
Financial Planning Fundamentals - There are 7 quizzes which include topics such as Basics, Cash Management & Budgeting, Income tax, Insurance and Risk Management, Investments, Retirement and Estate Planning.
Rich Dad's Financial IQ Quiz - Rich Dad Poor Dad is one of the most highly recommended book for the people related to the financial sphere, especially individual investors. You can take take Rich Dad's Financial IQ Test. There are also quizzes on Real Estate and Debt.
Kiplinger.com - They have a collection of quizzes on personal finance and business.
Dave Barry's Quiz - For some fun and humor, you can take Dave Barry's Quiz to determine your current financial health. The result will surely make you laugh.

Financial Tenets

noreply@blogger.com (Saveen Kaur Ahuja) — Sat, 23 Aug 2008 17:20:00 +0000

Focus on return on equity, not earnings per share.
Calculate "owner earnings" to get a true reflection of value.
Look for companies with high profit margins.
For every dollar retained, has the company created at least a dollar of market value?

The test of economic performance, Buffett believes, is whether a company achieves a high earnings rate on equity capital (without undue leverage, accounting gimmickry, etc.), not whether it has consistent gains in earnings per share.
To measure a company's annual performance, Buffett prefers return on equity - the ratio of operating earnings to shareholders' equity.
To use this ratio, we need to make several adjustments.
First, all marketable securities should be valued at cost & not at market value, because values in the stock market as a whole can greatly influence the returns on shareholders' equity in a particular company. For example, if the stock market rose dramatically in one year, thereby increasing the net worth of a company, a truly outstanding performance would be diminished when compared with a larger denomination. Conversely, falling prices reduce shareholders' equity, which means that mediocre operating results appear much better than they really are.

Second, we must also control the effects that unusual items may have on the numerator of this ratio. Buffett excludes all capital gains & losses as well as extraordinary items that may increase or decrease operating earnings. He is seeking to isolate the specific annual performance of a business. He wants to know how well management accomplishes its task of generating a return on operations of the business given the capital it employs. That, he says, is the single best measure of management's economic performance.

Furthermore, Buffett believes that a business should achieve good returns on equity while employing little or no debt.Companies can increase their return on equity by increasing their debt-to-equity ratio. But Buffett believes good business or investment decisions will produce quite satisfactory economic results with no aid from leverage. Furthermore, highly leveraged companies are vulnerable during economic slowdowns.

Instead of focusing on cash flow, Buffett prefers to use what he calls "owner earnings" a company's net income plus depreciation, depletion, amortization, less the amount of capital expenditures & any additional working capital that might be needed.

Buffett's goal is to select companies in which each dollar of retained earnings is translated into atleast one dollar of market value.
Buffett believes that if he has selected a company with favorable long-term economic prospects run by able & shareholder-oriented managers, the proof will be reflected in the increased market value of the company. He uses a quick test: The increased market value should at the very least match the amount of retained earnings, dollar for dollar. If the value goes higher than the retained earnings so much the better.

(Source: The Warren Buffett Way by Robert G. Hagstrom)

Value Tenets

noreply@blogger.com (Saveen Kaur Ahuja) — Sat, 23 Aug 2008 07:15:00 +0000

1. Determine the value of the business.
2. Buy only when the price is right when the business is selling at a significant discount to its value.

Buffett's basic goal is to identify businesses that earn above-average returns, & then to purchase these businesses at prices below their indicated value. Graham taught Buffett the importance of buying a stock only when the difference between its price & its value represents a margin of safety. Today, this is still his guiding principle. The margin-of-safety principle assists Buffett in two ways. First, it protects him from downside price risk. If he calculates that the value of a business is only slightly higher than its per share prices, he will not buy the stock. He reasons that if the company's intrinsic value were to dip even slightly, eventually the stock price would also drop, perhaps below what he paid for it. But when the margin between price & value is large enough, the risk of declining value is less. If Buffett is able to purchase a company at 75 percent of its intrinsic value (a 25 percent discount) & the value subsequently declines by 10 percent, his original purchase price will still yield an adequate return.
The margin of safety also provides opportunities for extraordinary stock returns. If Buffett correctly identifies a company with above-average economic returns, the value of its stock over the long term will steadily march upward. If a company consistently earns 15 percent on equity, its share price will appreciate more each year than that of a company that earns 10 percent on equity.
"Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised."

