Value Investing...Secret to good investing

As we see the stock market move up and down just like a SEE-SAW, what thought crosses our mind?...Is there fear when it drops and excitement when it rises!!!
Well its time to understand Value investing, which goes beyond all other forms of investing in the long run. Its the approach of not paying a very high price for a stock and remaining invested for a long period of time to gain optimum benefits. But our investors lack patience in this age...all they want is quick returns, short cut to gaining wealth!!!
As per Prashant Jain, CIO of one of India's Largest MUTUAL FUND HOUSE HDFC - the secret is that he buys only into business he understands well and while he likes growth and quality, he will never overpay for growth. He further added that he believes in doing simple things well. Many people don't want to concentrate on cash-flows and numbers like return on equity and this is where they lose out. These are simple things but a very important part of our process...Yes friends its time to learn the basics of Value Investing and how to analyze stocks to avoid choosing a wrong one just based on tips and stock recommendations!!!
I have put below some of the things that need to be checked in simple words before investing in a stock. Remember these are just the basics and we need to have a thorough research which Value investing will teach us
RETURN ON EQUITY(ROE):- NetIncome divided by the shareholder's equity(book-value). Its average should be between 15-17% over a long term
P/E RATIO:- Low ratio is always a good sign and can be worth buying
P/BV RATIO:- Stock is costly if this ratio is higher
DEBT:- Should be as low as possible and checked for stability
EARNINGS PER SHARE(EPS):- States a firm's profits on a per share basis. Gradual increase in EPS overtime is a good sign


This blog is an initiative to help the middle class community to ignite the Financial genius within them and motivate them to achieve Financial Freedom

Blow to IT Industry

Its all happening...Is the IT Industry heading towards its downfall?

Well the symptoms though are pointing towards it.
As per the latest news, the chief of Infosys, India's second largest IT services firm said,"What we see from customers is that they are committing short term; they also reserve the right to cancel, so clearly, everybody is playing the short-term game at this point in time." Further we have the H1B visa(work visa for US) fees nearly doubled from US $2000 to US $4500. The Indain IT Industry derives nearly 45-50% of its revenues from its onsite work resources. As per NASSCOM, this will increase the annual visa cost for the Indian IT industry by US$ 200-250 m annually. This will reduce the cost arbitrage that India offers to its clients in US. However, Indian IT firms cannot afford to miss the US markets!!!
The percentage of onsites that we had is also constantly reducing as per latest reports of the last decade. If this trend continues then surely the Indian IT Industry could be in deep trouble. But who will be the most affected will be the common man, us middle class whose primary source of income is the JOB in IT. Are we prepared well???


This blog is an initiative to help the middle class community to ignite the Financial genius within them and motivate them to achieve Financial Freedom