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- Book Value of a Stock - How does it help?
- Stock investment for beginners
- Set financial goals before investing
| Book Value of a Stock - How does it help? Posted: 27 Sep 2014 06:23 AM PDT Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Leave a missed Call on 94 8300 8300 What is Book value of a share? Book value, or BV, is the value of each share of a company after all its liabilities have been paid off. In other words, it is the value of all the assets of a company that remains after all its liabilities have been deducted. This is different from the market value of a share which is the price of the stock of the company when it is traded on a bourse. The BV of a company's stock rarely equals the market price of the stock. If the book value of a company's share is more than its stock price, it indicates that investors are expecting a slide in the stock price as they believe the company's future earnings and potential for stock price appreciation are low. In contrast if the share price of a company is higher than its book value, then it is an indication that investors believe that the company's future earnings potential is strong and hence they are willing to pay a higher price for the stock than what is its accounting value. For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
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--------------------------------------------- Invest Mutual Funds Online
Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund Application Forms ---------------------------------------------
Best Performing Mutual Funds
B. Large and Midcap Funds Invest Online
C. Mid and SmallCap Funds Invest Online
D. Small and MicroCap Funds Invest Online
E. Sector Funds Invest Online
F. Tax Saver Mutual Funds Invest Online 1. ICICI Prudential Tax Plan 2. HDFC Taxsaver
G. Gold Mutual Funds Invest Online
H. International funds Invest Online 1. Birla Sun Life International Equity Plan A 2. DSP BlackRock US Flexible Equity 3. FT India Feeder Franklin US Opportunities 4. ICICI Prudential US Bluechip Equity 5. Motilal Oswal MOSt Shares NASDAQ-100 ETF | ||||
| Stock investment for beginners Posted: 27 Sep 2014 05:25 AM PDT Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Leave a missed Call on 94 8300 8300
The buoyancy in the stock market is luring first-time investors to explore the option of investing in equities. Here's a guide
With optimism abounding about the prospects of both the economy and the markets, first-time investors are entering the equity markets in droves. But investing in equities can be risky, especially when indices are close to their all-time high levels. Therefore, it is important to learn a thing or two before you enter the stock market.
The equity markets are not a route to quick riches. "Greed and speed are the worst enemies of sound investing. All direct investments in equities should be made with a time horizon of at least 3-5 years. If you ignore this tenet and adopt a high-churn strategy, you will soon come to grief. "You may get lucky on your first punt, but then, inevitably, you will buy something that will keep sinking
The equity markets are not a route to quick riches. Greed and speed are the worst enemies of sound investing. All direct investments in equities should be made with a time horizon of at least 3-5 years. If you ignore this tenet and adopt a high-churn strategy, you will soon come to grief. You may get lucky on your first punt, but then, inevitably , you will buy something that will keep sinking
Before you start investing in stocks, educate yourself about this asset class. Learn the ropes from an unbiased source with no conflict of interest. Many brokerage houses today run short term learning programmes on equity investing. Brokerages earn more when you transact more. Hence, they have a vested interest in teaching strategies that involve a high churn
Invest only what you can afford to lose. It will take about 2-3 years of regular work to get an idea of how to invest in stocks. Any loss incurred should be treated as the cost of learning. Stick to large-caps first First-time investors
should stick to large-cap stocks for two reasons. One, they are less volatile than mid and small-cap stocks. Two, a lot more information is available on largecaps. This minimises the probability of unpleasant surprises. The chances of falling prey to issues like aggressive accounting and cooked books are also lower among these stocks. Develop an exit strategy
Develop a clearly defined sell strategy even before you enter the markets. This decision framework should be based on a mix of fundamentals and valuation. If a stock's fundamentals remain sound but its price has fallen, you should buy more. If the fundamentals have declined while the valuation has run up, you should sell. If the fundamentals remain sound but the valuation has run up, you may perhaps book partial profits, and so on.
Stick to your circle of competence Stick to simple businesses whose functioning you can understand easily. The business should also ideally have a consistent operating history.
Warren Buffett avoids tech stocks where today's leader is soon replaced by another. Stick to companies whose products and services will not become obsolete anytime soon. He cites the example of Nokia, a good business that has today been overtaken by Samsung and Apple. Businesses like banking will not change much in the next 20-30 years,.
Invest in companies with moats Buy-and-hold type investors should select companies that enjoy sustainable competitive advantages. If a company enjoys outsized profits, a number of competitors enter the field and drive down profits. However, some companies manage to remain highly profitable for a long time because they have a strong competitive advantage over rivals. Opt for quality management
Watch out for management that doesn't act in the best interests of minority shareholders. Check the announcements made three-four years earlier by the management to see whether it has managed to bring those plans to fruition. This will give you an idea of its execution skills.
You should look up Sebi's website and trawl the Internet for bad news on promoters. He suggests avoiding companies where the promoter holding is less than 30%.
