Just 1 query about Annual reports in general. I read Annual reports regularly now a days. But what I feel is , other than reading qualitative factors like product categories, Capex done or innprocess and managment discussion, other financial statememts, be it Balance sheet, cash flow or P and L, all these are available in screener and even we can easily compare it with previous quarters and Years. So doe it male sense to read financial statememts in Annual reports?
Qualitative factors and discussions , offcourse yes but can we rely on screener for financial statements?
In my view, it’s like getting all the information from a Map compared to a visit to the real terrain. The map has rivers, and oceans but no water.
Reading financial statements without accounting notes is insufficient. A/R will also list off the balance sheet, but very important information such as contingent liabilities, Related Party Transactions, and details about accounting discretion for various accounts. If I were you, I will use both in tandem.
If you are good with price+volume charts, all the above may start to look like a futile exercise 
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From my limited AR reading, I can say that it has everything in it, quantitative, qualitative, visceral, intellectual. It is exhausting but answer a lot of questions, if not all questions we can think about the company.
And Screener or any other such website which provides numbers is about the stock, and AR is about a company. So if we want to take a big position, we need to know about a lot of things about the company, the people who run it, their vision, their plans, so we need AR, con calls etc.
On the other hand, if we just want to have a cursory look at a stock or check the metrics that we think are important for us to move forward, numbers are sufficient. Even I do this, a few minutes of looking the numbers make me stop.
So it all depends on the kind of investment we do, core PF, mid term holding, position building, tracking, trading etc. Different seasons, different clothing.
And Screener’s data is reliable, although at times there are some discrepancies which are pointed out. Here is some proof.
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What i meant was once we have done a complete reading on annual report and have understood the important things like management who are running the shows etc, then after putting it in core portfolio, then for subsequent quarterly and annually tracking it, does it make sense to just do screener or it has to be from Annual Report?
The reason i am.asking is my portfolio is of 30 companies and now 30 annual reports are on the desk. Average pages are 300 per report. You can imagine my situation
I have little experience in this regard but I can say a few things. For a company to be in the core PF, it has got to have a lengthy future. It has to be in existence for many years to come. And depending of the nature of the business it is in, a couple of quarters of under performance does not matter, but for a year I guess AR should be read. After all, if a company is in the core PF, and a year has passed, the AR should be read to understand what has happened in the year, or what has not happened. One can check what was said in the last AR and if that happened or not.
And if the company does conference calls, it helps more. Dr. Hitesh makes it a point of listening to conference calls for his trading bets. So AR and conference calls help in understanding the tone of management in letters and speech. And depending upon the stock performance and the understanding of the business we can invest more or trim.
Numbers are quantitative, there are no two ways about it, but many other things that pertain to the business are subjective, arbitrary, we can be wrong here. And I think the only way to improve this is by gaining experience.
And if you have 30 ARs to study, you can start with your more convinced bet. Also, I think, the more familiar we get with the ARs, the fast we can skip the unnecessary pages, we can focus on the things that are important. And of course, if the company is small or if we have doubts about the management, then we have to read more including the salaries paid, RPTs, loans given to group companies, unlisted subsidiaries etc.
So depending upon on the nature of the business the company is in, our conviction, our allocation, our trust etc, we can choose to check the numbers and skim through AR, or go through it despite it is exhausting.
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i recently came accross this VIP (value averaging investment plan) vs SIP article, however could not find any funds offering this type of investment product. I have contacted my HDFC Securities relation manager, no feedback recieved so far…
if any seasoned investor here is using this method instead of SIP please let me know how to go about this?
Regarding tax calculation in ITR
1.Having STCL of 3000
2.Having LTCG of 1000
LTCG less than 1 lakh is tax exemption.
But in ITR form it is setting off Current Year Capital Losses with Current Year Capital Gains(LTCG)
so i have only loss of 2000 to carry forward to next year. why it is calculating LTCG which is in tax exemption. or we no need to show LTCG with in exemption limit in ITR
Short term capital loss is not allowed to set off against long term capital gain. Its always Long term gain set off against long term loss. In your case, even long term gain is also not there.
Long term loss cannot be set off against short term gain. However, long term gain can be set off against short term loss.
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How to know components of other expenses in qtr results.
As ex. IEX’s Q1 results - under expenses - highest is other expenses 9.33 cr, followed by employee exp of 8 cr. Hence this is the most significant expense.
Any way to find more details? Thanks
I don’t think there is any way to know from any mandatory disclosures. Many times analysts ask about it in the concall, or one can write to the company and enquire.
