Traits of a good investor

•Is truthful to himself and knows his limitations
•Is able to say that I don’t know this. So he won’t invest in these regardless it might offer bountiful opportunities
•Is a good reader
•Is humble in success
•Is disciplined – follows his investing process regardless of the outcome
•Is always eager to learn new techniques of investments and tries to replicate good ones in his own investment strategies
•Is mostly frugal – spends wisely
•Is realistic in achieving the targeted returns
•Is a good capital allocator
•Understands businesses, competition well

Will try to find more and put it across…

Mein Zindagi ka saath - Adieu Mr. Evergreen

Truly said, the era has ended. With sad demise of Dev Anand, the vibrant actor who has lived his life like the following song:

Main Zindagi Ka Saath Nibhata Chala Gaya

Maein Zindagi Ka Saath Nibhata Chala Gaya
Har Fikar Ko Dhuen Mein Udata Chala Gaya
Barbadiyon Ka Shok Manana Fizul Tha
Barbadiyon Ka Jashan Manata Chala Gaya
Har Fikar Ko Dhuen Mein Uda
Jo Mil Gaya Usi Ko Muqaddar Samajh Liya
Jo Kho Gaya Maein Usko Bhulata Chala Gaya
Har Fikar Ko Dhuen Mein Uda
Gham Aur Khushi Mein Farq Na Mehsoos Ho Jahan
Maein Dil Ko Us Muqaam Pe Laata Chala Gaya
Har Fikar Ko Dhuen Mein Uda

This is one of my best songs. Doesn’t it resemble qualities of a Yogi from Geeta?

Macro Picture - Should We spend time on it?

What is coming off in investment these days?
•Europe crisis looming ahead - Greeks on verge of default.
•Interest rates still high due to inflation

Where are we heading towards? What will happen to our investments? Why are we worrying about the macro factors?

I wouldn’t have but it is necessary to take the holistic view to check if everything is alright in the global markets especially after reading Jim Rogers. But one must not completely look at the macro picture. If the economy is not doing well, then majority of the companies will not do well. This is the time where the good companies are available cheap and you can start investing in them. Yes, everything won’t be hunky-dory and it will require tremendous amount of patience to get adequate returns. But as Warren Buffet said, time is a good friend of good businesses while it is a foe for bad businesses.

Happy investing!

what am I reading and watching

What am I reading since last week (diwali)

Hot commodities - completed
Adventure capitalist - currently reading
Revolution 2020 - Completed
Norwegian Woods - Currently reading
The Great Gatsby - Have to start

Which movies I saw
Shaitan
Mere Brother Ki Dulhan

It seems that I am relaxing too much. Not working at all and indulging in books and movies...

Cheshire Cat quotes which I like

Cheshire Cat "`Cheshire Puss,' [Alice] began, rather timidly, as she did not at all know whether it would like the name: however, it only grinned a little wider. `Come, it's pleased so far,' thought Alice, and she went on. `Would you tell me, please, which way I ought to go from here?'
`That depends a good deal on where you want to get to,' said the Cat.
`I don't much care where--' said Alice.
`Then it doesn't matter which way you go,' said the Cat.
`--so long as I get SOMEWHERE,' Alice added as an explanation.
`Oh, you're sure to do that,' said the Cat, `if you only walk long enough.'"

"`But I don't want to go among mad people,' Alice remarked.
`Oh, you can't help that,' said the Cat: `we're all mad here. I'm mad. You're mad.'
`How do you know I'm mad?' said Alice.
`You must be,' said the Cat, `or you wouldn't have come here.'
Alice didn't think that proved it at all; however, she went on `And how do you know that you're mad?'
`To begin with,' said the Cat, `a dog's not mad. You grant that?'
`I suppose so,' said Alice.
`Well, then,' the Cat went on, `you see, a dog growls when it's angry, and wags its tail when it's pleased. Now I growl when I'm pleased, and wag my tail when I'm angry. Therefore I'm mad.'"

Source: http://www.alice-in-wonderland.net/school/cheshire-cat.html

How to value company with negative cash flows:

First of all why would you like to select the company having negative cash flows consistently (here I am assuming consistently means for duration of 3-5 years). It’s better to ignore them.