(Source: The Warren Buffett Way by Robert G. Hagstrom)

Management Tenets

noreply@blogger.com (Saveen Kaur Ahuja) — Sat, 23 Aug 2008 05:06:00 +0000

Is Management rational?
Is Management candid with the shareholders?
Does Management resist the institutional imperative?

When considering a new investment or a business acquisition, Buffett looks very hard at the quality of management.

"When you have able managers of high character running business about which they are passionate, you can have a dozen or more reporting to you & still have time for an afternoon nap."

Buffett believes that management's most important act is the allocation of capital & that this allocation, over time, will determine shareholder value. If extra cash can be reinvested internally & produce a return higher than the cost of capital, then the company should retain all its earnings and reinvest them. That is the only logical course. Retaining earnings to reinvest in the company at less than the average cost of capital is completely irrational. It is also quite common.

A company that provides average or below-average investment returns but generates cash in excess of its needs has three options: (1) It can ignore the problem and continue to reinvest at below-average rates, (2) it can buy growth, or (3) it can return the money to shareholders. It is at this crossroad that Buffett keenly focuses on management. It is here that managers will behave rationally or irrationally.

Generally, managers who continue to reinvest despite below-average returns do so in the belief that the situation is temporary. They are convinced that, with managerial prowess, they can improve their company's profitability. Shareholders become mesmerized with management's forecast of improvements.
If a company continually ignores this problem, cash will become an increasingly idle resource and the stock price will decline. A company with poor economic returns, a lot of cash, and a low stock price will attract corporate raiders, which often is the beginning of the end of current management tenure. To protect themselves, executives frequently choose the second option instead: purchasing growth by acquiring another company.
Announcing acquisition plans excites shareholders and dissuades corporate raiders. However, Buffett is skeptical of companies that need to buy growth for two reasons, (1) it often comes at an overvalued price, and (2) a company that must integrate and manage a new business is apt to make mistakes that could be costly to shareholders.
In Buffett's mind, the only reasonable and responsible course for companies that have a growing pile of cash that cannot be reinvested at above-average rates is to return that money to the shareholders. For that, two methods are available: raising the dividend or buying back shares.
With cash in hand from their dividends, shareholders have the opportunity to look elsewhere for higher returns. On the surface, this seems to be be a good deal, and therefore many people view increased dividends as a sign of companies that are doing well. Buffett believes that this is so only if investors can get more for their cash than the company could generate if it retained the earnings and reinvested in the company.
The ultimate test of owners' faith is allowing management to reinvest 100 percent of earnings.
The second mechanism for returning earnings to the shareholders' is stock repurchase.
When management repurchases stock, Buffett feels that the reward is twofold. (1) If the stock is selling below its intrinsic value, then purchasing shares makes good business sense. Such transactions can be highly profitable for the remaining shareholders. (2) Secondly, when executives actively buy the company's stock in the market, they are demonstrating that they have the best interests of their owners at hand rather than a careless need to expand the corporate structure. That kind of stance sends good signals to the market, attracting other investors looking for a well managed company that increases shareholders' wealth.
Frequently, shareholders are rewarded twice; first from the initial open market purchase and then subsequently from the positive effect of investor interest on price.

Sometimes companies tend to manipulate annual reports with inflated numbers, half-truths, and deliberate obfuscations. Warren Buffett gives some important tips in this regard:

Beware of companies displaying weak accounting. In particular he cautions to watch out for companies that do not expense stock options. It's an obvious red flag that other less obvious maneuvers are also present.
Another red flag: "unintelligible footnotes." If you can't understand them, he says, don't assume it's your shortcoming; it's a favored tool for hiding something management doesn't want you to know.
"Be suspicious of companies that trumpet earnings projections and growth expectations." No one can know the future, and any CEO who claims to do so is not worthy of your trust.

