LEARNING


Multiple factors drive the prices of stocks. The main one is expected earnings growth. This seems logical. After all, you expect to make money in future, not in the past. So, the market is forever trying its own version of palm-reading to figure out the the kind of future earnings a company...

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Moneylife Digital Team 06 May 2016
It has been around 12 years since Credit Information Bureau (India) Ltd (CIBIL), the country’s first credit bureau started its operations. However, there still are several myths, and apprehensions among people about functioning and the role played by credit bureaus like CIBIL as well the...

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Moneylife Digital Team 08 April 2016
Are they really smart? Research firm Morningstar estimates that there were more than 450 US-listed smart-beta products on 30 September 2015. Assets under management (AUM) with smart-beta strategies have grown rapidly, to $616 billion (bn) in 2015 from $103bn in 2008. What is a smart-beta...

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Moneylife Digital Team 25 March 2016
But the financial industry is least bothered    There are over 650,000 registered financial advisers in the US who help manage nearly $30 trillion of investible assets. In 2010, more than half of American households sought advice from a financial professional. Yet, despite the ethical...

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Moneylife Digital Team 20 February 2016
  The Moneylife columnist shared his four decades of experience in financial markets   Decoding annual reports and getting behind the numbers of a company is not an easy task. R Balakrishnan, who has four decades of experience in financial markets and having been among the...

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Moneylife Digital Team 15 January 2016
US firms with CEOs or CFOs who golf frequently are associated with poor financial performance    Researchers in two separate studies have highlighted that playing of golf more frequently by chief executive officers (CEOs) and chief financial officers (CFOs) is associated with less...

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...to the extent decided by the builders   The government is supposed to be ‘of’ the people, ‘for’ the people, and ‘by’ the people. I believe in the last part. I am not sure about the first one; and I am very sure that the middle one, ‘for’, is a lie. The government is never ‘for’ the...

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Moneylife Digital Team 06 November 2015
Is investing in Islamic stocks profitable?   Islamic finance refers to financial activities undertaken that are consistent with Shariah Law. This is an alternative investment option that has gained much traction in recent years. In India, too, many investors track Shariah-compliant...

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Moneylife Digital Team 23 October 2015
US consumers are strongly attracted to schemes highlighted by the media   Several studies have established a relationship between performance and flows into mutual fund (MF) schemes. Schemes that report a good past performance are rewarded with higher fund flows. However, media...

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Moneylife Digital Team 23 October 2015
Wedding-related debt stress may be leading to shorter marriages in the US   In 2014, wedding industry revenues were projected to exceed $50 billion in the United States. According to a nation-wide survey conducted annually by the top wedding website, TheKnot.com, the average wedding...

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Moneylife Digital Team 23 October 2015
Are mutual fund managers efficient in managing downside risk?   In the previous issue of Moneylife, we cited a research which found that multi-asset mutual fund (MF) schemes are not as superior as they claim to be when it comes to market-timing. Apart from market-timing, fund managers...

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Stock market forecasts are meaningless. Ignore them   There are more people making a living by telling others what to do out there in the stock markets than actual people who invest. But the stock market is an interesting place. It never behaves the way it has been forecasted. The...

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Moneylife Digital Team 25 September 2015
When 100 past psychology researches were replicated, only 39 yielded the same results   Enormous amount of research has been done in the field of psychology. However, you may not want to trust those results because less than half of them may be accurate. Brian Nosek, a social...

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A simple tool—RoCE or return on capital employed—separates the winners from the losers   Return on capital employed (RoCE) is a great tool to choose good-quality stocks. In any company, the ‘capital employed’ comes from two sources. One, from shareholders, who have put in equity and...

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Moneylife Digital Team 11 September 2015
A US academic study shows that the nearer you are to a golf course, the better are your returns   It is an old business saying that more deals are struck on golf courses than in boardrooms. Golf fosters valuable social interaction and communication among business professionals. And,...

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Moneylife Digital Team 11 September 2015
An individual’s net worth is not an indicator of financial knowledge, shows a study   Are wealthier households better equipped to invest in complex financial securities? Not exactly. In the United States, an individual investor is qualified to be an accredited investor if he has an...

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We seem to be feeding the consumerist frenzy, rather than building up long-lasting assets   Consumerism, as a disease, has hit India big time. Aggressive online marketing by companies like Amazon and Flipkart—coupled with aggressive financing by credit-card sellers and lenders—is...

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Moneylife Digital Team 28 August 2015
If you are an investor in mutual funds, don’t add your mistake to the mistakes of fund managers   All it takes is one rash decision to wipe out years of investment returns. While investment managers find it difficult enough to overcome their behavioural bias, retail investors, often,...

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Moneylife Digital Team 28 August 2015
Theory’s guru Richard Thaler winds up with mixed success   Can behavioural finance theory be used to make correct investment decisions? This is what Russell Fuller and Richard Thaler, who are actively involved with studies in behavioural finance, attempted to accomplish when they...

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Mid-caps give you higher returns than large-caps. How does one select?   Would I buy a fast moving consumer goods (FMCG) company that has a turnover of under Rs3,000 crore and available at a price-earnings (P/E) of over 70, or one that has a turnover of over Rs30,000 crore at a P/E of...

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