However, we can segregate them in 2 categories:

The newly established companies like Linked in, which does not have positive cash flows

The perennial loss making company like MTNL which has negative cash flows due to high fixed cost and are unable to recover them

Valuation will differ depending on the above types:

For the first type of company, ideally DCF should be used, but it is difficult to look in the future. Another thing which can be done is you estimate eps for next few years and multiply it by PE (general estimate), and then you discount the price by the discounting rate (a hurdle rate).

Other option is just valuing the company on tangible assets

2nd type of company:

No point of valuing it :) I wouldn’t. However if you want, you can value it on basis of liquidation value

It requires tremendous patience to get the correct appraisal from the market for these companies

Running away

I want to run away from myself....Why??? To find myself!

Good morning mumbai dialogue. Lage Raho Munnabhai (Vidya Balan)

Shaher ki is daud me daud ke karna kya hai?
Jab yehi jeena hai dosto to phir marna kya hai?
Paheli barish me train late hone ki fikr hai
Bhul gaye bhigte hue tahelna kya hai?
Serials ke kirdaaro ka saara haal hai malum
par maa ka haal puchhne ki fursat kaha hai?
Ab ret pe nange pao tahelte kyu nahi?
108 hai chanel phir dil bahelte kyu nahi?
Internet se duniya ke to touch me hai,
lekin pados me kon raheta hai jaante tak nahi.
Mobile, Landline sab ki bharmaar hai,
Lekin jigri dost tak pahuche aise taar kaha hai?
Kab dubte hue suraj ko dekha tha, yaad hai?
Kab jaana tha shaam ka guzarna kya hai?
To Dosto Shaher ki is daud me daud ke karna kya hai
Jab yahi jeena hai to phir Marna kya hai?

Har Ek "Facebook" Friend Zaroori Hota Hai?

Bharti Airtel has come up with an advt. with tag line “Hare ek Friend Zaroori Hota Hai”. It’s a really good ad. And has a nice jingle around it. However this ad. made me think of what is friendship. It has described various kinds of friends. Out of which, one type could be Facebook friends. I have seen many of my friends having 500-700 facebook friends. (Mine is just ~150 :().

This can tell you one thing:
1.The person having large number of facebook friends is highly social, and could be mostly very outgoing. Here one really has to know what is the definition of facebook friend from him.

2.It could be other way round as well –
the one with limited friends is very choosy, doesn’t have time to be on facebook often, has opened the account due to peer pressure, or he is least bothered with new things happening in other person’s life.

I wonder where do I fit in (yeah in the second point – first point is out of scope for me)

In the Bazaars of Raviwar Peth…

“Where do you stay?” I reply “Pune City Area – Raviwar Peth”….Never heard of this place before…most of my colleagues reply. “Tu Gavat Rahato” I feel offended :).

Is city a village? Majority of my colleagues stay at outskirts of the main city – most of them are plush locations of Aundh, Baner, Kalyani Nagar, Kondhwa, and Koregaon Park which are predominantly residential areas. However, my (sorry my ancestors!) 5-storeyed house stands tall in the wholesale hub of Pune. Now, this wholesale market sells everything from safety pins to software, but yeah it is still a village! Let’s compare the property rates here – 30000 per sq feet at Raviwar Peth vs. 8000 per sq. feet at Aundh / Baner, little high for other areas mentioned above, but not at par at Raviwar Peth; but yes it is still a village…

However, a person who has spent its childhood in Raviwar Peth would be able to live in the bazaars of Raviwar Peth – bazaars where there is constant honking (by 2 wheelers, 4 wheelers would make traffic jam, and everyone would curse them for bringing them in this locality). So that’s the reason of not owning a car (:), though I still don’t know how to ride a bike too).

So what do I like about Raviwar Peth – area with narrow lanes and only commercial space that I am writing a blog about. I can spend countless hours looking at people. Families of four come on 2 wheelers and buy groceries, toys, birthday gifts, cosmetics, and clothes. Seasonality bring true colors to this place – Buying lights for Diwali, Small thermocol temple and thrones for Ganesh Chaturthi, Rakhi for Rakshabandhan, and of course colours for Holi. I enjoy looking at them, their purchase habits, their haggling nature, and poor husbands and boyfriends who totally seem out of place. But yes, they get the goods cheaper than “Big Bazaars”, and they seem happy about it.

