6 Things you should never tell people

Dont tell people your plans. They will sabotage you.
Dont tell people your weakness. They will use it against you.
Dont tell people your failures. They will see always see you as a failure and never give you opportunity.
Dont tell people your next big move. Always move in silence, take action and shock them with your results.
Dont tell people your secrets. Only a fool revels secrets and they will use it against you at the worst time you would like to hear it.
Dont tell people your income or source of income. Always make them wonder where you are getting money from.

Stock Portfolio Ratios

September 13, 2022 ~ moneyxmoney

Dividend Yield: Dividend Yield of a stock indicates how much dividend the company pays out in dividends each year relative to its stock price. It is computed as Annual Dividend Amount divided by the Market Price of the stock and indicates how much yield an investor can expect by purchasing the stock. Portfolio Dividend Yield is the weighted average of the dividend yield of all the stocks held by you.

Portfolio Alpha: Alpha of your portfolio is a measure to indicate how your portfolio performs as compared to its expected returns as suggested by CAPM model. The expected return is based on risk free rate, beta of the portfolio and Benchmark’s performance. Alpha is computed as Portfolio return – (Risk free return + Portfolio Beta *(Benchmark return – Risk free return)). A positive alpha signifies that your portfolio has performed better than expected; while a negative alpha means that your portfolio has performed worse than expected given its beta. In Consolidated Portfolio Analysis, for calculation of Portfolio Alpha, 1-year return of portfolio & benchmark has been considered.

Portfolio Beta: Beta of a stock measures the volatility, or systematic risk, of the stock as compared to its benchmark. A stock which is more volatile than the market over time has a beta of over 1 and a stock which is less volatile than the market over time has a beta less than 1. A beta of 1 means the stock’s volatility is in line with the market. High-beta stocks are riskier. Say, if the beta of a stock is 1.5, then if the market (benchmark) rises by 10%, the stock would rise by 15% and if the market falls by 10%, the stock would fall by 15%. Portfolio Beta is the weighted average of the beta of all the stocks held by you.

Portfolio Standard Deviation: Standard Deviation of a stock is a measure of its volatility, measuring how widely its prices are dispersed from its average price. A low standard deviation indicates that its prices tend to be very close to its average price and signifies lower volatility, whereas high standard deviation indicates that its prices are spread out over a large range of values and signifies higher volatility. At a portfolio level, the deviation is checked on the average value of the entire portfolio. For Consolidated Portfolio Analysis, the portfolio standard deviation is calculated based on the overall value of the equity portfolio for the last one year, assuming the same portfolio was held during this duration.

Sharpe Ratio: Sharpe Ratio of a portfolio measures the excess return generated by the portfolio over the risk-free return, relative to its standard deviation. The higher the Sharpe ratio of a portfolio, the better the portfolio’s returns have been relative to the risk it has taken on.

P/B Ratio: The Price-to-Book Ratio of a stock is used to compare its current market price per share to its book value per share. Book value of a company is its total assets minus liabilities. A high P/B ratio indicates that the share price is overvalued, compared to its book value and vice versa. Portfolio P/B ratio is the weighted average of the P/B ratio of all the stocks held by you.

P/E Ratio: The Price-to-Earnings Ratio of a stock measures the relationship between a company’s stock price and its earnings per share of stock issued and tells us how much investors are willing to pay for one rupee of that company’s earnings. The P/E ratio is calculated by dividing a company’s current stock price by its earnings per share (EPS). A high P/E ratio signifies that expectation from the share is higher and the share price is overvalued and vice versa. Portfolio P/E ratio is the weighted average of the P/E ratio of all the stocks held by you.

5 Top Ideas in the World

May 8, 2022 ~ moneyxmoney

Murphy’s Law: The more you fear about something, the more it will happen.
Kidlin’s Law: If you can write the problem down clearly, half of the problem is solved
Gilbert’s Law: The biggest problem at work is that no one gives you what to do or how to succeed.
Walson’s Law: if you put information and intelligence first at all times, then money keeps coming in.
Falkland’s law: When you dont have to make a decision, then don’t make a decision.

