Disciplined investment plan can deliver the goods
Aashish Deshpande, 33, lives with his wife Gauri and their four-year-old daughter in Mumbai. The family’s gross annual income works out to Rs 40 lakh, while monthly household expenses amount to Rs 35,000, not including medical and recreational spends.
In addition, their home loan repayment entails an outgo of Rs 53,700 per month. Their investments primarily comprise equity assets and gold. Both are currently looking to buy life insurance cover. Their medium-term goal is to buy a bigger house in 2013.
The couple also wants to save for their daughter’s education. On the retirement front, Mr Deshpande wishes to move out of the city by the time he turns 45 and get into farming or set up a motel, besides saving enough to maintain the current lifestyle and fund annual vacations.
Basic financial planning
The family’s non-discretionary expenditure is close to `1,07,000 per month.
To provide for a four-six month emergency fund (for any sudden loss of income), they need to have approximately `5,00,000 in liquid funds.
Hence, an additional amount of `2,50,000 through the SIP route in a liquid fund needs to be arranged over five months.
Considering his outstanding loans, spouse’s income stream and goals for their daughter, a pure term cover of approximately `1 crore for the next 20 years should be a good start.
A health cover of at least `2 lakh for the family is also recommended.
Investment planning
If they were to follow a disciplined investment style, the family has a huge wealth-creating potential. For the young family, we would suggest an asset allocation of 70:30 in equity:debt.
His daughter is about to start higher school. In all probability, the fee amount has not been provided for in the budget. If he were to allocate Rs 1 lakh per year towards education, the amount should be adjusted against the monthly surplus of `1 lakh.
Not considering the recommended emergency fund, the family runs a monthly surplus of nearly `1 lakh. Besides the two equity SIPs of `10,000, we suggest that they invest up to `65,000 per month into equity assets.
An additional investment of up to `12,000 per month is recommended into debt products. For example, long-term debt funds, public provident fund (PPF), small savings schemes or bank FDs, which fetch a tax-effective return of 6% or more.
Daughter's education
Assuming that they would need `25 lakh when she turns 18, the couple needs to create a corpus of `56 lakh (inflation-adjusted) over the next 14 years.
Since it is a long-term goal, we would suggest allocating equity SIP of `18,000 towards this goal for the next 14 years. At a tax-effective rate of 9% annually, this should yield around `60 lakh then.
Besides, the PPF account (assuming investments of `70,000 per annum) should yield `20 lakh then
Annual vacation spend
Since this is an annual expense, we assume that the same is not invested and the money could be put into a liquid fund or even a low-risk monthly income plan to optimise earnings from the yearly float of about `1 lakh, which will be created towards this goal.
Bigger house: Based on current calculations and assuming same rates for the property, there would be a requirement of around `1.05 crore for the new house.
A 10-year loan at an interest rate of 9.75% would mean an EMI outgo of `1,37,000 per annum.
Since Mr Deshpande’s ultimate aim is to shift out of the city, it does not make sense to stress incomes for next 10 years.
Early retirement
The couple wishes to retire at the age of 45. Based on current cash flows and considering a 5% pa incremental savings over the next 12 years, they should be able to create an equity corpus of `2.32 crore.
The EPF should fetch `67.3 lakh in the 12th year (@6.5%p.a. CAGR). Hence, gross available retirement corpus is roughly `3 crore.
Calculation: Assuming that their living expenses (along with medical needs) amount to `42,000 per month, he would need to create a corpus of `2.5 crore (assuming that the corpus amount is invested in a basket of products that would earn a return of 9% annually). Hence, the retirement corpus gap will be NIL.
Conclusion: Careful investment planning should help the couple reach all their financial goals.
(Prerana Salaskar-Apte, certified financial planner, is a partner with financial planning firm, The Tipping Point)
http://economictimes.indiatimes.com/quickiearticleshow/6290306.cms
Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
Thursday 12 August 2010
How good is your financial adviser?
More insight
The industry has to do more to get younger people, who would benefit from good advice, coming though its doors. A survey conducted last year for the Industry Super Network, which represents the industry superannuation funds, showed only 19 per cent of those in households earning less than $100,000 had spoken to an adviser.
The survey found that those on moderate incomes do not seek advice until the age of 55, with only one in 10 seeking advice. Over the age of 55, the proportion rises to one in three. More than half of over-55s on any income seek advice, much of it relating to super.