All this viewed from balcony; where there is really cool breeze blowing on your face. Two – three hours are nothing when you enjoy this stuff. Though there are some disturbances from my mom who thinks I am wasting time. So after my office hours I usually stand in my balcony to catch the glimpses of the market – (also helps to know which festival is around and how one can plan out leaves!!!). “Why are you lazing around” mom remarked breaking my reverie.
“Lazing around” who said so?
“No one said, I can see”
“I am learning psychology in practical way” I say giving intelligent looks
“Which psychology?”
“Consumer psychology” She doesn’t say anything then. Sometimes I do win in the arguments…

Smartfone for Dumb!

Well, after five years I bought a new cell phone. I was still content using my old phone but much to my dismay, I couldn’t disconnect my phone as the button was not working. So unless the person at the opposite end didn’t disconnect, the phone was still on.

Also, my family and friends (who already knew I was a great miser) coerced me to hunt down some good color phone with lots of features and so called apps (read as android and bb’s). What they didn’t know that I am technologically challenged and will probably never use any of the above features except listening to the music. This is one thing which I thought that my current phone lacked.

So on Saturday afternoon, I was on my way to buy a phone. Unfortunately, my sister got up early from her afternoon siesta and joined me in my phone hunt. What I was very clear about that I would be purchasing a Samsung phone. She also liked Samsung so I was saved by the torture of arguing which phone is the best one.

We reached the store and I made a point of just taking 15 mins. to finalize the phone, but I forgot I was with my sister who is a hardcore android devotee. I selected one simple Samsung cdma phone having FM radio+Music player and it was costing Rs.4650/-. It was a little higher priced as compared to GSM but I didn’t want to change my service provider so had to accept the price. I still can’t figure out why is there a need to CDMA and GSM. GSM is sufficient and it has more varieties of phone at cheaper rates than the CDMA versions, but our telecom ministry wants to make things complicated for the consumer.

“Why are you buying this one?” Ruchi spoke with pursed lips. She was aghast with what I was buying. She informed that I was not going along with the trend. “I am not a trend setter” I replied with annoyance. But she insisted me to buy the android version (Galaxy Pop) costing Rs.8500/-. I was quite defiant. Its simple, I am not smart enough to buy a smartfone :). Why should I freak out additional 3000/- bucks for the phone features which I am hardly going to use? “So if you are not buying I am gonna buy it”. I gawked at her! But who can win against women. She didn’t have her debit card and ultimately I had to pay Rs.13500/- (This was a lesson of being Smart! :()

Delhi Belly **** should be negative starred

Can film reviews be compared to the hyped growth stock? Undoubtedly, I would like to compare Delhi Belly as a tech stock of 2000’s. Absolutely no value and all hype!

It was the first movie in my life where I wanted to just leave in the interval (there was no interval, so after 45 mins. I felt I had to just move out of the movie hall). What is Aamir Khan trying to show in this movie, I still can’t figure out...

Yes, he has become a master salesman who can sell any lame movie with all the Peppery words to the public. All Ivy league B-school grads should call him as a guest lecturer. After all we do need to train these chaps in becoming big shots in insidious firms like Lehman and Bear Stearns. Well, he will be a best prof to guide that, especially when he can get 4 Stars in all the major newspapers for this crappy movie.

All major newspapers said it’s the best youth movie which is gonna be a cult movie. Now I can understand Dil Chahta Hai and even Rang De Basanti being a cult movie, but Delhi Belly – not even in my wildest dreams!

There is hardly any story line. It is just one of the stereotype movies where the smuggled diamonds are misplaced by the protagonists, and there is complete chaos for getting the diamonds back by goons and them. I would have been okay with stuff too but this is just one part of it. The movie begins with an abuse (all words BC, MC, G, C, etc. etc….) and ends with an abuse and there is nothing except this. Yes, there is farting too in this one (bad Belly you see :)).

Now come to the worst part, people were laughing whenever these words were spoken! or some farting scene was shown. This was supposed to be a funny movie….but we have stooped so low in making such movies or we fell so low in our standards, that we are calling this funny stuff. Farting will be enjoyed once….not in every other scene. Even kiddos will laugh for 5-6 times max. but we adults weren’t tired of laughing….

