Invest in Incredible India

Saturday, February 25, 2006

BUY Reliance Capital Venture Limited(RCVL)

Reliance demerger schem was announced, one after another the demerged entities started listing in the Exchanges. I will now buy Relaince Capital Venture Limited and Reliance Communication Venture Limited. Reliance Capital Venture Limited is going to merge with Reliance Capital at 100:5 ratio, you will get 5 shares of Reliance Capital for every 100 RCVL held. Reliance Capital whose main business is Insurance, it has both life and general insurance arms, it operates a Mutual fund and have a equity holding arm called Reliance Private Equity which hold 44% share in DTDC Courier, AdLabs. Reliance Capital is also planning to enter retail stock brocking through it's online arm R-Trade. According to Warren Buffett, old economy companies like insurers and reinsurers will have a large margin of safety, so you can buy RCVL.

Reliance Communication Venture Limited, which is about to list by March 6 is also a good investment, it's the holding company of 4 telecomm companies including overseas takeover Flag telecom, it recently recovered from previous quarter losses. It is also a good buy.

Nifty PE Ratio is 18. Is Indian market expensive or not?

My friend once said to me before 3 months that NSE's S&P CNX Nifty's PE Ratio is 18 and doesn't look much expensive. But it's not the actual truth. NIFTY have more than 13 PSU stocks including Banks and Oil Companies, these stocks were out of favour stocks, FII can't buy a PSU stock and there are more limitation to these stocks and so they will trade at only 5,6,7,8 PEs, giving an average of NIFTY to 18, many good companies trade @ high PE, You have to remember that " GOOD THINGS IN LIFE WILL NOT COME CHEAP ", Though India is expensive it have lot of potential growing @ 7.5% in terms of GDP and there are still lot of space for stock market to go up. Buy good stocks and hold on for a long term, that's all you can do for now.

Radaan Mediaworks

Radaan Mediaworks, the maker of Tamil's mega hit mega serials like Chitti, Annamalai, Selvi etc. According to me these serials were the mostly watched serials in India, more than 3 crore Tamil People watch these serials. It has a wealthy Hinduathan Lever sponsorship. I still wonder why this company was trading under Trade for Trade segment in NSE at a price of Rs.6/- . while other competitors with low market share in business like Balaji Telefilms trade at a descent price. What is going on in the company or it's management is a myth, may be it's like Enron case.

So AVOID it.

K Sera Sera

K Sera Sera produces and distributes films it also has a television content arm.

K Sera Sera will not be a good stock for your portfolio,this stock does not have a margin of safety. It's like investing in a ship during the late 1500s when maritime activity was increasing,If your ship could make it across the Atlantic with supplies,sell them or trade them for commodities, and return with a valuable cargo, you could make a fortune but if the ship can't make it or sink you lose all. It's like betting on horse race with only 2 hores running, you win a lot or lose a lot. Like that you will get a huge return when a film hits and a huge loss when it fails.


So avoid K Sera Sera

Saturday, February 18, 2006

Invest in SUN TV IPO

Sun Network has a group of business in TV, Radio and publishing.(SUN TV,KTV,Sun Music,Sun News,Suryan FM,Surya TV, Kiran Tv,Gemini TV,Teja Tv,Udaya Tv,Udaya News,Ushe Tv,Aditya Tv,Teja News,Kal Fm,South Asia FM.)

but don't be overwhelmed looking at the list, if you subscribe to the IPO you are going to get a piece of shares of SUN TV,KTV,Sun Music,Sun News,Suryan FM,Surya TV, Kiran TV,Kal Fm and South Asia FM under one name Sun Tv limited.You are not going to get any interest on other entity.

But still you have a large opportunity as the shares you are going to get have a larger market share and they are the leader in their own category.

Subscribe to the issue which may be open in end of March or by mid April to get a good short term gain, you can also hang on with the share for long term it is a definite blue chip.


This stock has a very long lasting enemy called politics. Promoters(some exited) belongs to a south Indian Political party named DMK (Dravida Munnetra Kazagam) have to face many difficulties from the Tamil Nadu Ruling Party.The both political parties have their own news channels to blame each other.


Please read the Draft Red Herring Prospectus of the Issue which is available @ www.sebi.gov.in before investing.

