Thursday, March 31, 2011

Investment Recipe from Warren Buffet

The last week of March ended with all good things for Indian fans. Stock market was upbeat. BSE sensex closed at 19,445. India defeated Pak in ICC world cup semi final and Wits of great investor Warren Buffet were in the atmosphere of investor community.

Investment return success of any individual can not be replicated so to repeat the performance of Warren Buffet is impossible. However, as a student of investment community we can always be receptive of the ideas. How Buffet identified the mult ibagger? This skill need both brains working together.

While selecting the share he is very conservative and goes by old theory of fundamental checking instead of aggressive gut feeling. The triad of his formula are :

1. Financial Stability,

2. Quality of Management and

3. Simplicity of Business.

The most precious secrete is to buy share of the essential goods and the business which does not have to take the beating of inflation. This means that the management should be efficient to provide goods at reasonable price, but should pass on the increased cost to the customer without losing its share. Not many companies can pass this test.

One of the most all time favourite share of Buffet is Coca Cola. This is because no company has so far been able to dislodge the coke from its position, regardless of how much money it might be willing to spend on advertising and brand building.

What he checks in the fundamentals is something which all the investment guide books would teach about :

1. Stability of earnings during past 10 years.

2. Debt to earnings ratio should not exceed 5 meaning that all infra structure and power companies would fail on this criteria.

3. Average return on equity (ROE) during past 10 years should be more than 1.5 times the interest rate on fixed deposit.

4. Ten year average return on total capital (ROTC) should be more than 12%

5. Positive free cash flow is a must.

6. If management retains earning it should have a Return on retained earnings same as ROTC.

Which Indian shares can pass on this test? May be Britannia, BASF, GAIL, L&T; HEG, WIPRO, TCS, ONGC, ITC, Asian Paints, etc. Make a checklist invest in the companies which pass these test and remain invested.  Try to avoid shares runnung on the shoulders of  rumours, which includes many Penny Stocks like Mav Biotech and mid caps like Kalindi Rail, Essar Oil India Bulls and so on. Also, all the PSUs which have to follow government directives for pricing NHPC, NTPC, MTNL etc fall under touch me not list. That is how the wealth is created  Buffet way. Wish you all happy returns during 2011-12 financial year.

Related  Posts :
Indian Union Budget Highlights 2011

Share Market Freezes Again

Wednesday, March 30, 2011

These innocent ones need you.

Summer is here and its going to be equally harsh to the animals around us. Kindly do your tiny bit by keeping a bowl of fresh water out side your balcony or garden.

There is a saying
"Until one has loved an animal, part of their soul remains unawakened."

Saturday, March 26, 2011

Gujarat to have more Courts for Speedy Justice

The Gujarat state is posed to take a lead in speedy justice for all. The state government has announced to double the number of family courts and enact some new laws to bring transparency in the working of public trusts.

Gujarat High Court Ahmedabad

Speaking during the discussion on budgetary allocations for law and justice department, minister of state for law and justice, Pradipsinh Jadeja, said, “14 family courts are already operational in the state and the GoG wants to put up 15 more.” . He also announced plans to start 700 fast track courts for five years for speedy disposal of cases of similar nature.

Jadeja informed the assembly that besides the special courts for family disputes, the state government will also establish seven new courts for cases filed with Anti Corruption Bureau (ACB), six courts for cases under Atrocities Act, 25 new courts for cases regarding disputes related to recovery, electricity and other such relief and 12 new courts for Negotiable Instruments Act cases.

Speed and quality in judiciary is the focus of the government. The Gujarat government is planning to take concrete steps to improve the quality of legal training to law practitioners. The law minister also announced that the state plans to enact a new law, viz, The Gujarat Public Trust Act, to make public trusts' administration more transparent and accountable. Public trusts at present are governed by the Mumbai Public Trust Notification of 1950.

Related Posts  :

Wikileaks boomranged Guj Congress

SIT Inching to Question Gujarat Chief MODI

Legal battle likely over SIT

Friday, March 25, 2011

Placement Efforts in IIM-A are on along with Golden Jubilee celebrations.