Top 5 finance rules for early life

May 1, 2022 ~ moneyxmoney

Rule of 15*15*15: – If you invest 15K monthly * At 15% growth * For 15 years. It becomes 10Million (1 Crore)
70% savings rule: – If you are able to save 70%+ of your salary, for 10 years. And, do not undertake lifestyle inflation Then, you can theoretically retire.
4% withdrawal rule: – For every INR 100 of savings, you could spend INR 4. And, your money would stay the same, provided you can grow your wealth at 10%+. -Math: Assume inflation@6%, your money grows at 10%. So net you are making INR4 on INR 100 savings.
Money making = Adding value: Improving your earning potential is the best investment. Hence, the more skilled you are (at any trait), the more value to can add. And, the more money you can make. Best part, if you are skilled, you save your own time.
Time >> Money: Theoretically, we can make infinite money. But, all of us have finite amount of time (and we don’t even know how much). So keep meetings shorts, avoid unnecessary drama, cut toxic people; and don’t waste your time and other people’s time.

Governments influence in Stock Market

September 27, 2018 ~ moneyxmoney

Recently someone asked me “Can ruling governments influence and manage stock market indices? If so, how can they do it? Why would they do it?”

Q1:YES or NO?

Ans: YES

Q2: Why?

Ans:

a) Every government would like to portray their image as a good government to the rest of the world. A rising index is a good sign of prosperity and growth which will invite more investors into the country.

b) Governments can do IPO listing of the government holding companies and cash out of that business by divesting to the public.

c) An overall positive sentiment in the people focused on the next election.

Q3: How?

a) Monetary Policies: They create tax incentives or taxes based on how they like to control it.
For example, India govt did not charge taxes for stocks that gained over more than 1 year. Recently in 2018, they introduced Long Term Captial gains (LTCG) tax on stocks at 10% from FY 2018-19. This impacted a lot of FII’s who were investing in India and caused markets to crash in mid and small cap stocks.

b)Fiscal Policy: They use the policies of Federal institutions to control the interest rates.
For example, RBI controlling Repo and Reverse Repo rates

c) Regulations: They create new rules to control the market through market regulators.
For example, Recategorization of Mutual Fund schemes in 2018 and result of the work. The result was many small and mid-cap stocks went for a downward spin since many bluechip/index category of mutual funds were holding it for higher gains.

c) Rigging: They use public money in public institutions to rig it.
For example :
i) Asking/Ordering Life Insurance Corporation of India (LIC) to buy some index stocks.
ii) Opening up Provident and Retirement Funds to invest in equity markets.

d) Bailouts, Subsidies, and tariffs: They give away news or manipulate news for markets to react in a timely manner. it could be government spending or subsidies to industries.
For example, giving subsidies to Sugar sector (News) or farmers or capital infusion to governmental banks or importing taxes on certain imports.

I hope this quick blog was helpful in understanding how governments rig a countries economy as well as build perception to the rest of the world.

Other References:

FY 18-19 Stock Picking Competition

April 3, 2018 ~ moneyxmoney

We are starting a new competition for FY 18-19 period and here is the list along with their names. This will be tracked over the next 1 year.

Bulls

There are 23 stocks here on this list. This time we will also do an assessment of the stock performance as a portfolio for the next one year. I will allocate Rs 1 lac to each of the stock and total of 23 lacs in a virtual portfolio. So it looks like as below:

Bulls2

Jan 2018 Stock Picks for next 1-3 years

February 5, 2018 ~ moneyxmoney

Here is the list of Large Cap stocks for next 1-3 years

Capture2

Here is the list of Mid and Small Cap stocks for next 1-3 years

Capture

After the FY 18-19 budget announcement, there is a serious meltdown in the market due to the introduction of Long Term Capital Gains Tax (LTCG). Here there would be some heavy offloading in the market since many stocks would have hit stop loss due to the eventful day. I would recommend dropping your stop loss boundary to another 15-20% considering the high Volatility due to the LTCG changes. Please note that nothing else has changed in the business due to LTCG and long-term investors are still staying on them.