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- Is asset quality of a lender subjective? What other factors one should consider except GNPA & loan mix to asses the asset quality?
- Can we get Annual reports of the years before a company was listed? If yes, where can I get them?
Whether we need to show LTCG which is less than 1 Lakh in ITR?
Experiences from my recent filing…
I had to file ITR2 and AIS promptly brought the LTCG. It was 1.4L.
Good thing is I had STCG loss from my US equity (company RSU) and also STCG loss and LTCG loss carried forward from the previous years. That offsetted my LTCG to zero.
That is in a way bad since upto 1L there’s no tax. And now it got offsetted for no benefit.
However it brought down my taxable income and I was lingering above the slab where surcharge increased dramatically. So in total the LTCG offset to zero saved me quite a lot of taxes.
Income tax department would want you to declare the LTCG even if it is below 1L for their benefit of increasing surcharge if that amount makes you cross a tax slab
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Thanks for clear information
Hi,
How to show loss in accrual / receipt’s column for capital gain in ITR 2? It doesn’t seem to take negative sign.
Thanks in advance.
Portfolio question- if I have 10% allocation to a stock that has since appreciated (doubled) and now becomes 20%. How does one go about normalising the portfolio?
Should we see % allocation on cost basis or price basis?
Lastly, if seen on price basis and I sell a portion of the appreciated stock to bring back the allocation to 10% am I not cutting my winners here? The wisdom says let your winners run…
Appreciate the thought process of learned forum’rs here
Not an easy question to answer, in the sense that, there are many angles to it.
Say for example, if a stock is part of one’s core PF, like one is certain of the company’s foreseeable future, its growth, profits or if one wants to have a stock which provides stability, then there is no point in trimming the position, or taking the capital back etc.
On the other hand, if it is a stock or a stock from a sector that is fancied right now, so despite its future potential, if the growth of next 2 or 3 years is priced in already, there may not be any further price appreciation. One can take a decision basing on PE, margins, share holding pattern, management’s and competitors’ commentary etc, and other such quantitative or qualitative factors.
Or if the invested capital is substantial, if it is big, then the capital can be taken out and the profit can be left.
Or even if one is sure of the company’s future, if the chart structure is not strong, one can observe for sometime and can either come out of it entirely or just take the capital back. And if it falls more and consolidates, then one can initiate a position again. Charts help here, because sometimes stocks consolidate for months, so it may not be beneficial if one books profits, because the price may not fall after one has booked profits. Moving averages may help too.
Or to give a small psychological happiness, one can book some % of the profit, say 25% and leave the rest, if the price falls, 25% has already been booked, and if the price rise, 75% still grows.
I am sure, there are many other ways of looking at it.
So there are no rules that can be applied in situations like these, everything is subjective and also each stock is different. Along with the understanding of the business, performance of the stock, psychological aspects are also at play here. If for any reason if the stock doubles from here, and one has booked the entire profit or even just the capital, how would he feel? Or if the price does not move for a few quarters and time correction happens, how would he feel then?
I am yet to experience everything I have mentioned above, so do take my words with a bag of salt.
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Hi,
When an investor talks about portfolio, percentages, allocations, etc.
he’s only being a speculator than an investor.
The selling of an enterprise only because of its recent run up, securing the profits/principal is the mindset of a speculator or trying to be a speculator.
When an investor talks about allocating % of his money into each stock. He is talking in crores or lakhs above 20-30.
20lakhs 20x makes a difference to your life.
20thousand 20x will still make you do the 9-5 job.
when you bring in cash you have to have the risk factor to it you will not only have the returns but also get you hooked to it and think like an entrepreneur and not like an employee.
the return percentage is the same on the capital invested, whether in lakhs or thousands.
An investor thinks fundamentally about when to sell. This is a vast subject that can not be explained theoretically but only through experience. When you do not know When to sell you probably did not buy at the right time( It’s not timing here that I am talking about, but the phases of growth. Buying at the consolidation phase, and seeking high returns).
A speculator does not think from the company’s point of view and attributes factors that are not in control of the company like his gratification, perceptions in the near and long term, and short-term exaggerations of policies(fiscal deficit, GDP growth) and events.
When you get advice on selling the principal amount in the stock and letting the profit run.
it is partial to sell your principal and let the profits be invested in the stock.
Money is Money.
Always think like a businessman.
You have to define what is risk when you are investing.
Be a Fundamental Investor
This is another perception.
Thanks for reading.
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