(Source: The Warren Buffett Way by Robert G. Hagstrom)

Business Tenets

noreply@blogger.com (Saveen Kaur Ahuja) — Fri, 22 Aug 2008 08:57:00 +0000

1. Is the business simple and understandable?
2. Does the business have a consistent operating history?
3. Does the business have favorable long-term prospects?

According to Buffett, an investors financial success is correlated to the degree in which they understand their investment.
Buffett is able to maintain a high level of knowledge about Berkshire's businesses because he purposely limits his selection to companies that are within his area of financial & intellectual understanding which he calls it his "circle of competence." His logic is this: If you own a company in an industry you do not understand, it is impossible to accurately interpret developments & therefore impossible to make wise decisions.
"Invest within your circle of competence. Its not how big the circle is that counts, its how well you define the parameters."

When a company has demonstrated consistent results with the same type of products year after year, it is not unreasonable to assume that those results will continue.
Buffett avoids purchasing companies - (a) that are fundamentally changing direction because their previous plans were unsuccessful. (b) that are solving difficult problems.

According to Buffett, the economic world is divided into a small group of franchises & a much larger group of commodity businesses, most of which are not worth purchasing.
He defines a franchise as a company whose product or services (1) is needed or desired (2) has no close substitute, and (3) is not regulated.

Individually & collectively, these create what Buffett calls a moat – something that gives the company a clear advantage over others & protects it against incursions from the competition. The bigger the moat, the more sustainable, the better he likes it.

A franchise that is the only source of a product people want can regularly increase prices without fear of losing market share or unit volume. Often a franchise can raise its prices even when demand is flat & capacity is not fully utilized. This pricing flexibility is one of the defining characteristics of a franchise; it allows franchises to earn above-average returns on invested capital.

Another defining characteristic is that franchises posses a greater amount of economic goodwill, which enables them to better understand the effects of inflation.
Another is the ability to survive economic mishaps & still endure.

Conversely, a commodity business offers a product that is virtually indistinguishable from the products of its competitors. Commodity businesses, generally, are low –returning businesses & “prime candidates for profit trouble”. Since their product is basically no different from anyone else’s, they can compete only on the basis of price, which severely undercuts profit margins. The most dependable way to make a commodity business profitable, then, is to be the low cost provider. The only other time commodity businesses turn a profit is during periods of tight supply – a factor that can be extremely difficult to predict.

"I want to be in businesses so good even a dummy can make money."

(Source: The Warren Buffett Way by Robert G. Hagstrom)

Kaizen Philosophy

noreply@blogger.com (Saveen Kaur Ahuja) — Wed, 20 Aug 2008 19:45:00 +0000

I came across this philosophy while reading a book on World Class Manufacturing. The Kaizen principles to be adopted by companies for improvement can also be applied on an individual basis to improve one's life.

Kaizen is the name given by Japanese to the concept of “Continuous Incremental Improvement”. “Kai” means “change” & “Zen” means “good”.
“Kaizen” therefore means making changes for the better on a continual never-ending basis.

Kaizen strategy is the single most important concept in Japanese management – the key to Japanese competitive success. There are two elements that construct Kaizen, improvement/change for the better and ongoing/continuity. Kaizen involves on-going improvement involving every one – top management, managers and workers.
If Kaizen philosophy is in place in an organization, all aspects of the organization should be improving all the time.

Kaizen 5-step plan:

The five step plan is concerned with 5‘S’s namely – Seiri, Seiton, Seiso, Seiketsu & Shitsuke and it is the Japanese approach to implement Kaizen.

Seiri – means to Straighten – up or Sort
It involves differentiating between the necessary and unnecessary & discarding the unnecessary. In the same way, we should also realize what is important for us in life and what matters the most & then accordingly remove all the unimportant concerns, matters from our life.

Seiton – means putting things in order – Organize
Keep the things in order so that they are ready for use when required. Everything should be at its place and there should be place for everything.