Further insights into the way the big planning groups treat consumers is on the way. The Financial Ombudsman Service will, reportedly, release the names of planning firms involved in the highest number of consumer disputes.
Under the changes required of the service - outlined by the Australian Securities and Investments Commission in theFinancial Ombudsman Service 2009-10 annual report, to be released in late September - it will need to show the number of complaints received and the outcomes.
Case study 1: A lesson well learned
Jenny Garvey, 63, used to have a financial planner that she rarely heard from. When she tried to contact the financial planner, who was employed by a big financial institution, during the global financial crisis, she would have to wait. Then she would get a different person each time who did not know her and who was abrupt.
After a while, she realised it was pointless ringing them, yet she was paying fees. She was not getting the personalised advice she needed.
The retired teacher had an accident 16 years ago and has physical limitations. Since being with her current planner, Janne Ashton at Plan Protect, an authorised representative of AXA Financial Planning in Sydney's Frenchs Forest, she says she now knows what service is all about.
''I feel she respected my situation and no longer felt it was pointless coming to see someone for advice,'' Garvey says. ''I had assets but I did not have enough income.''
Garvey (pictured) wanted to be able to stay in her house for a little longer. ''I will downsize but I have young grandchildren and they come here,'' she says. ''I want to keep my house for a while until they are older and Janne has rearranged things so that I have cash flow.
''Within 48 hours of seeing Janne I had a complete plan - where I was going, what I had to do and what she was going to do. I now feel secure and my life is on track and I have more joy in my life as a result.''
Case study 2: Invaluable help
Rikki Bewley, 64, has just returned from swimming in the River Thames in England. She swam 14 kilometres in two days. She's a marathon runner and does tai chi. ''I love adventures. And if you are going to do all of that stuff you need a good financial planner,'' she says.
She first saw Joe Sacco, a financial planner with ANZ in Melbourne, 10 years ago. She did not have much money back then and after she received an inheritance, with the help of Sacco, has been able to support charities.
After training as an occupational therapist, Bewley spent 34 years working with chronically and terminally ill children, supporting their psychological and emotional well-being, before retiring in 1998.
She supports Animals Asia Foundation, a Hong Kong-based charity, which helps with animal welfare in Asia. She also supports Anti-Slavery International, a London-based charity that works to stop child labour.
She meets with Sacco several times a year and he also calls her on the phone. She says he explains everything to her and makes sure she understands.
Sacco remembers everything that is going on in her life and his people skills are terrific, she says.
Source: The Age
Stocks and interest rates tumbled overnight as investors around the world took a bleaker view of the US economy.
Offshore overnight
Stocks and interest rates tumbled overnight as investors around the world took a bleaker view of the US economy.
The Dow Jones industrial average fell 265 points, its biggest drop in six weeks, and all the major indices fell more than 2 per cent.
The yield on the Treasury's 10-year note fell to its lowest level since March 2009 as investors worried about the economyand avoiding stocks sought the safety of government securities.
Companies across a wide range of industries dropped.
Only 442 stocks rose on the New York Stock Exchange, while 2627 fell, a sign that investors expect all businesses to suffer if the economy continues to weaken.
Investor gloom deepened a day after the Federal Reserve said it would begin buying government bonds as a way to stimulate the economy.
News of slower industrial growth in China and a disappointing economic indicator in Japan helped send stocks plunging first in Asia, then in Europe and the US.
Investors got more bad news after trading ended in the US Cisco Systems Inc's revenue in the company's latest quarter fell short of analysts' expectations.
When markets settled, the Dow had dropped 265.42, or 2.5 per cent, at 10,378.83, its largest slide since it fell 268.22 on June 29.
The Standard & Poor's 500 index fell 31.59, or 2.8 per cent, to 1089.47, slipping below 1100, a key psychological level.
Falling and holding below that level could lead to more selling as computer-driven trading sets in.
The Nasdaq composite index fell 68.54, or 3.01 per cent, to 2208.63.
The Nasdaq tends to have the biggest losses when stocks are falling sharply because many of its component companies are smaller businesses that struggle the most in a weak economy.
Trading volume was fairly light on the NYSE at 1.2 billion shares.
Trading has been particularly slow, even by summer standards in recent days as uncertainty about the economy led many investors to exit the market completely.
Low volume also can exaggerate swings in the market.
The Chicago Board Options Exchange's Volatility Index rose 3.02, or 13.5 per cent, to 25.39.
The VIX is known as the market's fear gauge because a rise signals traders are expecting more drops in stocks.
