Showing posts from April, 2020

Investing Wisdom in One Lines

One of my close friends shared a tweet link by Gautam Baid with me. Gautam shares really good ideas here. I think they are originally by Morgan Housel. Nevertheless it is the idea which really I wanted to note down and reflect upon. I have only jotted those which I think I want to think about later again and modified a few suitably. The most important finance topics don't require details. Most can be, and should be, summarized in a sentence or two. Dollar-cost average for your entire life and you'll beat almost everyone who doesn't. Every five to seven years, people forget that recessions occur every five to seven years. You're twice as biased as you think you are (four times if you disagree with that statement). Read more books and fewer articles. Read more history and fewer forecasts. Be careful when reading about how stupid investors can be and not realize you're reading about yourself. Your circle of competence is probably 90% smaller than you think

Buffett Letter: 1966 semi-annual 1

1966 Semi-annual 1 Mr Buffett reiterates that his goal is to have a 10% point advantage over the index (Dow) Forecasting is prone to a lot fallibility He says that those who expect very superior results (like those in in the previous year) are perhaps day dreaming by attending weekly meetings of Halley's Comet Observation Club ' Dow is no pushover as an index of investment achievement ' - Buffett Anyone engaged in money management should have a clear standard of measurement be it on returns, time periods and so on. This should also be clear to all stakeholders By setting up yardsticks of performance upfront a money manager cannot blame external or other circumstances. There will certainly be loss years but that is not to be criticized, losing to the index in the appropriate time frame is to be criticized I think this is the first letter in which he says that increasing the size of the fund will be disadvantageous Buffett disclosed that he has bought a compa

Why we must value a company

Price is what you pay. Value is what you get. - Profound or cliché? Treatise after treatise has been written on valuations. Some swear by value investing and some renounce it saying it does not work in India. My personal belief does require me to pay credence to how much I am willing to pay up when I buy a security. In this note I try to capture with a few examples on how to go about calculating in a quick way the intrinsic value of a share. But first a disclaimer. Whatever will follow is just the beginning steps to building a model of your own. Models are for guidance and not prediction. If all models could predict with accuracy all of us would have our own Medallion funds. What is Price? Have you ever asked yourself this question? Think about it. Try to break your answer into deeper layers say like in the movie inception. Something like this: I want to buy Nestle India's stock. It is priced at 17,000 rupees Does 1 share give me a portion of the net profit to

Poly Medicure: An Overview of the Company

Disclaimer: I am not a registered analyst neither an advisor. These are my notes on a listed company. Background This note is only a first order analysis just stating the obvious about the company which is visible to the eye at first glance. Derivative order effects can only be analyzed with deep dive and scuttlebutt. Intent is to have an overview of what the company does and how well is it doing. Best resource to read is on the VP Forum. Poly Medicure Limited is a company which was incorporated in 1995 and today is one of the largest medical devices manufacturer in India. It makes medical consumable products across the following: Infusion therapy Gastroenterology Anaesthesia  Respiratory Dialysis Surgery Blood Collection Systems & Management Renal Care Oncology Vascular Care Currently the revenue mix is broken as per the following. Courtesy Tijorifinance. I do not know the nitty gritties of each product line but I am speaki

An Experiment in Small Cap Stock Picking

The global markets seem to be having a pull back rally but recession is around the corner every 'expert' says. Over the next few quarters there could be a great time to pick stocks. Even a not so proficient stock picker like me will have the rub of the green towards me. So time to have a list ready and more importantly keep researching on them. In no way this is a recommendation. Below are a few stocks in a shortlist which I am currently studying. Please note I might have a very small position in a few of them already.

System Trading - Part 1: A Brief Background

I have been contemplating jotting down all I know about system trading at a common place but never got around to doing so. So maybe in a series of posts I will try to delve into whatever I have learnt about mechanical trading over the years. Though currently I do not use this in my core portfolio there are elements of this I leverage for instance the way I do money management is directly from these methods. But first a disclaimer: Again this is a purely theoretical exercise and please do not take it as some form of financial advice. If you do so the risk and returns associated with it are totally yours.  Before you read on do spare a thought on Why do you invest? After thinking it over write it down. Investing or Trading is an endeavor with one sole goal that is to make maximum money with the least chance of going bust It is not an endeavor to be proven right. If that is the reason better to take up Economics. Have you even found an economist who thinks he or she was wro

What is resilience?

The Finnish people have a concept called 'Sisu'. I have read that it cannot be translated to English. The root of the word comes from 'inner'. Many words are used to describe this concept of Sisu. Finnish people look for their 'own' Sisu at times of despair. Words such as grit, determination, drive, inner strength, tenacity, stoic determination and so on are multi facets of this concept. There is no way to learn it. One has to develop his own individual philosophy. Coming back to markets as outlined before these are trying times. The speed of the collapse has shaken up most investors. And these are times when one has to dig deep down inside & introspect about the decisions made years ago. And how he should proceed from here on. Business resilience stems from the balance sheet, flows into the cash flow statements and shows later in the profit and loss statement. It is the balance sheet which is the foundation. And this foundation needs to be firm, very