Seiso – means to Clean Up
Japanese firms strongly believe in the slogan “keep the work place clean”. We should also keep our mind & environment clean &/or clear from bad thoughts & dirt.

Seiketsu – means personal cleanliness – Maintain
It refers to maintaining personal cleanliness. Some of the Japanese beliefs are – “There is a healthy mind in a healthy body”, “Cleanliness is necessary for Godliness”.

Shitsuke – means Discipline
Japanese believe that only with discipline in following the principles and procedures, one can contribute significantly to personal & organizational success. It is necessary to have discipline in all aspects of life to improve our quality of life.

The Fifteen Points To Look for in a Common Stock

noreply@blogger.com (Saveen Kaur Ahuja) — Thu, 20 Mar 2008 08:57:00 +0000

Philip A. Fisher, in his book, Common Stocks & Uncommon Profits, has suggested fifteen points on the basis of which your decision on making investments in common stocks should be based.

Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?
Does the management have a determination to continue to develop products or processes that will still further increase total sales potentials when the growth potentials of currently attractive product lines have largely been exploited?
How effective are the company's research and development efforts in relation to its size?
Does the company have an above-average sales organization?
Does the company have a worthwhile profit margin?
What is the company doing to maintain or improve profit margins?
Does the company have outstanding labor and personnel relations?
Does the company have outstanding executive relations?
Does the company have depth to its management?
How good are the company's cost analysis and accounting controls?
Are there other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competition?
Does the company have a short-range or long-range outlook in regard to profits?
In the foreseeable future will the growth of the company require sufficient equity financing so that the larger number of shares then outstanding will largely cancel the existing stockholder's benefit from this anticipated growth?
Does the management talk freely to investors about its affairs when things are going well but "clam up" when troubles and disappointments occur?
Does the company have a management of unquestionable integrity?

Creativity Check

noreply@blogger.com (Saveen Kaur Ahuja) — Mon, 17 Mar 2008 16:41:00 +0000

Are you in the right job?

Are you happy doing what you do to earn?

Creativity and Success in the work we do is directly related to our happiness in performing it.

So do you want to know how creative you are at work.

You could do your Creativity Check by taking the Creative Motivation Scale developed by Dr. E. Paul Torrance, a pioneer researcher in the field of creativity research. You could probably take a sheet of paper and a pen and mark "T" stands for True, if the statements below describes your attitudes and motivations and "F" stands for False, if it does not describe your attitudes or motivations.

I think financial reward is the best incentive to good work.
I am apt to pass up something I want to do when others feel that it isn't worth doing.
I find it easier to identify flaws in the ideas of others than to think of other possibilities myself.
It is hard for me to work intently on a problem for more than an hour or two at a stretch.
I enjoy work in which I must keep trying out new approaches.
I am fascinated by new ideas, whether or not they have practical value.
My mind often gets so caught up in a new idea that I am almost unable to think of anything else.
I thoroughly enjoy activity in which pure curiosity leads me from one thing to another.
I enjoy trying out a hunch just to see what will happen.
I never pay much attention to "wild" or "crack-pot" ideas.
I enjoy experiences where I can't know what is going to happen.
I feel upset when little things happen that I had not counted on.
I sometimes lose myself in experimenting with an idea that may have no practical value.
My interest is often caught up in ideas that may never lead to anyhing important.
The presence of a group stimulates me to think of new solutions.
When I get a new idea, I drop everything to try it out.
I sometimes get so intent on a new idea that I fail to do the things I ought to be doing.
I enjoy work in which I must change my course of action as I go along.
I am inclined to be "lost ot the world" when I get sarted on a new, original idea.
I enjoy tackling a job that I know involves many as yet unknown difficulties.
I never feel really qualified when taking on a new job.
I have a feeling of excitement when an idea I am working on begins to jell.
I enjoy staying up all night when I'm doing something that interests me.
I frequently try things which do not occur to others to try.
I like to find ways of converting necessities to advantages.
I am willing to risk suffering for the sake of possible growth.
I see many problems to work on, much work to do.
I sometimes become childishly enthusiastic about an apparently simple thing.
I usually put a great deal of energy and zeal into my work.
I resist accepting the accustomed ways of doing things unless I can prove to my own satisfaction that it is the best way.