Premier Business School, IIM-A is celebrating its Golden Jubilee Function on 26th March. True to its commitment to provide satisfaction to all participants, it did not closed its placement process only for one student.
One out of a batch of 314 Post-Graduate Programme in Management (PGP) at IIM- Ahmedabad could not find the job of his choice this year during lateral placement exercise of the institute.
 For any other Institute near 100% placement with the best companies would have been a matter of pride, but the placement committee at IIM-A is worried and could not officially close the placement process even after three weeks.
A release from the B-school gave the reason of  “specific career objectives as well as location preferences of this student,” and added that the institute would “continue to support the efforts of the other student.” All others have been placed either through Pre-Placement Offers (PPOs) through the internship process or the lateral placement process.
Over 120 firms participated in the laterals and final placement process, including MNC like  Goldman Sachs, Citi, JP Morgan, Morgan Stanley  HSBC. Amongst the Indian companies were Tata Steel, Aviva, Bajaj Allianz and Reliance Industries Ltd. Nomura and Royal Bank of Scotland had  made PPOs.
This year more numbers of International offers were made reflecting the  improving market sentiment and recruiters’ confidence in IIM-A. Seven students opted out of the placement process to become entrepreneurs and three others used the final placement process to join Ingersoll Rand’s two-year entrepreneurship development programme.
IIM-A has completed 50 years of  its existence on 11th March, 2011 and is celebrating golden jubilee functions. Before this new pass out batch students are happy and satisfied with the wide variety of opportunities that they could choose from. The IIM-A placement process will now be on a rolling basis with firms visiting campus based on the specific interests of students. 

Wednesday, March 23, 2011

Wikileaks boomranged Congress in Gujarat Assembly

The opposition Congress party in Gujarat State assembly tried to raise the Wikileaks statement to disrupt the proceedings of the assembly on Wednesday. The Leader of Opposition Shaktisinh Gohil, at the beginning of the question and answer session, announced that the Congress has accessed a cable, released by the Wilileaks, of the US Consul General of Mumbai which said that there was a 'big ticket corruption' in Gujarat.

Speaker Ganpat Vasava agreed to grant time to Opposition to have a debate on the issue of leaked US cables after the question and answer session is over, Congress leaders were not satisfied and started raising anti-government slogans following the house was adjourned for an hour.

The Congress, later failed to provide the source of information to the reporters clearly losing the face on this act. The action was more to get some headlines to counter the news of praise of Modi in such a Wikileak message earlier this week.

In one of the leaked diplomatic cables accessed by The Hindu newspaper, Michael S. Owen, the US consul general in 2006, wrote to the US State Department that they might have to reassess the Gujarat chief minister, whose visa they revoked due to his alleged role in the 2002 Gujarat riots.

Owen also said that Modi has successfully branded himself as a non-corrupt, effective administrator, as a facilitator of business in a state with a deep commercial culture, and as a no-nonsense, law-and-order politician who looks after the interests of the Hindu majority. This news was given high publicity by certain section of local newspapers.

Saturday, March 19, 2011

Traditioanl Colours for Holi

The spring season, during which the weather changes, is believed to cause viral fever and cold. The playful throwing of natural coloured powders has a medicinal significance: the colours are traditionally made of Neem, Kumkum, Haldi, Bilva, and other medicinal herbs prescribed by Āyurvedic doctors.

Pallash Flowers

A special drink called thandai is prepared (commonly made of almonds, pistachios, rose petals, etc.), sometimes containing bhang (Cannabis indica). For wet colours, traditional flowers of Palash are boiled and soaked in water over night to produced yellow coloured water, which also had medicinal properties. Unfortunately the commercial aspect of celebration has led to an increase in the use of synthetic colours which, in some cases, may be toxic.

This information on safe holi was recieved from Mr Shivshankar Dhondiyal Executive - Technical OG Corporation , Mumbai.