European stock markets closed sharply lower on Wednesday after the US Federal Reserve warned that the US recovery was stalling and that it would take fresh stimulus measures to get it back on track.
Dealers said the warning only confirmed what many had feared after recent disappointing data, especially last week's worse-than-expected employment report, which stoked growing fears of a double-dip recession.
Data earlier on Wednesday also showed a marked slowdown in the Chinese economy, hitting sentiment badly in Asia and compounding fears that one of the world's growth engines might not be able to drag its peers forward.
At the same time, a Bank of England growth downgrade for the British economy added to the negative tone and offset recent strong eurozone figures.
Second quarter German growth figures, due on Friday and which are expected to be very good, will be closely examined for any sign of approaching weakness.
In London, the FTSE 100 index of leading shares closed down 131.2 points, or 2.44 per cent at 5245.21 points.
The German DAX lost 132.18 points, or 2.10 per cent, to 6154.07 and in France, the CAC 40 tumbled 102.29 points, or 2.74 per cent, to 3628.29.
How we fared yesterday
Australian shares joined a global retreat, dropping the most in nine weeks, as worries about the global economy outweighed a bumper profit result from the Commonwealth Bank. Banks, miners and information stocks led falls.
The benchmark S&P/ASX200 Index ended the day down 85.2 points, or 1.9 per cent, at 4455.5 points, while the broader All Ordinaries Index had fallen 83.3 points, or 1.8 per cent, to 4479.5 points.
Commodities
World oil prices fell sharply in line with tumbling global equity markets as investors set aside a positive International Energy Agency report on demand.
New York's main contract, light sweet crude for September, dropped $US2.23 to end the day at $US78.02.
London's Brent North Sea crude for delivery in September sank $US1.96 to $US77.64 a barrel.
News of falling US oil reserves and increased demand worldwide did little to push prices higher.
The US government reported on Wednesday that crude inventories fell by three million barrels last week to 355 million barrels.
Earlier, the Paris-based International Energy Agency raised its estimate for world oil demand this year by 80,000 barrels per day, and for next year by 50,000, on the basis that the global economy grows 4.5 per cent this year and 4.3 per cent in 2011.
The revised figures mean total demand this year would rise 1.8 million barrels per day or 2.2 per cent to 86.6 million. It would then rise by 1.3 million barrels per day or 1.5 per cent to 87.9 million next year, according to the IEA.
Economic recovery is pushing up estimates of oil demand this year and next, but there are dangers to growth in advanced nations and some emerging countries, the IEA added.
The IEA is the oil strategy and monitoring arm of the 31-member Organisation for Economic Co-operation and Development.
December gold was the only key metal to rise in overnight trading, closing up $US1.20 at $US1199.20 per fine ounce.
September silver closed down 25.6 US cents at $US17.902 per fine ounce, and September copper fell 5.85 US cents to $US3.2540 per pound.
October platinum fell $US16.40 to $US1,520.60, and September palladium also fell, by $US5.90 to $US464.70.
AAP, with BusinessDay
All Malaysians desire a clean, fair and reasonable government.
Wanted: A good, clean government. Any takers? – The Malaysian Insider
August 11, 2010
AUG 11 – The reports of Umno’s demise may be exaggerated but Malaysia’s grand old party is certainly in dire straits.
Malaysia finds itself a divided country.
It is a country addicted to easy money, a country where the rule of law has been trampled on and where institutions have been hollowed out because of Umno/Barisan Nasional (BN) leaders.
The class of Tun Abdul Razak Hussein, Tun Dr Ismail Abdul Rahman, Tun VT Sambanthan, Tun Tan Siew Sin, Tun Hussein Onn no longer exist.
They have been replaced by avaricious, chauvinistic leaders.
The prominent blogger Sakmongkol AK 47 argued in a posting today that PKR has little to offer.
Well, he is right.
After all they are a collection of Umno has-beens.
But Sakmongkol AK47 also argues that PKR is merely a smorgasbord of fired up individuals united only by a desire to throw out corrupt and abusive leadership.
He claims that the few good men left in Umno are also fired by the same desire.
Therefore Malaysians should pick politicians who are:
1) men and women of integrity;
2) who truly believe that Malaysia belongs to every citizen;
3) who have a healthy respect for law and order and the rule of law;
4) who don’t speak from both sides of their mouth;
5) who are unafraid to stand up for principles; and
6) who detests playing the race card.
Now if Umno can produce such leaders, then well and good.