So now lets check the score. Your score is the number of answers you marked "True."
The following answers are how an ideal 100% creative person would have answered.

Interpretation of Scores for Creative Motivation Scale
24 or higher: Exceptionally strong creative motivation, "hard to stop," not easily discouraged
21-23: Strong creative motivation
18-20: Above average in creative motivation
14-17: Average creative motivation
12-14: Below in creative motivation
11 or less: Weak creative motivation, hard to get motivated for creative thinking or expression

Company Analysis

noreply@blogger.com (Saveen Kaur Ahuja) — Sun, 16 Mar 2008 08:41:00 +0000

1. What is Company Analysis?

Company Analysis assists individual investors, managers & companies in evaluating opportunities, trends, market innovations as well as in selecting appropriate information solutions in order to make effective investment decisions.
The study covers information on the business structure, areas of operation, products & services offered by the company. It comprises SWOT analysis, key ratios & financials that aid the investors in gaining an insight into the company’s performance.

2. Why is Company Analysis done?

Company Analysis is done for the following reasons –
1. To know how the industry to which the company belongs is faring.
2. To know how the company has been faring over the past few years.
3. To analyze the correct price of the scrip & decide on whether it is a good buy or not by considering the financial performance of the company & certain key financial parameters like Earnings Per Share (EPS), Book Value (BV), current size of the equity, P/E Ratio, etc. for arriving at the estimated future price.

3. How does Analysis help?

The purpose of an analysis is to predict the performance of the company & thereby its future share price. At times, the company may not perform as per expectation or the general depressed sentiment of the stock market may push the price down. For that matter any investment in shares involves risk, as it cannot exclude future uncertainties. But the impact of such events can be reduced if stock is well analyzed & a good company has been selected.
Analysis therefore reduces the probability of making a wrong judgement
& thereby minimizes risk. The chances of buying a good scrip are much higher if investment is based on proper analysis rather than just buy & sell on speculation.

4.. What is the yardstick for analyzing a company?

They are-
1. Background
2. Promoters & Management
3. Capital History
4. Shareholding Pattern
5. Growth
6. Market Share
7. Technology
8. Marketing Capabilities
9. Export
10. Production & Capacity Utilization
11. Resource Availability
12. Human Resource Management
13. Profitability
14. Capital Structure
15. Liquidity
16. Activity Ratios
17. Expansion Plan
18. Diversification Plan
19. Strategic Plan
20. Products & Services

5. Sources Of Data for Company Analysis

The Analyst is expected to examine two major categories of information for assessing the intrinsic worth of the company’s stock. First is the factual position as revealed by the financial statements of the company, viz., internal information. Second are the external sources of information given by the researchers or security firms and financial journals, published from time to time in Dailies & Magazines or in handouts issued by the security firms.
The various sources of information are as follows –
1. Investment Magazines
2. Business Newspapers
3. Business Magazines
4. Investment Bulletins
5. Stock Exchange Directory
6. Annual Report of Companies
7. Computer Software
8. Websites - the Company’s official website.

Therefore, Company Analysis focuses on selecting companies with a sensible business plan, solid management & sound financials.

What type of an investor are you?

noreply@blogger.com (Saveen Kaur Ahuja) — Fri, 14 Mar 2008 15:18:00 +0000

While I was going through a book on Portfolio Management, I came across this interesting model which classifies investors on the basis of their level of confidence and the method of action. According to the Bielard, Biehl and Kaiser Five-Way model, there are 5 categories of investors.

1. Individualists: These are the confident and carefultype. They generally do not go to a consultant to manage their investments but do it by themselves, if they find enough time. But due the rapid changes taking place, they may also be eventually compelled to seek help from investmentcounsels.

2. Adventurers: Adventurers go for only big bets. Theyhave the resources to do so and are willing to take risks. The investments made by this type of investors are generally focused and not diversified. Since they are confident of what they do, they also don't require help.