Strategic Tips for Success

* If news that could potentially affect the price of a stock is
announced on TV, don’t run with all the amateurs, giving it an
upward throttle. The more experienced market makers and
traders will sit in a corner, biding their time until the stock is right
for shorting it and driving it back down. As the stock price
plummets, these amateurs that purchased it at the highest price
of the day now have no one to sell it to.


* Don’t ever trade with money that you can’t afford to lose such as
bill money, retirement money, or any other finances that could
affect your living style if you were to lose it. Only trade with a
stash of money that you have saved up for the specific purpose
of trading. Just as a few people have been very successful at
the stock markets, there are even more who have failed, losing
homes, cars and furniture, and nearly evreything. Don’t be one
of them!


* Never get into a trade that has a poor risk-to-reward ratio. You
should only consider trades that will bring you a decent profit,
otherwise, the risk isn’t worth it.


* Get out of the trade as soon as you realize the odds are against
you. The longer you wait, hoping that the tide will turn again in
your favor, the more money you could be losing. Plus, you
might find it very difficult to sell.

SIX SENSIBLE STOCK INVESTING RULES TO LIVE BY

Here are a few rules of smart investing that you can bank on:

1. Most quick-buck deals turn out to be losers. If it seems too good to
be true, it probably is.

2. Let your winners run . . . and cut your losses short.(Don't cut flowers and water the weeds)

3. A rising tide lifts all ships. Whenever possible, invest in a sector
that is appreciating.

4. A buy-and-hold strategy works only if you are investing in a solid
company and can wait out a bad market almost indefinitely.

5. If you don’t understand an investment, don’t buy it. You will be at
the mercy of your stockbroker and adviser. And they’re never
wrong, right?

6. There’s no such thing as a hot tip. Getting inside information may
seem like the next best thing to winning the lottery. But you could
go to jail if you act on it. And if it’s not the real inside dope, you
could lose all your money.

Friday, February 17, 2006

18 Common Mistakes Most Investors Make

1. Most investors never get past the starting gate because they do not use good selection criteria. They do not know what to look for to find a successful stock. Therefore, they buy fourth-rate "nothing-towrite- home-about" stocks that are riot acting particularly well in the marketplace and are not real market leaders.


2. A good way to ensure miserable results is to buy on the way down in price; a declining stock seems a real bargain because it's cheaper than it was a few months earlier. For example, an acquaintance of mine bought International Harvester at $19 in March 1981 because it was down in price sharply and seemed a great bargain. This was his first investment, and he made the classic tyro's mistake. He bought a stock near its low for the year. As it turned out, the company was in serious trouble and was headed, at the time, for possible bankruptcy.


3. An even worse habit is to average down in your buying, rather than up. If you buy a stock at $40 and then buy more at $30 and average out your cost at $35, you are
following up your losers and mistakes by 18 Common Mistakes Most Investors Make
putting good money after bad. This amateur strategy can produce serious losses and
weigh you down with a few big losers.


4. The public loves to buy cheap stocks selling at low prices per share. They incorrectly feel it's wiser to buy more shares of stock in round lots of 100 or 1000 shares, and this makes them feel better, perhaps more important. You would be better off buying 30 or 50 shares of higher-priced, sounder companies. You must think in terms of the number of dollars you are investing, not the number of shares you can buy. By the best merchandise available, not the poorest. The appeal of a $2, $5, or $10 stock seems irresistible. But most stocks selling for $10 or lower are there because the companies have either been inferior in the past or have had something wrong with them recently. Stocks are like anything else. You can't buy the best quality at the cheapest price! It usually costs more in commissions and markups to buy low-priced stock, and your risk is greater, since cheap stocks can drop 15% to 20% faster than most higher-priced stocks. Professionals and institutions will not normally buy the $5 and $10 stocks, so you have a much poorer grade following and support for these low-quality securities. As discussed earlier, institutional sponsorship is one of the ingredients needed to help propel a stock higher in
price.


5. First-time speculators want to make a killing in the market. They want too much, too fast, without doing the necessary study and preparation or acquiring the essential methods and skills. They are looking for an easy way to make a quick buck without spending any time or effort really learning what they are doing.