But there is little evidence for Malaysians to be hopeful that the present crop of Umno/BN leaders can hold a candle to the towering individuals of the past.
For sure the present bunch of Umno Youth leaders don’t even meet minimum standards.
It is pointless labelling PAS as conservative mullahs or DAP as Chinese chauvinists.
Malaysians just want good, clean government.
They are not interested in labels.
http://www.themalaysianinsider.com/breakingviews/article/wanted-a-good-clean-government.-any-takers-the-malaysian-insider/
August 11, 2010
AUG 11 – The reports of Umno’s demise may be exaggerated but Malaysia’s grand old party is certainly in dire straits.
Malaysia finds itself a divided country.
It is a country addicted to easy money, a country where the rule of law has been trampled on and where institutions have been hollowed out because of Umno/Barisan Nasional (BN) leaders.
The class of Tun Abdul Razak Hussein, Tun Dr Ismail Abdul Rahman, Tun VT Sambanthan, Tun Tan Siew Sin, Tun Hussein Onn no longer exist.
They have been replaced by avaricious, chauvinistic leaders.
The prominent blogger Sakmongkol AK 47 argued in a posting today that PKR has little to offer.
Well, he is right.
After all they are a collection of Umno has-beens.
But Sakmongkol AK47 also argues that PKR is merely a smorgasbord of fired up individuals united only by a desire to throw out corrupt and abusive leadership.
He claims that the few good men left in Umno are also fired by the same desire.
Therefore Malaysians should pick politicians who are:
1) men and women of integrity;
2) who truly believe that Malaysia belongs to every citizen;
3) who have a healthy respect for law and order and the rule of law;
4) who don’t speak from both sides of their mouth;
5) who are unafraid to stand up for principles; and
6) who detests playing the race card.
Now if Umno can produce such leaders, then well and good.
But there is little evidence for Malaysians to be hopeful that the present crop of Umno/BN leaders can hold a candle to the towering individuals of the past.
For sure the present bunch of Umno Youth leaders don’t even meet minimum standards.
It is pointless labelling PAS as conservative mullahs or DAP as Chinese chauvinists.
Malaysians just want good, clean government.
They are not interested in labels.
http://www.themalaysianinsider.com/breakingviews/article/wanted-a-good-clean-government.-any-takers-the-malaysian-insider/
Wednesday 11 August 2010
Never trust an Analyst or an Investment Banker
The reason given being they are self-serving. Although they will give you the impression that your interest is paramount, they too benefit from pushing their investment products.
One of the most interesting thing I came across which is worth sharing here is understanding the job of the analyst. We come across analysts' reports regularly. In the present cyclical bull market many of these reports are very bullish. However, recall how many of these analysts' reports were bearish, downgrading the stocks, even when the market was already at the depth of the recent severe bear market.
The most important point to take home is that the MAIN job of an analyst is not to analyse!!! It never was and neither is even today. Hear this, and repeat this often. Keep this in your mind whenever you read an analyst report. (Of course, ze Moolah's blog is an exception, he is not an analyst. Tan Teng Boo, Dali's blog and a few others are in this category. ;-0 )
In fact, an analyst is a salesman. His present job description is very much that of a stock-pusher. This is not unlike that of a drug dealer pushing drug. Of course, this is a rather poor comparison, but you do get the point.
They are there to dress up the report on the company to make it nice so that investors can buy or sell their products they have an interest in.
Who are these present analysts? Are they the white haired chaps who have worked for many years on the job. Most unlikely. They are often perhaps the young 23 to 25 year recently graduates from elite universities who have been given the task to produce the analyst reports on the various companies. They certainly lack the experience of the market.
However, let us not totally dismiss the roles of the analysts and the investment bankers in our investing. Of course, do read the reports but always invest based on your personal opinion and research.
One of the most interesting thing I came across which is worth sharing here is understanding the job of the analyst. We come across analysts' reports regularly. In the present cyclical bull market many of these reports are very bullish. However, recall how many of these analysts' reports were bearish, downgrading the stocks, even when the market was already at the depth of the recent severe bear market.
The most important point to take home is that the MAIN job of an analyst is not to analyse!!! It never was and neither is even today. Hear this, and repeat this often. Keep this in your mind whenever you read an analyst report. (Of course, ze Moolah's blog is an exception, he is not an analyst. Tan Teng Boo, Dali's blog and a few others are in this category. ;-0 )
In fact, an analyst is a salesman. His present job description is very much that of a stock-pusher. This is not unlike that of a drug dealer pushing drug. Of course, this is a rather poor comparison, but you do get the point.
