Investing Basics - Feel free to ask the most basic questions


(suhagpatel) #689

Off late hearing a lot about investing in liquid/debt funds. Many advisers keep on advising to invest cash in liquid funds rather than keeping that in saving accounts. Wanted to know what are the basic advantages of investing in liquid funds Vs Bank FDs. Returns are more or less same as FD at current rates.

Since liquid fund investments are generally short team in nature what kind of tax is applicable for such transactions.

Regards,
Suhag


(shyamutty) #690

Is having some portion of portfolio in gold a good option?


(Dinesh Sairam) #691

The general idea is that assets to up in value over the long term. The second idea is that different assets have different Risk-Reward profile, although it’s been proven that even decent stocks returns more than any other asset class over time (Doubtful… Real Estate could be a very close competitor).

In India, Gold has returned over 12% every year for the last 3 or so decades. Gold also has an emotional value in India. So I guess you’ve gotta ask yourself “Will gold remain an emotional asset in India for the long term?” and whether 12% is enough returns for that level of conviction.


(Dinesh Sairam) #692
  1. I’ve noticed that the PEG Ratio is a good indicator of a possible undervaluation. It’s not always the case, but it’s right up there with EV/EBITDA as a decent indicator of undervaluation. I’ve never (Personally) found a company with a PEG greater than 1.5-1.75 to be undervalued.

But of course, one has to use the medium term Profit growth to determine a PEG. Some companies may have reported subdued profits due to some adverse condition, but may have had good growth otherwise in the past.

  1. Yes, that’s a valid question. I usually look at the most mature company in the industry and look at how its Margins are. That’s probably what the company you’re considering would also earn in the long run. However, nobody can guess the rate at which the convergence will happen. For companies with very good pricing power (Brands, Oligopolistic Industry, Niche business etc), the convergence will happen very, very slowly.

(sarthak kumar) #693

Could somebody please explain or point to a source to help me understand what exactly happened to Equitas and Ujjivan today.

Thanks


(Krishnakumar M) #694

Hi,
Is there any way to calculate New high new low index indicator to find market breadth. Any website provides it?
This indicator from Elder Alexander books look intriguing. Tried checking this in different platforms but couldn’t succeed. Or is it thatonly way to plot is taking it directly from NSE or BSE website and calculate it manually?

Could anyone please let me know.

Any direction would be of great help!

Thanks,
Krishna


(AtulD) #695

Continuing the discussion from Finception - Understanding Stocks through stories:

Can you please share the Whatsapp group details/links if possible?


(Karthick Chennai) #696

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(suranjit sarkar) #697

I am trying to understand how NPAs are added/deducted and how Bad debts are written off from P&L during a particular year. For instance take following notes from an NBFC.

Here Bad debts/advances written off is 315.66. How do they come to this figure?

Another note regarding movement of NPAs below. How NPAs are added and deducted during the year? Any norms for that or is that just as mgmt wishes to deduct/add during the year. I understand that closing balance is summation of net NPAs(sub standard+doubtful+loss assets) which is also the opening balance of next year.


(Dinesh Sairam) #698

One, it is against forum rules to post any sort of contact detail whatsoever. That would amount to spamming. And two, I’m not in any of these ‘telegram’ kind of channels. Most of the groups I am in are kind of invite-only, so I’d prefer not to post it publicly. I hope this is understandable.


(Manojlion) #699

Video on Moats by Pat Dorsey.Found it pretty useful


(Vikas009) #700

The link are not working


(Vikas009) #701

The link of basics are not working?


(preetkaran) #702

Need help.
currently i am reading Mark Minnervini’s Book and i have one doubt.

In the book, the author has done following calculation:
40% batting average (i.e 40% win in the trade)
42%average gain
21% average loss

Result: net loss of 1.16% in 10 trades

i just couldn’t figure out the result, as per my calculation:
let you trade 100 rs for 10 times with 40%batting average then

a. 100 + 42%gain =142
b. 142
c. 142
d. 142
e. 100-loss of 21%=79
f. 79
g.79
h. 79
i.79
j.79

Net Profit/Loss: (424)-(216)=168-126=42
net %gain=42/1000=4.2%

But the author is reporting loss of 1.16%; HOW?

here is the screenshot


(preetkaran) #703

@dineshssairam @hitesh2710
please let me know if you have understood the concept


(ashish) #704

This is the calculation:

Trade N0. Amount Gain/Loss %
0 100
1 142 42
2 201.64 42
3 286.3288 42
4 406.586896 42
5 321.2036478 -21
6 253.7508818 -21
7 200.4631966 -21
8 158.3659253 -21
9 125.109081 -21
10 98.836174 -21

The gain in 4 trades is average of 42% and loss in 6 trades is average of 21 %. Final amount is 98.83 which is 100-98.83=1.16% loss


(preetkaran) #705

thanks @ashish.iit
you made it very clear


(nabilmoideen) #706

Should one add costs such as - Brokerage & Tax incurred (while buying the stock) to the Cost of purchase of a stock or only the terminal price paid should be considered while measuring one’s portfolio performance & calculating capital gains tax (after selling the stock)…


(Chandragupta) #707

These are two different things – calculating capital gains for income tax purpose and calculating portfolio performance for personal review.

For income tax purpose, all costs directly attributable to the purchase or sale of the share can be adjusted, such as brokerage or transaction charges except STT. You can easily google for this information since this is straight away as per Income Tax law.

If you are a DIY retail investor and doing a personal performance review, I think you should include not only the direct costs given above but ALL costs related to your investing activity itself, such as annual demat charges, subscription to magazines, paid services, websites etc. if any and so on. After deducting all of these, one should be able to beat the average equity mutual fund at least, then only it is worth investing directly in the markets.


(Manojlion) #708

Shared by @Prdnt_investor in Twitter
History of Corporate misadventures
http://prdntinvestor.blogspot.com/2018/11/history-of-corporate-misadventures-in.html?m=1