Does youthfulness means using abusive language as fad and showing off? Well I am still a youth (I assume :P) and I sparingly use any of the above words but I have friends who use them, but occasionally, definitely not in every sentence….and I presume that this would be applicable to most of us!

So was just wondering, how does this movie get 4 stars. Hats off to Aamir! You are truly a RocketSingh...

Music albums - where are they now?

It’s been a long time since I have come across the music videos like the old days of early 2000’s. Most of the songs were crap, but there were few lovely numbers from Falguni Pathak, Silk route, and Euphoria. The gems like Bally Sagoo, Biddu, Anaida, etc. seem to have been lost in time.

Yes, times change and so do we. But songs are songs, and we can listen to good songs be it in movies or albums – so why the silent death for the albums? I was trying to contemplate the reasons of their decline!

Too many movies – too many songs – who wants to listen to the music albums?
The company making these videos making losses – Overall music videos making losses. Who buys music now a days? Piracy rules!

Eventually all boils down to the economics and people making money from the venture. If demand outstrips supply, the album makers will make money and vice versa. Though that is the case I long for Yesterday Once More!

Solitude

On the cold chilly day
Walking with her in the meadows
Without any talk between us,
She seems to guess what I mean
Just her eyes says it all
No need of any speech…no need of any cliché’
Just I and her walking in solitude
Understanding each other
A Blink and a tear says it all!

"The best conversations happen when she listens to what you are not saying"

Ode to MBA

Sitting in the class of MBA
Is as weary as studying for CA
With mind roaming from Paris and Rome
To ours very own Taj’s dome

From Financial management; Khan and Jain
To marketing management; Kotler and Tain

Having some foolish seminars
And listen to stupid profs for hours

Coming back from reverie…
I still have to prepare the thesis!

shrek - Hallelujah

Listening to this song - good composition
of course I liked the movie but this song is one of my best
http://www.youtube.com/watch?v=ZAmzHO06_c0

Lyrics go like this
Source: http://www.stlyrics.com/lyrics/shrek/hallelujah.htm

I've heard there was a secret chord
That David played, and it pleased the Lord
But you don't really care for music, do you?
It goes like this
The fourth, the fifth
The minor fall, the major lift
The baffled king composing Hallelujah

Hallelujah, Hallelujah
Hallelujah, Hallelujah

Your faith was strong but you needed proof
You saw her bathing on the roof
Her beauty
in the moonlight
overthrew you
She tied you
To a kitchen chair
She broke your throne,
she cut your hair
And from your lips she drew the Hallelujah

Hallelujah, Hallelujah
Hallelujah, Hallelujah

Maybe I've been here before
I know this room, I've walked this floor
I used to live alone before I knew you
I've seen your flag on the marble arch
love is not a victory march
It's a cold and it's a broken hallelujah

Hallelujah, Hallelujah
Hallelujah, Hallelujah

There was a time you'd let me know
What's real and going on below
But now you never show it to me do you?
Remember when I moved in you?
The holy dark was moving too
And every breath we drew was hallelujah

Hallelujah, Hallelujah
Hallelujah, Hallelujah

Maybe there's a God above
And all I ever learned from love
Was how to shoot at someone who outdrew you
It's not a cry you can hear at night
It's not somebody who's seen the light
It's a cold and it's a broken hallelujah

Hallelujah, Hallelujah
Hallelujah, Hallelujah
Hallelujah, Hallelujah
Hallelujah, Hallelujah

Investors club? Do we need it?

Of late in my office, we have started investors club. Investors club is a group of people who meet every fortnight and speak about a stock picks i.e. why would you invest in this company. This is really great as it helps us in knowing best stocks which will yield better returns for the long term.

However, when there were expectations setting, one of the common trends which were observed; that most attendees were clueless about investing in stocks and directly wanted to invest in the stock markets. Consequently, first session was kept on the basics of various market instruments where individuals can invest. However, just because it was investment club, members still wanted to invest directly in the markets. Some wanted tips without putting in efforts.

I can understand that there is definitely a thrill of directly investing in markets, but there has to be learning process involved.