They are there to dress up the report on the company to make it nice so that investors can buy or sell their products they have an interest in.
Who are these present analysts? Are they the white haired chaps who have worked for many years on the job. Most unlikely. They are often perhaps the young 23 to 25 year recently graduates from elite universities who have been given the task to produce the analyst reports on the various companies. They certainly lack the experience of the market.
However, let us not totally dismiss the roles of the analysts and the investment bankers in our investing. Of course, do read the reports but always invest based on your personal opinion and research.
Introductory Lecture to The Investment Process
http://video.google.com/videoplay?docid=8694846935046925487&hl=en&emb=1#docid=6890486866020900949
Diversification, risk, asset classes, asset allocation, active and passive investment strategies, primary and secondary markets.
Bullbear Stock Investing Notes
Diversification, risk, asset classes, asset allocation, active and passive investment strategies, primary and secondary markets.
Bullbear Stock Investing Notes
Tuesday 10 August 2010
Introductory Lectures to Business Cycles
Business Cycles, Part 0 of 4- Interest and Capital,
Prof. Krassimir Petrov
Prof. Krassimir Petrov
1:02:36 - 3 years ago
The theory of Interest, Production, and Capital is the foundation for understanding Economic Growth and Business Cycles.http://video.google.com/videoplay?docid=-6484061137769305763&hl=en&emb=1#docid=-5669706349089810530
Business Cycles, Part 1 of 4 - Introduction,
Prof. Krassimir Petrov
Prof. Krassimir Petrov
1:06:14 - 3 years ago
An introductory 65 min lecture describing the nature of business cycles. Explains business fluctuations, phases, periodicity, comovement, persistence, amplitude, cyclicality, and introduces major business cycle theories.
http://video.google.com/videoplay?docid=8415267688491832655#
Business Cycles, Part 2 of 4 - Business Cycle Indicators, Prof. Krassimir Petrov
1:02:32 - 3 years ago
The lecture explains the behavior of 18 different procyclical leading or lagging macroeconomic variables/indicators throughout the business cycle.
http://video.google.com/videoplay?docid=5546452117626581217#
Business Cycles, Part 3 of 4 - The Austrian Boom,
Prof. Krassimir Petrov
1:12:14 - 3 years ago
Explaining the Boom - what happens and why; characteristics of booms; why booms cannot last forever; why they inevitably turn to bust. The next part,part 4 is devoted to the "Bust".
BusinessCycles, Part 4 of 4 - The Austrian Bust, Prof. Krassimir Petrov
1:06:20 - 3 years ago
Crisis, Bust, Deflationary Depression, Stagflation, and other fundamental Austrian School concepts.
Introductory Lectures to Technical Analysis
http://video.google.com/videoplay?docid=-6926061697255437758&hl=en&emb=1#docid=3236390700554076825
Investment Analysis, Lecture 01 - The Essentials of Investments
Introductory lecture covering Chapter 1 from the Bodie, Kane, Marcus "Essentials of Investments". The course will continue with Technical Analysis in next 4-5 lectures.
http://video.google.com/videoplay?docid=-6926061697255437758&hl=en&emb=1#docid=3522828464732950634
Investment Analysis, Lecture 02 - Technical Analysis, Introduction
Introduces important concepts in technical analysis necessary to understand and read charts.
http://video.google.com/videoplay?docid=-6926061697255437758&hl=en&emb=1#docid=2468906696139555918
Investment Analysis, Lecture 03 - Technical Analysis
Continues the discussion of basic concepts in technical analysis and proceeds with various charts and chart formations.
http://video.google.com/videoplay?docid=8845215362536133716#
Investment Analysis, Lecture 04 - Technical Analysis
Provides many real-world examples of applying technical analysis with proper interpretations.
http://video.google.com/videoplay?docid=8845215362536133716#docid=3573708715720331479
Investment Analysis, Lecture 05
Continues with real world examples of technical analysis.