3. Celebrities: Celebrities are those which go with theflow of the trend. They go for what is popular at that point of time. They do not have any expertise or opinion about investments. They are always occupied with the thought of being left out when everyone else is making profits. They usually lack the expertise and the confidence which makes them approach investment managers frequently for help and expect them to invest in what is popular without realizing that what is popular now has already realized its potential and does not offer scope for substantial profits in the future.

4. Guardians: Guardians are both anxious and careful.Since they lack confidence, they approach investment counsels. They generally emphasize on safety of the capital while making investments and a significant proportion of their investments is generally devoted to government securities and guaranted return investments. They choose their investment advisor with great care and stay with them for the rest of their lives.

5. Straight Arrows: These are halfway between completeconfidence and anxiety, and extreme carefulness and impetuousness. They can be aptly described as the average investors.

The Richest Man In Babylon

noreply@blogger.com (Saveen Kaur Ahuja) — Fri, 14 Mar 2008 15:08:00 +0000

Babylon was once the richest city in the world, known for its lavish houses, palaces and huge city walls. It created fertile farmland where once there had been desert through the use of irrigation. But as George Clason notes, it was also the cradle of modern finance: money as the means of exchange, tradeable property titles, promissory notes and all forms of lending and borrowing were all highly developed. Its prosperity continued for centuries because its inhabitants were allowed to make money freely. Even slaves, if they could earn a bit on the side, could eventually buy their way to freedom. Millions of readers have become familiar with George S. Clason's famous "Babylonian parables" through the distribution of these success secrets of the ancients by banks, insurance companies, investment houses and employers. Acclaimed as the greatest of all inspirational works on the subject of thrift and financial planning, these fascinating and informative stories have become a modern classic in their field.
The Richest Man In Babylon, written in a parable form, holds the secrets to acquiring money, keeping money, and making money earn more money.
Arkad, one of the richest man in Babylon shares his experiences and wisdom with his fellow citizens on making money.
Here is what Arkad has to say when his friends ask him the way to become rich.“A part of all you earn is yours to keep. Impress yourself with the idea. Fill yourself with the thought. Then take whatever portion seems wise. Let it be not less than one-tenth and lay it by. Arrange your other expenditures to do this if necessary. But lay by that portion first. Soon you will realize what a rich feeling it is to own a treasure upon which you alone have claim. As it grows it will stimulate you. A new joy of life will thrill you. Greater efforts will come to you to earn more. Then learn to make your treasure work for you. Make it your slave. Make its children and its children’s children work for you.Insure an income for thy future. Look thou at the aged and forget not that in the days to come thou also will be numbered among them. Therefore invest thy treasure with greatest caution that it be not lost. Usurious rates of return are deceitful sirens that sing but to lure the unwary upon the rocks of loss and remorse. Provide also that thy family may not want should the Gods call thee to their realms. For such protection it is always possible to make provision with small payments at regular intervals. Therefore the provident man delays not in expectation of a large sum becoming available for such a wise purpose.Counsel with wise men. Seek the advice of men whose daily work is handling money. A small return and a safe one is far more desirable than risk.Enjoy life while you are here. Do not overstrain or try to save too much. If one-tenth of all you earn is as much as you can comfortably keep, be content to keep this portion. Live otherwise according to your income and let not yourself get niggardly and afraid to spend. Life is good and life is rich with things worthwhile and things to enjoy.”

Arkad offers Seven Cures for A Lean Purse
1. Start thy purse to fattening
For every ten coins thou placest within thy purse take out for use but nine. Thy purse will start to fatten at once and its increasing weight will feel good in thy hand and bring satisfaction to thy soul.
2. Control thy expenditures
Budget thy expenses that thou mayest have coins to pay for thy necessities, to pay for thy enjoyments and to gratify thy worthwhile desires without spending more than nine-tenths of thy earnings
3. Make thy gold multiply
Put each coin to laboring that it may reproduce its kind even as the flocks of the field and help bring to thee income, a stream of wealth that shall flpw constantly into thy purse.
4. Guard thy treasures from loss
Invest only where thy principle is safe, where it may be reclaimed if desirable, and where thou will not fail to collect a fair rental. Consult with wise men. Secure the advice of those experienced in the profitable handling of gold. Let their wisdom protect thy treasure from unsafe investments
5. Make of thy dwelling a profitable investment
Own thy own home.
6. Insure a future income
Provide in advance for the needs of thy growing age and the protection of thy family.
7. Increase thy ability to earn
The seventh and last cure is to cultivate thy own powers, to study and become wiser, to become more skillful, to so act as to respect thyself. Thereby shalt thou acquire confidence in thyself to achieve thy carefully considered desires.

