Month: March 2015

How Inflation kills investing returns

Inflation and investing , I often revisit this quote when I am reviewing my portfolio

Inflation is a tax one has to bear irrespective of whether one is investing or not.
The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislature. The inflation tax has a fantastic ability to simply consume capital. It makes no difference to a widow with her savings in a 5 percent passbook account whether she pays 100 percent income tax on her interest income during a period of zero inflation or pays no income taxes during years of 5 percent inflation. Either way, she is ‘taxed’ in a manner that leaves her no real income whatsoever. Any money she spends comes right out of capital. She would find outrageous a 120 percent income tax but doesn’t seem to notice that 5 percent inflation is the economic equivalent  ~ Warren Buffet

 

I had an opportunity to visit India after almost a year and I took this opportunity to do a dip stick test on inflation

Cautionary Note : I was in Kolkata for 15 days and my experiences may be totally irrelevant and Read the rest

Learn how to Dissect RoE

There is almost a unanimous agreement in investment community that RoE is an important indicator of health of a company, High sustainable ROE implies sustainable competitive advantages and hence investment attractiveness of the company

Sustainable is a key word here so always execute ROE analysis for at least 5 years if not 10 years to arrive at a conclusion

DuPont comes in handy to break down ROE, I will not go into details of DuPont , you can read this article to get yourselves accustomed to DuPont

You can use Tankrich Valuation Tool to do DuPont analysis in 5 mins, post analysis how do you dissect RoE ?

This will be largely dependent on how familiar you are with operations of the company and industry, We will take a case today and see if we can put together a generic framework for dissecting RoE

Friends this is going to be a long post so take out your pen, paper, food and time and lets dig in. The company that we will use as case is Ajanta Pharma

The RoE for last 5 years has been ..

roe-1

Fantastic improving from 16% to 41%

The frame-work that we are going to use … Read the rest

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Did the Peter Lynch Screener worked ?

Did the Peter Lynch Screener worked ?

In June 2014, I created a stock screener after re reading ‘One up on wall street’ by Peter lynch. You can read the old post here now lets review how those stocks performed vis a vis broader markets

1 Tata Consultancy Services Ltd. 2213.55 2696 21.80%
2 Lupin Ltd. 983.4 1838 86.90%
3 Amara Raja Batteries Ltd. 491.45 902 83.54%
4 MindTree Ltd. 807.65 1466 81.51%
5 DB Corp Ltd. 299.7 391 30.46%
6 CMC Ltd. 1689.2 2023 19.76%
7 Persistent Systems Ltd. 1060.75 1870 76.29%
8 Lakshmi Machine Works Ltd. 3697.35 3794 2.61%
9 Monsanto India Ltd. 2131.5 3282 53.98%
10 eClerx Services Ltd. 1169.15 1572 34.46%
11 NIIT Technologies Ltd. 427.5 417 -2.46%
12 Finolex Cables Ltd. 162.1 279 72.12%
13 Dhanuka Agritech Ltd. 380.35 642 68.79%
14 Zensar Technologies Ltd. 394.65 731 85.23%
15 VST Tillers Tractors Ltd. 1818.15 1592 -12.44%
Average return (equal weight portfolio) 46.84%
CNX Midcap 25.36%
BSE Small Cap 18.42%
Sensex 16.73%

In Brazil this fact has sildenafil uk buy been known for a long time. Recently, according to the successful case of 38 females who encounter breast cancer to achieve the highest compensation, about 1 Read the rest

An investor’s dilemma

An investor’s dilemma is perfectly captured in below lines

To be, or not to be, that is the question Whether ’tis nobler in the mind to suffer, The slings and arrows of outrageous fortune, Or to take arms against a sea of troubles

Shakespeare would have never thought that centuries later lines from Hamlet will truly reflect the state of Indian investors.

Re read [ Interpretation Mine 🙂]

To be, or not to be: that is the question Whether ’tis nobler in the mind to suffer [Notional loss of having missed the biggest bull run in Indian equities in last 5 years], The slings and arrows of outrageous fortune [Envious pain of neighbours making baggers overnight], Or to take arms against a sea of troubles [Jumping and buying companies touching 52-week highs every day and selling winners]

During a bull run (read now) an investor is trapped in various dilemmas, on one hand he is reluctant to buy  businesses making sequential 52-week highs, I did a post on why it is not a very smart idea to overlook stocks hitting 52-week highs, however the bigger dilemma is right under his nose his very own portfolio

Imagine this,

As … Read the rest

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