Investment Analysis, Lecture 01 - The Essentials of Investments
Introductory lecture covering Chapter 1 from the Bodie, Kane, Marcus "Essentials of Investments". The course will continue with Technical Analysis in next 4-5 lectures.
http://video.google.com/videoplay?docid=-6926061697255437758&hl=en&emb=1#docid=3522828464732950634
Investment Analysis, Lecture 02 - Technical Analysis, Introduction
Introduces important concepts in technical analysis necessary to understand and read charts.
http://video.google.com/videoplay?docid=-6926061697255437758&hl=en&emb=1#docid=2468906696139555918
Investment Analysis, Lecture 03 - Technical Analysis
Continues the discussion of basic concepts in technical analysis and proceeds with various charts and chart formations.
http://video.google.com/videoplay?docid=8845215362536133716#
Investment Analysis, Lecture 04 - Technical Analysis
Provides many real-world examples of applying technical analysis with proper interpretations.
http://video.google.com/videoplay?docid=8845215362536133716#docid=3573708715720331479
Investment Analysis, Lecture 05
Continues with real world examples of technical analysis.
Investment Analysis, Lecture 06 - Technical Analysis cont.
1:00:48 - 2 years ago
Continued with practical interpretations of charts.http://video.google.com/videoplay?docid=2688538007524052761#
Introductory Lecture to Portfolio Theory
http://video.google.com/videoplay?docid=8694846935046925487&hl=en&emb=1#docid=4234873094754328164
Investments - Lecture 01 - Portfolio Theory 01
http://video.google.com/videoplay?docid=-5661465017176597915&hl=en&emb=1#docid=8694846935046925487
Investments - Portfolio Theory 02
http://video.google.com/videoplay?docid=-5661465017176597915&hl=en&emb=1#
Investments - Portfolio Theory 03
http://video.google.com/videoplay?docid=-5661465017176597915&hl=en&emb=1#docid=5497259751608833266
Investments - Portfolio Theory 04
http://video.google.com/videoplay?docid=-5661465017176597915&hl=en&emb=1#docid=6247815643869225195
Investments - Portfolio Theory 05
Investments - Lecture 01 - Portfolio Theory 01
http://video.google.com/videoplay?docid=-5661465017176597915&hl=en&emb=1#docid=8694846935046925487
Investments - Portfolio Theory 02
http://video.google.com/videoplay?docid=-5661465017176597915&hl=en&emb=1#
Investments - Portfolio Theory 03
http://video.google.com/videoplay?docid=-5661465017176597915&hl=en&emb=1#docid=5497259751608833266
Investments - Portfolio Theory 04
http://video.google.com/videoplay?docid=-5661465017176597915&hl=en&emb=1#docid=6247815643869225195
Investments - Portfolio Theory 05
Investments - Portfolio Theory 06
53:18 - 1 year ago
Capital Asset Pricing Model (CAPM), Part 2.http://video.google.com/videoplay?docid=-6988926808213550755#
Investments - Portfolio Theory 07
1:04:18 - 1 year ago
Efficiency, efficient markets, the efficiency hypothesis, random walk, implications of market efficiency.http://video.google.com/videoplay?docid=-6988926808213550755#docid=-9063491810101872769
Introductory Lecture to Fundamental Analysis
Investments - Fundamental Analysis, Lecture 1 - Introduction
1:08:47 - 1 year ago
Introduces the role of fundamental analysis in investing; explains concepts such as fundamentals and valuation; and begins to develop basic concepts from macro-investment analysis.
http://video.google.com/videoplay?docid=3236390700554076825#docid=1129162666296607058
Investments - Fundamental Analysis - Lecture 2 - Interest Rates
1:02:21 - 1 year ago
The role of interest rates in fundamental analysis. The fundamental determinants of interest rates; liquidity effect; Fisher effect.http://video.google.com/videoplay?docid=1340565254021002003#
Monday 9 August 2010
Introductory Lecture to Essentials of Investment
Investments - Lecture 01 - Introduction
52:24 - 1 year ago
This is an introductory lecture in Investments. It reviews the very basics, mostly elementary concepts that should be familiar from an introductory course in finance or corporate finance. It follows Chapter 1 from "Investments" by Bodie et al.
http://video.google.com/videoplay?docid=8694846935046925487&hl=en&emb=1#docid=-6926061697255437758
Investments - Lecture 02 - The Investment Process
29:45 - 1 year ago
Continues to cover Chapter 1 from "Investments" by Bodie, Kane, and Marcus. Diversification, risk, asset classes, asset allocation, active and passive investment strategies, primary and secondary markets.