The Five Laws Of Gold
1. Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.
2. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
3. Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
4. Gold slippeth away from the man who invests it in business or purposes with which he is not familiar or which are not approved by those skilled in its keep.
5. Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.
In language as simple as that of the Bible, this book presents a sure path to prosperity and happiness. It offers an understanding of—and a solution to—your personal financial problems which will guide you successfully through a lifetime. The Richest Man in Babylon is a book you will want to read yourself, recommend to friends, and give to young people just starting out in life.
About the Author

George Samuel Clason was born in Louisiana, Missouri on November 7, 1874. He attended the University of Nebraska and served in the United States Army during the Spanish-American War. Beginning a long career in publishing, he founded the Clason Map Company of Denver, Colorado, and published the first road atlas of the United States and Canada. In 1926, he issued the first of a famous series of pamphlets on thrift and financial success, using parables set in ancient Babylon to make each of his points. These were distributed in large quantities by banks, insurance companies and employers and became familiar to millions, the most famous being "The Richest Man in Babylon." Today, these Babylonian parables have become a modern classic and are assembled in the book titled "The Richest Man in Babylon."

Richard Tanner Pascale

noreply@blogger.com (Saveen Kaur Ahuja) — Wed, 12 Mar 2008 09:00:00 +0000

Richard Tanner Pascale

A professor and a best selling author.He is known as an architect of corporate transformation programs. He also serves as an advisor to top management for several Fortune 100 size companies.

Richard Pascale came to prominence in the early 1980s at the time when Tom Peters and Bob Waterman's In Search Of Excellence, published in 1982, was aiming to redefine the route to corporate success.

His The Art of Japanese Management (coauthored with Anthony Athos), expounding the virtues of the McKinsey Seven-S model, has become a classic, and he has remained at the forefront of management thinking ever since.

Richard combines a rare synthesis of scholarly thinking and practical experience.

He encourages agility which enables businesses to reinvent themselves in the dynamic and volatile new economy.

He sets the rules for creating complex adaptive systems that are poised to constantly to rethink strategic initiatives and attain the renewal necessary for success.Comparing businesses to a living organisms he declares that they must 'adapt or die' in the economic ecosystem.

Life and Career -
Born in 1938, Pascale was educated at the Harvard Business School. He was heavily involved in the evolution of the Seven-S model developed by Peters and Waterman at McKinsey. He has worked closely with the CEO and top management teams of many large corporations including AT&T, General Electric, The New York Times, Marriot, British Petroleum, Ciba Geigy, Intel and Morgan Guaranty Bank. Additionally, he has conducted research at GM, Ford, Chrysler, British Airways, Motorola and Sony. His latest research focuses on the emergence of self-organisation.He was a member of the faculty at Stanford's Graduate School of business for 20 years and taught the most popular course in their MBA program - a course on organisational survival. Furthermore, Richard was a White House Fellow, Special Assistant to the Secretary of Labour and Senior Staff of a White House Task Force. In the latter capacity, he participated in the reorganisation of the Executive Office of the President. In October 1991, the BBC TV dedicated a program to his work and he is also the subject of a two-hour video on Transformation.

Key Concepts introduced by Pascale
The 7-S McKinsey Model
Agility
Chaos

Books written by Richard Tanner Pascale
The Art of Japanese Management.
Managing on the Edge: How Successful Companies Use Conflict to Stay Ahead.
Surfing the Edge of Chaos.