6. Mainstream America delights in buying on tips, rumors, stories, and advisory service recommendations. In other words, they are willing to risk their hard earned money on what someone else says, rather than on knowing for sure what they are doing themselves. Most rumors are false, and even if a tip is correct, the stock ironically will, in many cases, go down in price.


7. Investors buy second-rate stocks because of dividends or low price-earnings ratios. Dividends are not as important as earnings per share; in fact the more a company pays in dividends, the weaker the company may be because it may have to pay high interest rates to replenish internally needed funds that were paid out in the form of dividends. An investor can lose the amount of a dividend in one or two days' fluctuation in the price of the stock. A low P/E, of course, is probably low because the company's past record is inferior.


8. People buy company names they are familiar with, names they know. Just because
you used to work for General Motors doesn't make General Motors necessarily a good
stock to buy. Many of the best investments will be newer names you won't know very
well but could and should know if you would do a little studying and research.


9. Most investors are not able to find good information and advice. Many, if they had sound advice, would not recognize or follow it. The average friend, stockbroker, or advisory service could be a source of losing advice. It is always the exceedingly small minority of your friends, brokers, or advisory services that are successful enough in the market themselves to merit your consideration. Outstanding stockbrokers or advisory services are no more frequent than are outstanding doctors, lawyers, or baseball players.Only one out of nine baseball players that sign professional contracts ever make it to the big leagues. And, of course, the majority of ball players that graduate from college are not even good enough to sign a professional contract.


10. Over 98% of the masses are afraid to buy a stock that is beginning to go into new high ground, pricewise. It just seems too high to them. Personal feelings and opinions are far less accurate than markets.


11. The majority of unskilled investors stubbornly hold onto their losses when the losses are small and reasonable. They could get out cheaply, but being emotionally involved and human, they keep waiting and hoping until their loss gets much bigger and costs them dearly.


12. In a similar vein, investors cash in small, easy-to-take profits and hold their losers. This tactic is exactly the opposite of correct investment procedure. Investors will sell a stock with a profit before they will sell one with a loss.


13. Individual investors worry too much about taxes and commissions. Your key
objective should be to first make a net profit. Excessive worrying about taxes usually leads to unsound investments in the hope of achieving a tax shelter. At other times in the past, investors lost a good profit by holding on too long, trying to get a long-term capital gain. Some investors, even erroneously, convince themselves they can't sell because of taxes—strong ego, weak judgment. Commission costs of buying or selling stocks,especially through a discount broker, are a relatively minor factor, compared to more important aspects such as making the right decisions in the first place and taking action when needed. One of the great advantages of owning stock over real estate is the substantially lower commission and instant marketability and liquidity. This enables you to protect yourself quickly at a low cost or to take advantage of highly profitable new trends as they continually evolve.

14. The multitude speculates in options too much because they think it is a way to get rich quick. When they buy options, they incorrectly concentrate entirely in shorter-term, lower-priced options that involve greater volatility and risk rather than in longer-term options. The limited time period works against short-term option holders. Many options speculators also write what is referred to as "naked options," which are nothing but taking a great risk for a potentially small reward and, therefore, a relatively unsound investment procedure.


15. Novice investors like to put price limits on their buy-and-sell orders. They rarely place market orders. This procedure is poor because the investor is quibbling for eighths and quarters of a point, rather than emphasizing the more important and larger overall movement. Limit orders eventually result in your completely missing the market and not getting out of stocks that should be sold to avoid substantial losses.


16. Some investors have trouble making decisions to buy or sell. In other words, they vacillate and can't make up their minds. They are unsure because they really don't know what they are doing. They do not have a plan, a set of principles, or rules, to guide them and, therefore, are uncertain of what they should be doing.


17. Most investors cannot look at stocks objectively. They are always hoping and having favorites, and they rely on their hopes and personal opinions rather than paying attention to the opinion of the marketplace, which is more frequently right.


18. Investors are usually influenced by things that are not really crucial, such as stock splits, increased dividends, news announcements, and brokerage firm or advisory recommendations. If you hunger to become a winning investor, read the above items over very carefully several times and be totally honest with yourself. How many of the habits mentioned above describe your investment beliefs and practices? As Rockne would say, "These are the weaknesses which you must systematically work on until you can change and build them up into your strong points." Poor principles and poor methods will yield poor results. Sound principles and sound methods will, in time, create sound results.



- William J. O'Neil

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