LEARNING


Moneylife Digital Team 19 June 2015
There is no secret formula to grow your money   “Everyone wants the secret, the key, the roadmap to the primrose path that leads to El Dorado: the magical low-risk, high-return investment that doubles your money in no time,” says Jason Zwieg, who has written pioneering books on...

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Moneylife Digital Team 19 June 2015
As many as 9 out 10 of CNBC’s top 10 fee-only advisers have a conflict of interest   On 3 June 2015, CNBC (US) released its second annual list of the top 100 fee-only wealth management firms based in the US. ‘Fee-only’ registered investment advisors have a fiduciary...

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Here’s how you can dodge the stock market’s minefields while investing   At the Moneylife Foundation’s seminar, held at Pune on 23 May 2015, the debate was on how returns from stocks could be better than those in mutual funds, if only the investor took care to do his/her research well...

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Moneylife Digital Team 08 June 2015
Book value: The term indicates how much assets shareholders would get if the company is wound up. Book value is arrived at after deducting intangible assets from the net worth of the company. Comparison of the book value of the company with market value shows whether the company is overvalued...

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Moneylife Digital Team 05 June 2015
A survey of financial services professionals reveals widespread disregard for ethics   In the light of headline-making reports of corporate misconduct, a survey reveals that attitudes toward corruption within the financial services industry have not changed for the better. Numerous...

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Moneylife Digital Team 05 June 2015
What is the role of luck and skill in investing?   In a memo to his clients at Oaktree Capital, Howard Marks, a well-known investor and writer, says: “I believe a great many things contribute to success. Some are our own doing, while many others are beyond our control.” There’s no...

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Moneylife Digital Team 26 May 2015
Return on net worth (RoNW)—Also called  return on equity. This is the main ratio of interest to equity shareholders. It considers net profit after appropriating preference dividend, if any. It shows the amount that will be available for equity shareholders after paying off all other expenses....

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Moneylife Digital Team 26 May 2015
Increases in whistleblower activity, plus better internal compliance, deters wrongdoers   The Dodd-Frank Wall Street Reform and Consumer Protection Act was adopted by the US Congress in January 2010 in response to numerous instances of financial fraud by some of the largest companies...

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Moneylife Digital Team 22 May 2015
Companies with a higher percentage of women at the top performed better    The Securities and Exchange Board of India (SEBI) last year imposed a condition that every listed company must have at least one woman director on its board. The deadline expired at the end of March 2015, but...

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Moneylife Digital Team 12 May 2015
Analysing a company’s performance requires measuring its efficiency at different levels of profits, such as operating profit or net profit. Most people concentrate only on net profit because it determines the popular price to earnings (PE) ratio; but net profit is distorted by various heads...

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It is not very difficult to pick a winning business to pick the right stocks   Getting the big picture right is perhaps the most important thing, so far as identifying an investment opportunity is concerned. Once we have that right, the other things are not as important in...

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Moneylife Digital Team 28 April 2015
Two of the most important parameters which we consider while stock-picking are market-cap (MC) to sales and MC to operating profit (OP). Sales are the revenue generated from the core operation of the entity. Operating profit is the profit generated from the operational activities. It may be...

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Moneylife Digital Team 24 April 2015
How expectations are shaped by memory   Investors have always been restricted by their memory. If a stock is bought at, say, Rs230 but is now at Rs180, investors wait for it to get to at least Rs230 to exit. Or, if one has invested at the market peak and kept waiting for price to...

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Moneylife Digital Team 24 April 2015
Can valuations predict a market correction?   History shows a clear relationship between the cyclically adjusted price-to-earnings (CAPE) ratio and forward 10-year compounded annual real returns. “High valuations today imply lower future returns,” says Theodore Berg, who analyses...

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R Balakrishnan R Balakrishnan 21 April 2015
The shares of high-quality companies will give better return than equity MFs   Investing in shares of a company, as opposed to investing through a mutual fund (MF) route, calls for a very different mindset and approach. For the MF route, the best strategy is a systematic...

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Moneylife Digital Team 14 April 2015
A share may be subjected to split or bonus or other adjustments. What are these and how they affect your holdings?    Split – Share capital is based on the number of shares and face value (FV) of the share. A split reduces the face value of a stock while it increases the number of...

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Moneylife Digital Team 10 April 2015
Historically high valuations raise concerns about financial stability   From the market bottom in March 2009 through the end of 2014, US equity prices have tripled. This gain is driven largely by the recovery in corporate earnings which have increased by a similar magnitude over this...

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Moneylife Digital Team 10 April 2015
Looking beyond post-cost performance   In the US, many investors opt for index schemes because a majority of actively managed schemes underperform the broad market indices, post-costs. There is always a debate on which is a better investment strategy. Most studies have shown that...

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Moneylife Digital Team 27 March 2015
Be wary of hidden commissions behind ‘advice’   If you are seeking financial advice, make sure you are not being nudged towards products from which advisers benefit by getting commissions. If you submit your existing portfolio for advice, chances are that the adviser will ask you to...

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R Balakrishnan R Balakrishnan 10 March 2015
Beware of Budget proposals that mean only a short-term pop   By the time you read this piece, the first full Budget of the Narendra Modi government presented by Arun Jaitley would have left its impact. Should it change the way we invest in stocks? To answer this question, I have to...

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