History of Holi

Holi is an ancient festival of India and was originally known as 'Holika'. The festivals finds a detailed description in early religious works such as Jaimini's Purvamimamsa-Sutras and Kathaka-Grhya-Sutras. Historians also believe that Holi was celebrated by all Aryans but more so in the Eastern part of India.

It is said that Holi existed several centuries before Christ. However, the meaning of the festival is believed to have changed over the years. Earlier it was a special rite performed by married women for the happiness and well-being of their families and the full moon (Raka) was worshiped.

Calculating the Day of Holi

There are two ways of reckoning a lunar month- 'purnimanta' and 'amanta'. In the former, the first day starts after the full moon; and in the latter, after the new moon. Though the amanta reckoning is more common now, the purnimanta was very much in vogue in the earlier days.

According to this purnimanta reckoning, Phalguna purnima was the last day of the year and the new year heralding the Vasanta-ritu (with spring starting from next day). Thus the full moon festival of Holika gradually became a festival of merrymaking, announcing the commencement of the spring season. This perhaps explains the other names of this festival - Vasanta-Mahotsava and Kama-Mahotsava.

Reference in Ancient Texts and Inscriptions

Besides having a detailed description in the Vedas and Puranas such as Narad Purana and Bhavishya Purana, the festival of Holi finds a mention in Jaimini Mimansa. A stone incription belonging to 300 BC found at Ramgarh in the province of Vindhya has mention of Holikotsav on it. King Harsha, too has mentioned about holikotsav in his work Ratnavali that was written during the 7th century.

The famous Muslim tourist - Ulbaruni too has mentioned about holikotsav in his historical memories. Other Muslim writers of that period have mentioned, that holikotsav were not only celebrated by the Hindus but also by the Muslims.

Reference in Ancient Paintings and Murals

The festival of Holi also finds a reference in the sculptures on walls of old temples. A 16th century panel sculpted in a temple at Hampi, capital of Vijayanagar, shows a joyous scene of Holi. The painting depicts a Prince and his Princess standing amidst maids waiting with syringes or pichkaris to drench the Royal couple in coloured water.

A 16th century Ahmednagar painting is on the theme of Vasanta Ragini - spring song or music. It shows a royal couple sitting on a grand swing, while maidens are playing music and spraying colors with pichkaris.

There are a lot of other paintings and murals in the temples of medieval India which provide a pictoral description of Holi. For instance, a Mewar painting (circa 1755) shows the Maharana with his courtiers. While the ruler is bestowing gifts on some people, a merry dance is on, and in the center is a tank filled with colored water. Also, a Bundi miniature shows a king seated on a tusker and from a balcony above some damsels are showering gulal (colored powders) on him.

Legends and Mythology :

In some parts of India, specially in Bengal and Orissa, Holi Purnima is also celebrated as the birthday of Shri Chaitanya Mahaprabhu (A.D. 1486-1533). However, the literal meaning of the word 'Holi' is 'burning'. There are various legends to explain the meaning of this word, most prominent of all is the legend associated with demon king Hiranyakashyap.

Hiranyakashyap wanted everybody in his kingdom to worship only him but to his great disappointment, his son, Prahlad became an ardent devotee of Lord Naarayana. Hiaranyakashyap commanded his sister, Holika to enter a blazing fire with Prahlad in her lap. Holika had a boon whereby she could enter fire without any damage on herself. However, she was not aware that the boon worked only when she enters the fire alone. As a result she paid a price for her sinister desires, while Prahlad was saved by the grace of the god for his extreme devotion. The festival, therefore, celebrates the victory of good over evil and also the triumph of devotion.

Legend of Lord Krishna is also associated with play with colors as the Lord started the tradition of play with colours by applying colour on his beloved Radha and other gopis. Gradually, the play gained popularity with the people and became a tradition.

There are also a few other legends associated with the festival - like the legend of Shiva and Kaamadeva and those of Ogress Dhundhi and Pootana. All depict triumph of good over evil - lending a philosophy to the festival.