LEARNING


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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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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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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Moneylife Digital Team 27 February 2015
Not just financial literacy but numeric skills are required for individuals to make informed financial decisions   Financial literacy is a buzzword around the world. While modern technology, investments and liberalisation have made new financial products and services widely available,...

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What is the temperament of a successful investor?    To be a successful investor, one does not need a high IQ. You need not be a wizard at mathematics or finance. One of the most important attributes of a successful investor is ‘temperament’. I understand that the word is being...

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Crores being blown up, while aggrieved investors don’t get redress   Financial literacy is as much a fad today as corporate governance was after the global accounting fraud had engulfed top multinationals, at the turn of the century. In the past decade, we have seen regulators pooling...

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Moneylife Digital Team 13 February 2015
Why do people fall short of their retirement goals?   There are numerous research studies and surveys which have highlighted the retirement crisis in America. In April 2014, a poll by Gallup, an American survey company, found that having enough money in retirement is the biggest worry...

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There are times when they are worth buying. Here is a guide   Globally, commodity prices are on a sharp decline. Prices of metals, like copper, are at multi-year lows. Oil prices have more than halved from their peak. Is this good or bad? If prices are falling because there are new...

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Moneylife Digital Team 30 January 2015
Market conditions may change, but the basics of financial planning remain the same   The basics of planning your finances and investing do not change all that much, over time. What you see in the financial media on personal finance is a re-hash of this advice which is not bad. But...

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Moneylife Digital Team 30 January 2015
A large number of investors made just 4% in 2014 when S&P 500 was up 14%, while the top quartile made 16.5%. What differentiates the good investor from the average?   Most people are poor at investing. Several studies highlight this misfortune of investors time and again. The...

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How to select fast-growing emerging companies? Here are some guidelines   In the last issue of the year gone by, Moneylife had a Cover Story on the ‘wealth creators’ of a decade. It was a point-to-point measure—from 2004 to 2014. The article mentioned the near impossibility of anyone...

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