http://video.google.com/videoplay?docid=8694846935046925487&hl=en&emb=1#docid=6890486866020900949
Investments - Lecture 03 - Financial Instruments
1:31:19 - 1 year ago
Covers in great detail the topic of financial instruments from Bodie, Kane, and Marcus, the first half of Chapter 2. The topic will continue in Lecture 4.http://video.google.com/videoplay?docid=3927600563840580683#
Investments - Lecture 04 - Mortgages and Stocks
1:10:47 - 1 year ago
Explains the basics of mortgages and equities.http://video.google.com/videoplay?docid=1508378369026087071#
Reference:
http://vimeo.com/10950693
Sunday 8 August 2010
iCap Portfolio of Stocks (2010 Annual Report, FYE 31.5.2010)
iCap 2010 Annual Report
Latest Portfolio for FY ending 31.5.2010
https://spreadsheets.google.com/pub?key=0AuRRzs61sKqRdE9BVE1USlBHQm9GdnMxbmtGdDl4THc&authkey=CNyN9NsH&hl=en&output=html
Latest Portfolio for FY ending 31.5.2010
https://spreadsheets.google.com/pub?key=0AuRRzs61sKqRdE9BVE1USlBHQm9GdnMxbmtGdDl4THc&authkey=CNyN9NsH&hl=en&output=html
Why We Look at the PEG Ratio
Why We Look at the PEG Ratio
One of the more popular ratios stock analysts look at is the P/E, or price to earnings, ratio. The drawback to a P/E ratio is that it does not account for growth. A low P/E may seem like a positive sign for the stock, but if the company is not growing, its stock's value is also not likely to rise. The PEG ratio solves this problem by including a growth factor into its calculation. PEG is calculated by dividing the stock's P/E ratio by its expected 12 month growth rate.
One of the more popular ratios stock analysts look at is the P/E, or price to earnings, ratio. The drawback to a P/E ratio is that it does not account for growth. A low P/E may seem like a positive sign for the stock, but if the company is not growing, its stock's value is also not likely to rise. The PEG ratio solves this problem by including a growth factor into its calculation. PEG is calculated by dividing the stock's P/E ratio by its expected 12 month growth rate.
For more information on utilizing the PEG ratio, visit Learning Markets.
How to Score the PEG Ratio
- Pass—Give the PEG Ratio a passing score if its value is less than 1.0.
- Fail—Give the PEG Ratio a failing score if its value is greater than 1.0.
Looking at the PEG ratio for WMT in above chart, WMT should receive a failing score. You can see that the PEG Ratio is above 1.0.
PEG Ratio: FAIL
Read more: http://www.nasdaq.com/reference/dozen/peg-ratio.aspx#ixzz0w08v7wfA
PEG Ratios
Other examples
Bullbear Stock Investing Notes
Country P/E Ratios and GDP Growth
Jun. 23, 2010
If you take stock markets' price to earnings ratio and divide it by their expected growth, then interestingly China and Russia, two of the BRICs turn up as the cheapest stock markets based on this PEG (PE/Growth) method. Obviously growth estimates can be wrong, but this at least opens up the debate:
Bespoke:
Above are the PEG ratios for 22 countries around the world. For each country, we use the trailing 12-month P/E ratio for the index shown as well as estimated 2010 GDP growth. As shown, Russia and China have the lowest country PEG ratios at 1.86 and 1.90, respectively. Russia has a very low P/E at 8 and decent estimated GDP growth at 4.3%. China, on the other hand, has a rather high P/E ratio at 19.24, but its GDP growth is also very high at 10.10%. The US is right in the middle of the pack with a PEG of 5.07. Our neighbors to the south rank just above the US with a PEG of 3.85, while our neighbors to the north rank just below the US at 5.67.
http://www.businessinsider.com/russia-is-the-cheapest-market-based-on-growth-2010-6#ixzz0w02Qccax
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January 28, 2010
Many investors use the PEG Ratio as a valuation tool these days because it puts a company's growth prospects into perspective along with the widely followed price to earnings ratio. The PEG ratio is the P/E Ratio over the Growth Rate, and a PEG of less than one is generally considered good.
In this regard, Bespoke created "PEG" ratios for a number of countries using the P/E ratio of each country's main equity market index along with 2010 estimated GDP growth rates. Just as with stocks, the lower the country PEG, the more attractive.
As shown, India has the best PEG out of the countries we analyzed. It has a P/E ratio of 26.19 and estimated 2010 GDP growth of 8%. While its P/E isn't as low as a lot of countries, its growth rate is very high. China ranks 2nd with a PEG of 3.66.
The U.S. ranks in the middle of the pack with a P/E of 24.53 and estimated GDP growth of 2.6%.