Don't invest in high-debt companies
When the economy is expanding, companies tend to overstretch themselves. Some take on more projects than they can handle. Others undertake costly acquisitions funded by debt. If the economy turns, the company's revenue may plummet, but the interest on debt will have to be paid. This can severely dent its bottom line. The debt:equity ratio and the interest coverage ratio are two parameters that indicate the degree of leverage. Buy at the right valuation
Usually retail investors enter the markets when they are at a high and valuations have already become stretched. Remember that the higher a stock's valuation, the lower the prospective returns from it. Study stocks and build a list of the ones you would like to buy. Work out the price points at which you would like to buy those stocks. Then wait patiently for prices to reach those levels.
Bear in mind that the stock that is cheap is not necessarily valuable.
It is better to pay a reasonable price for a quality business than a low price for a poor-quality business.
>First-time investors should avoid them for the simple reason that less information is available about these companies than about players which have been listed on the bourses for over 5-10 years. Besides, when the sentiment on the street is upbeat, promoters tend to price their IPOs expensively.
Chosen well, stocks can be a rewarding investment. Observe the comprehensive list of dos and don'ts listed above and your foray into the stock markets should be both safe and profitable.
For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
Leave a missed Call on 94 8300 8300
Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com
--------------------------------------------- Invest Mutual Funds Online
Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund Application Forms ---------------------------------------------
Best Performing Mutual Funds
B. Large and Midcap Funds Invest Online
C. Mid and SmallCap Funds Invest Online
D. Small and MicroCap Funds Invest Online
E. Sector Funds Invest Online
F. Tax Saver Mutual Funds Invest Online 1. ICICI Prudential Tax Plan 2. HDFC Taxsaver
G. Gold Mutual Funds Invest Online
H. International funds Invest Online 1. Birla Sun Life International Equity Plan A 2. DSP BlackRock US Flexible Equity 3. FT India Feeder Franklin US Opportunities 4. ICICI Prudential US Bluechip Equity 5. Motilal Oswal MOSt Shares NASDAQ-100 ETF | ||||
| Set financial goals before investing Posted: 27 Sep 2014 04:14 AM PDT Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Leave a missed Call on 94 8300 8300 Set financial goals before investing Asset allocation is a process where you need to answer a few short questions. These could include: What percentage of my portfolio should I invest in equities? How much of it should go into bonds? How much should I hold in cash? Know the difference Risk-taking capacity is determined by your financial position: You may not mind losing a lakh of rupees if your net worth is Rs 10 crore. But losing the same amount may be substantial if your net worth is Rs 10 lakh. Risk-taking ability, on the other hand, is independent of your financial position and has a lot to do with your mental ability to cope with losses. Simply put, determining your risk profile is asking yourself the amount of money you are willing to lose without getting sleepless nights. The losses you can bear before starting to get uncomfortable is a key determinant of your allocation to risky assets like equity . The age factor Your age could be a factor that can influence your risk taking ability. It has led to proliferation of models which suggest that investment in equity as a percentage of the portfolio should be 100 minus your age. That is, if your age is 40 years, you can have 60% of your portfolio in equities. However, it's important to remember that age is not the only determinant of one's risk profile as it does not take into account the emotional aspect of an individual. I have known many individuals who at an age of 25 do not like losing a single rupee and put all their money in bank fixed deposits. The way age influences asset allocation is that your requirement for steady income from financial assets increases once you retire. This requirement can be better met through income-yielding assets like fixed deposits, debt mutual funds, bonds, etc. Investment objective Investment objective is the other factor that influences asset allocation. It is important to determine whether the ideal asset allocation based on your risk profile is able to meet your stated investment objectives. Here, expected returns from various asset classes should be critically assessed. Long-term historical returns from an asset class can be a good starting point to make this assessment, keeping in mind the standard disclaimer that an asset's past performance is not an indicator of its future returns. In case your investment objective is not being met based on your asset allocation, the option is either to save more or be more realistic in terms of your goal. Time horizon Time horizon for investment is one key parameter to consider while deciding your asset allocation. Studies have shown that you have rarely lost money in a diversified portfolio of equities in India if your investment horizon is more than 10 years. So, the longer your time horizon for investing, the more you can invest in some of the riskier asset classes. Liquidity The need for liquidity is an important aspect to keep in mind while making any asset allocation plan. The portion of the portfolio that might be needed to take care of any financial exigencies needs to be kept in liquid funds or bank fixed deposits. The mistake most people make is to invest all their financial savings in equity or real estate, only to realize later that they need the money within six months. You might be lucky to make some decent returns in equity during that time frame. But, most of the times, it results in heartburn as you exit the investment at a loss. For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
Leave a missed Call on 94 8300 8300
Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com
--------------------------------------------- Invest Mutual Funds Online
Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund Application Forms ---------------------------------------------
Best Performing Mutual Funds
B. Large and Midcap Funds Invest Online
C. Mid and SmallCap Funds Invest Online
D. Small and MicroCap Funds Invest Online
E. Sector Funds Invest Online
F. Tax Saver Mutual Funds Invest Online 1. ICICI Prudential Tax Plan 2. HDFC Taxsaver
G. Gold Mutual Funds Invest Online
H. International funds Invest Online 1. Birla Sun Life International Equity Plan A 2. DSP BlackRock US Flexible Equity 3. FT India Feeder Franklin US Opportunities 4. ICICI Prudential US Bluechip Equity 5. Motilal Oswal MOSt Shares NASDAQ-100 ETF |
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