During the session, I suggested two books: The Warren Buffet Way and One up on the Wall Street as a starting point of understanding stocks and companies. After this session, one and half months have passed and in the next session when asked who has read the book – no one replied yes. None of them has even bought the books, let alone reading them. If this is the case, then how in the hell are they going to read the annual reports which is a most-read document for investing in stocks? Ideally one has to spend 5-6 hours in a week to analyze the stock.

In a nutshell, they want to earn high returns without dedicating themselves for the grinding work. Well, one can still generate benchmark returns, but one has to accept that he can’t devote time on this and there are other experts who can do that for him. Here comes the mutual fund advantage, where the person who doesn’t want to devote much time on research. So he has to be truthful with himself and assess his priorities before diving directly in the stock markets. Yes, this will be unexciting but it frees him to do other stuff which interests him. Also, it provides him the discipline to invest regularly in all market cycles which will ultimately result in creation of wealth over the long term.

Also, one thing which was missed in expectation setting session was that how much one saves of his total income. If the person is not able to save even 10% of this total income, then it is meaningless to speak about investing in front of him. What is he going to invest if he is spending every penny? Is there even a point to explaining him about investing and wasting one’s time…

These are solely authors’ views.

Good Dialogue in Ghajini

Description:
Confidence - "I can do it"
Arrogance - "Only, I can do it"

RIO movie

Trailer can be watched here - http://www.youtube.com/watch?v=p_8Pf8klXDU

I watched RIO this weekend. It is a wonderful movie. Watching with 3-D effects is a must. RIO city, especially Christ – The Redeemer was too good to be missed. The story line was simple; something similar to our Hindi love stories with Happy ending. Same was the case here.

Rating – 3 /5

My favorite movies

Below is the list of movies - Must watch according to me! Will add to this list if I recollect other good ones...

Hindi

1. Lamhe
2. Sahib Biwi Ghulam
3. Kabhi Haan Kabhi Na
4. Dil Hai ke manta nahi
5. Jab We Met
6. Namaste London
7. Golmal
8. Chupke chupke
9. Choti si baat
10. Swades
11. Jane Do Bhi Yaaro
12. Sparsh
13. Masoom
14. Parichay
15. Jo Jeeta Wohi Sikandar
16. Dil Chatha Hai
17. Anand
18. Jewel Thief
19. Khushboo
20. Swami
21. Angoor
22. Ek Doctor Ki Maut
23. Abhiman

English

1. My Girl
2. The pursuit of Happyness
3. Pretty Woman
4. 12 Angry Men
5. As good as it gets
6. Shrek 1
7. Finding Nemo
8. Lion King
9. A Few Good Men
10. LOTR
11. Scent of a woman
12. UP
13. Cast Away
14. Forrest Gump
15. Serendipity

Marathi

1. Ashi Hi Banva Banvi
2. Uttarayan

Namaste London

Yesterday saw Namaste London - Decent movie, KK was superb, Akshay was his usual best
One dialogue which struck me the most

"ishq de meree mitra pehchaan kee
mit javay jadoon zid apnan dee"

English Version:
Being In True Love Means-You Do Not Need To Posses It (explanation taken from http://wogma.com/movie/namastey-london-review/)

What is the identification of love ?
When you are no longer obsessed with the feeling to possess it.

This is quite old dialogue but I just loved it.

Volatility Woes

It was the best of the times, and it was the worst of the time! Volatility in the current choppy markets signifies both worst and best of times. With all the proponents of MPT (Modern portfolio theory with the Betas and Alphas) who really abhor the term citing it as "Risk" will advocate us to stay away from the markets. However, like all value investors, believe volatility helps people who help themselves. Long term investors who have done their homework well will find some discounts, albeit not with higher margin of safety, but high enough to start building their starter positions.

There are very few stocks which are available at good discounts. One of this is Balmer Lawrie &Co. which has one of the best balance sheets among the Indian corporates, offering a 4% dividend yield, and has EBITDA of Rs.110 cr at Mcap of Rs. 900 cr without any debt and cash of Rs. 250 cr. You will find this kind of value buys in market turmoil, but getting these at the current market levels will help to build a strong portfolio of companies.

Disclaimer: Guinea Pigs should try to do their own analysis to make an informed decision. I have a postion in this stock