At the bottom of the list sits Switzerland, Italy, and the UK, while Australia, Japan, and Spain have negative PEGs due to either a negative P/E Ratio or negative estimated GDP growth.
http://protect-your-assets.blogspot.com/2010/01/country-pe-ratios-and-gdp-growth.html
Bullbear Stock Investing Notes
Economic PEG = (P/E) / (100*GDP growth)
If you take stock markets' price to earnings ratio and divide it by their expected growth, then interestingly China and Russia, two of the BRICs turn up as the cheapest stock markets based on this PEG (PE/Growth) method. Obviously growth estimates can be wrong, but this at least opens up the debate:
Bespoke:
Above are the PEG ratios for 22 countries around the world. For each country, we use the trailing 12-month P/E ratio for the index shown as well as estimated 2010 GDP growth. As shown, Russia and China have the lowest country PEG ratios at 1.86 and 1.90, respectively. Russia has a very low P/E at 8 and decent estimated GDP growth at 4.3%. China, on the other hand, has a rather high P/E ratio at 19.24, but its GDP growth is also very high at 10.10%. The US is right in the middle of the pack with a PEG of 5.07. Our neighbors to the south rank just above the US with a PEG of 3.85, while our neighbors to the north rank just below the US at 5.67.
http://www.businessinsider.com/russia-is-the-cheapest-market-based-on-growth-2010-6#ixzz0w02Qccax
----
January 28, 2010
Many investors use the PEG Ratio as a valuation tool these days because it puts a company's growth prospects into perspective along with the widely followed price to earnings ratio. The PEG ratio is the P/E Ratio over the Growth Rate, and a PEG of less than one is generally considered good.
In this regard, Bespoke created "PEG" ratios for a number of countries using the P/E ratio of each country's main equity market index along with 2010 estimated GDP growth rates. Just as with stocks, the lower the country PEG, the more attractive.
As shown, India has the best PEG out of the countries we analyzed. It has a P/E ratio of 26.19 and estimated 2010 GDP growth of 8%. While its P/E isn't as low as a lot of countries, its growth rate is very high. China ranks 2nd with a PEG of 3.66.
The U.S. ranks in the middle of the pack with a P/E of 24.53 and estimated GDP growth of 2.6%.
At the bottom of the list sits Switzerland, Italy, and the UK, while Australia, Japan, and Spain have negative PEGs due to either a negative P/E Ratio or negative estimated GDP growth.
http://protect-your-assets.blogspot.com/2010/01/country-pe-ratios-and-gdp-growth.html
Bullbear Stock Investing Notes
Economic PEG = (P/E) / (100*GDP growth)
Value Investment is a Risk-Averse Approach
Conclusion
Fundamental Analysis is a structured and formal approach to research on a stock's value and its potential growth. This analytical procedure facilitates the identification of overvalued and undervalued stocks relative to their earnings potential, dividend income potential and to their asset values, against the backdrop of the economic and industry environment. On the basis of the research, investment decisions are made such that the odds are stacked in favour of the Fundamental Analyst.
FINDING INFORMATION
- There are various sources of information. The most accessible are:
- The company’s annual report
- SGX’s Pulses Magazine
- The Company’s Website
- ShareInvestor.com
- Yahoo.com
- Reuters.com
- Bloomberg.com
- Your friendly stockbroker’s research report
EVALUATING THE INFORMATION
Cash flow Evaluation – this indicates the long-term viability of a business
- Profit Growth. Can the company and its business grow revenue (sunset, star, Porter’s model)
- Managing debt and expenses e.g., Keppel Corp manages its debt well and SIA its expenses.
- Value Investing. Undervalued situations use discount to book value where share price is compared to the stock’s intrinsic value
- Cash Cow. Look for cash generating companies, and dividend policy, eg Haw Par Healthcare, SPH, Chuan Hup, SembMarine, Keppel Corp
- Management, governance, execution, good and poor (foul-up)
PER SHARE VALUATION
Often, analysts and fund managers look at stock valuation. The most common terms used are :
- Earnings per share or EPS
- Price to earnings ratio or PER
- Price earnings ratio to growth or PEG
- Net tangible asset per share or NTA
- Dividend per share or DPS
- Dividend yield per share or DPS/price
http://www.sias.org.sg/beginnerguide/03_02_Fundamental_Analysis.html
Bullbear Stock Investing Notes
How China's Dollar Peg Works
http://www.marketoracle.co.uk/Article8320.html
Bullbear Stock Investing Notes
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