Restoring Traders/Investors Faith into Investing

[krab]

Einstein,

Please write about value investing in simple language and how to select the particular stock at a right price with respective to value investing in step by step

 

[Einstein]

Best thread I've read on Value Investing.

Looks like I'll be reading the book The Intelligent Investor.

It would be nice to have a step by step breakdown on the analysis of these stocks (in the portfolio.) @Einstein, are ya planning on running a hedge fund? In case I ever truly get value investing, running an investment company might be one of the first things I do.

Thats sounds fascinating, but don't make any sense to me. why someone should invest his time and energy so that others can make money??I manage my own money, By the way, If peter lynch had invested his own money instead of his investor's money he might end up far more richer then mr. Buffett today. unfortunately, Peter's networth is not even half billion$ today.

(calculation based on Fidility magellan fund's average performance of 30% compounded return annually).

By the way, im open for suggestion and discussion if anyone is willing to invest serious money into any company he can contact me on phone or meet me person. I m willing to volunteer as analyst for fun.

@ Sniper, 3 years (or less)

 

[Steve_1982]

@Einstein: I currently don't have that much money of my own to manage so I thought investing for others would be a way to increase funds.

Even Buffet used earnings from his insurance companies to invest in other companies.

Any tips for beginner securities analyst? I read chapters 1, 2 and 8 so far in the intelligent investor. I'm probably a year away from being ready to pay for security analysis training.

For application of FA: I noticed that Just Dial has too much liability (and not enough assets to balance) to be a safe investment but I can't get why Muthoot Finance hasn't taken off even when its balance sheet is not showing any negative readings:
http://www.moneycontrol.com/financials/muthootfinance/balance-sheet/MF10#MF10 (all I can think of is an increase in liabilities in 2012)

 

[Einstein]

I was negative on just dial when its IPO hit market and still I m. I neither like lending business too much. was checking muthoot finance's performance its books are complete mess. I don't think anyone can correctly valuate this company.

there is something negative about gold in coming years. since 2000 to current gold and commodity prices has been rising mainly due to low interest rates in US. In 2015 end they are going to increase the interest rates which can trigger a start of long term bear market and decline in the commodity(gold, reality) prices through out the world. (read raghuram rajan's"Has Financial Development Made the World Riskier?" for more info).

If that happen Titan and muthoot finance can crash pretty hard for long time and end up like suzlon.. for longer term I'll be carefull in any real estate company or finance institutional companies.

Since you're already decoding balance sheet you should try the bible of investing 'Security analysis' I had read it 2 times already and strongly recommend it.

 

[Steve_1982]

I'll try to read that book. I can barely decode balance sheets. I'll get back into learning value investing by next week when I'll get back from a trip.

 

[Snip3r]

@einstein do you expect a market crash in India when fed increases the rate?like it happened in mid 2013 when they started tapering? Cause i feel it should but don't know

 

[Steve_1982]

I read some of Security Analysis.

I just noticed that United Breweries has a BV of more than 200 INR but share price of less than 30 INR

Value or Risk?

Edit: I mean UB holdings. I'm just starting to realise that a holding company may have companies that are over valued. Check out Innoventive Industries where shares are well under BV.

 

[Einstein]

I read some of Security Analysis.

I just noticed that United Breweries has a BV of more than 200 INR but share price of less than 30 INR

Value or Risk?

Edit: I mean UB holdings. I'm just starting to realise that a holding company may have companies that are over valued. Check out Innoventive Industries where shares are well under BV.

You mean United Breweries Holding ltd? right, its a different company.

Book Value alone is of no use, you must look into it in order to understand the company, for example price to book of UB Holding is just .30%, which in first sight will look cheaper to rookies, but when we look inside we can see that most of its assets are toxic, for example this company is holding 908 crores worth share of KFA :rofl: . second biggest holding is UBL worth 116 crores which in my views is highly expensive stock.

secondly worth thing is their debt which is higher then the the total assets(including toxic assets). Actual adjusted Debt-Equity ratio is far worse then quoted 2.05%.

I don't see any value in this.. do you??

 

[Einstein]

I read some of Security Analysis.

I just noticed that United Breweries has a BV of more than 200 INR but share price of less than 30 INR

Value or Risk?

Edit: I mean UB holdings. I'm just starting to realise that a holding company may have companies that are over valued. Check out Innoventive Industries where shares are well under BV.

Warren Buffett call them cigar butts, Seth Klarman says he still buys them and defined it beautifully in his book Margin of Safety, but I have different approach, when I bough alembic pharma it was trading at 4.0% of Book Value, my last investment of symphony is trading at 8% of book value. So I will leave this to you.

 

[Einstein]

@ Sniper, Quantitative Easing is a gigantic tsunami of Cheap Money capitalism has even seen. it is so big that it can create inflation and even drop the dollar's value. Just think it like this, total market cap of Indian stock(total) is just below 1 Trillion US$. and Fed in pumping 1 trillion per annum into US Debt market. sudden stop has been proven fatal to the value of the stock in US, for more detail look at the chart below.

This time its specil because instead of stopping the QE program, they decided to stop it slowly. maybe thats why we havn't seen any suddent crash of 10-15% yet.

Goldman Sachs says in his report recently that there is a possibility of 10-15% stop by october, but again who knows??!!


More:

regarding Interest Rates, warren once said in an interview that as the interest rates will go up, the value of stocks will go down, they works like magnet, he said. So im expecting an long term mildly bear market, but one thing is for sure its not going to go up for ever.