My mom usually asks me about my savings, when I say the amount i have in my savings and investments she always wonders what this guy is doing with the money. I have been earning for past 3.5 years and if i look at the amount i have saved and invested, even i wonder where is my hard(!) earned money gone. I usually think myself as a guy with the controlled spending habit. Being not used to cigar, liquor, costly GFs, I thought i ought be saving good portion of my salary.
Last week Sai introduced me a finance consultant. He did a quick analysis on my monthly savings and expenditures (Cashflow analysis) - they call this process as 'Financial Health Check up' in a fancy way. So I had a financial check up for 15 mins. I then realized things that I haven't even thought as a monthly expenditure.
He basically converted all the savings, liabilities(even if you pay yearly once) into monthly saving and expenditure. I noticed half of my monthly salary is going into meeting personal expenditure and paying bills. Then I realized no wonder in having my purse very less bulgier. The point I amazed I didn't even write down the money going out of my pocket. Also realized with the kind of flow I am going, surely I will not attain the short term and long term goals I want achieve.
I generally disapprove owning the credit card; I make out a point "spend within your limit" whenever there comes the question of buying a credit card. After having the financial check up, I realized the options like free credit card and balance transfers which come with 6 month interest free are good to use and play around in generating the additional cash flow.
Financial service companies are helping people in managing the lifestyle and meeting the ST/LT financial goals with right advice on spending, investment and insurance. They basically maintain all our bills with them. You dont need worry about due date, they will call you in advance and remind you to pay the bills. Some service companies are paying the bills behalf of you and collect the money later. When we go with these companies, we need to break the financial myths rather outdated financial myths. In a week or two I will be meeting up the guys in a finance service company. I will add more here if I find interesting things..
Wednesday, May 24, 2006
Thursday, May 18, 2006
It's time to think and move on...
Ooops.... 800+ pts fall for the sensex; nearly 7% correction. Much needed correction - this is what the experts feel.
In any world, consolidation is the much more needed thing to move to next phase of growth. So what was happened today is mere consolidation movement in the stock market. This is the phase where overrated stocks come to the correct value level.
So what does it mean to the investor? Is this the stop call for the people started investing in equity?
First we need to take the lession from the market. If market consolidates and we are running out of the market then there is not point in investing and staying ahead in the maket. If we dont accept the change in the world (market) obviously we are out of the world (Market). So when the market consolidates we need to consolidate our portfolio. How to do this?
* If the fundamentally weak and speculative stocks were bought, get rid of those stocks with right stop loss level. (Probably, I will make the initiative of posting the stop loss level of the stocks i come across; It will be helpful for us for future reference - One more lession :))
* Buy the (new) right stocks at these lower rather correct level.
* If long term stocks were bought at relatively higher levels, rupee cost averaging (RCA) can be done by buying at this level.
* If the companies future guidance are good, these companies can be accumulated at these levels even if the positions already taken on these companies at lower level.
Like market consolidation takes the market to another level, portfolio consolidation will help in creating wealth over the long run.
Tuesday, May 16, 2006
A mystery called Market...
A mystery called Market...
Indian market index breached all the levels in the recent time. 50% - 100% gain over 2-3 month in the stocks have been very normal news. When I started inveting in stocks two years back, IT stocks rallied like anything. Then service industries had good run up. Power sector picked up next, later commodity stocks picked up thanks to the lined up news of Gold, Zinc, Copper, Alum. touching new highs, increasing demand of Sugar gloabally and Kenyan drought.
But at any point of time, there is no end to the madness of people. We witnessed mad rush to the stocks over the past 2 years whenever there are news related to any industry. People bought as if there were no tomorrow. Same madness continued in the last 1.5 week also; but rush is at the selling counter.
In the last 2 years, i have seen two big corrections to the market. First, when the BJP govt. thrown out of power and second, this week in the backdrop of LME(London Metal Exchange) price fall. During the first fall i didn't feel the effect since i had no great position in the market. This time i could realize the rush and effect. I had positions in two stocks which were speculative buy. One got sold when the SL price is triggered. Another one holds on. All other stocks were value buy. I added more of the value stocks to average out.
In the mid of the day, i just called a friend in a broking firm. We talked about the correction and their broking firm view. He told another big borking firm predicts postive direction of SENSEX after 2 o clock. I didn't pay much attention to this prediction. Surprisingly market turned +ve after 2 o clock.
WheneverI came across this kind of prediction and happening, my belief of retail investors are the prey to FII (foreign Institutaional Investors) and HNI(High Networth Individual) is getting stronger . There are lot manipulation happening behind the screen. People seemed benefit right after the news like commodities touching new high, cement price are roofing and surging of global sugar demand. People, including me, invested on the wave of momentum seemed like intelligent investors. These biggies smartly offload chunk of thier positions at the peak price. When the news is negative, thru' media and broking firms, news spread in a matter of seconds, panic button pressed, ending up most of the stocks locked in the lower circuit. After few days of LC, people will get time to sell their stock after most their profit or capital got eroded. These big guys wait for cheaper price and getting back to their position on the stock.
So what would be the solution/safe guard to this problem?
The good, old idea of being less greedy. One more suggestion we can add, in Rakesh Jhunjunwala term, is Long Term Greedy. So applying less greedy to the trading and speculative stocks and Long term greedy for the value stock will save the investors from losing their shirt in the volatile market.
Indian market index breached all the levels in the recent time. 50% - 100% gain over 2-3 month in the stocks have been very normal news. When I started inveting in stocks two years back, IT stocks rallied like anything. Then service industries had good run up. Power sector picked up next, later commodity stocks picked up thanks to the lined up news of Gold, Zinc, Copper, Alum. touching new highs, increasing demand of Sugar gloabally and Kenyan drought.
But at any point of time, there is no end to the madness of people. We witnessed mad rush to the stocks over the past 2 years whenever there are news related to any industry. People bought as if there were no tomorrow. Same madness continued in the last 1.5 week also; but rush is at the selling counter.
In the last 2 years, i have seen two big corrections to the market. First, when the BJP govt. thrown out of power and second, this week in the backdrop of LME(London Metal Exchange) price fall. During the first fall i didn't feel the effect since i had no great position in the market. This time i could realize the rush and effect. I had positions in two stocks which were speculative buy. One got sold when the SL price is triggered. Another one holds on. All other stocks were value buy. I added more of the value stocks to average out.
In the mid of the day, i just called a friend in a broking firm. We talked about the correction and their broking firm view. He told another big borking firm predicts postive direction of SENSEX after 2 o clock. I didn't pay much attention to this prediction. Surprisingly market turned +ve after 2 o clock.
WheneverI came across this kind of prediction and happening, my belief of retail investors are the prey to FII (foreign Institutaional Investors) and HNI(High Networth Individual) is getting stronger . There are lot manipulation happening behind the screen. People seemed benefit right after the news like commodities touching new high, cement price are roofing and surging of global sugar demand. People, including me, invested on the wave of momentum seemed like intelligent investors. These biggies smartly offload chunk of thier positions at the peak price. When the news is negative, thru' media and broking firms, news spread in a matter of seconds, panic button pressed, ending up most of the stocks locked in the lower circuit. After few days of LC, people will get time to sell their stock after most their profit or capital got eroded. These big guys wait for cheaper price and getting back to their position on the stock.
So what would be the solution/safe guard to this problem?
The good, old idea of being less greedy. One more suggestion we can add, in Rakesh Jhunjunwala term, is Long Term Greedy. So applying less greedy to the trading and speculative stocks and Long term greedy for the value stock will save the investors from losing their shirt in the volatile market.
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