Are you interested to gain more Profits from Equities, But confused which type of stock to invest in???

Are you an investor want to gain more profits???
Want to generate more funds than that you earn from Bank Deposits???

Here is a solution for you all which benefits if you are long term investor.

Investment strategy: Prefers companies which generate large profits by employing little cash. Such companies tend to be cash flow positive, and in bad years, the free cash flow turns into dividends.

My investment mantra:

1) Invest in companies that have a return on equity (in excess of 30 per cent) and that pay regular dividend. These two factors are a sign of sound management. Better the sound management, higher the stock prices.

2) Invest in companies with high sales growth: Companies that generate 25-30 per cent sales growth for 5-6 years are unlikely to be loss-making propositions.

3) Never buy into a company which is not a sector leader.

4) Buy companies, which are trading at market price/face value of more than 100.

5) Companies with debt can also be good bets provided the growth in debt is significantly less than growth in sales.

6) Check the macro-economic factors, see which companies will benefit from the governments development initiatives.

Fixed Deposits v Equities

Among some of the best practices followed by top investment managers, tax emerges as an important aspect to be considered. It is common to see advisors in other countries talking about pre-tax returns, and more importantly, post-tax returns. However, in India, we do not talk about post-tax returns when talking about the returns of bank fixed deposits.

As investors it is important for us to ask our financial advisors, bankers or agents about the post-tax returns. The impact of tax on investment decisions cannot be underestimated.

Fixed deposit - pre-tax vs. post-tax returns

Interest earned on fixed deposit (FD) is taxed at the tax slab rate of the individual. If an individual decides to invest Rs 10,00,000 in an FD for a period of 1 year at 9 per cent interest rate(approx), pre-tax interest earned during the year would be Rs. 90000. Tax on the interest earned at 10 per cent tax rate would be Rs 8000, and net amount earned by the investor would be Rs 81000.

This translates into a net return is 8.1 per cent, which is much lower that the presumed return.

Would you decide to invest in an FD, if the net return from it was viewed 8.1 per cent instead of an overall return of 9 per cent?

Fixed income - debt mutual funds

Long-term capital gains on investments in debt mutual funds are taxed either at 10 per cent flat rate on 20 per cent indexed. Average return of short-term debt funds in the last 3 years is 11 per cent. If an individual decides to invest Rs 10,00,000 in a short-term debt mutual fund, pre-tax returns earned for one year would be Rs 1,00,000. At a flat 10 per cent tax, Rs 10,000 would the tax amount. Net capital gain would be Rs 10,000, whereas post-tax interest earned would be 9 per cent.

Equity(Shares & Mutual Funds) - no long-term capital gains

Equity exposure is an important aspect of any portfolio that is built. In India, the government has provided an excellent incentive for long-term investors, by keeping capital gains at 0 per cent. Prudent portfolio building with long-term vision and enough risk weighted exposure to equities can go a long way in building wealth.

Lets say, you dont know in which stock to invest in??? You can switch over to mutual funds, where you can do a one-time investment and wait for a month/year or invest in SIP(Systematic Investment Plan) periodically i.e monthly for a period of 12months or according to your wish. Here you can generate a higher return as compared to other investments. Because in mutual Funds, the highly trained AMCs allocate limited amount in various stocks which will fetch you the best returns. If we see for last 3 years, the average return on all the mutual funds stand at 20% which is much much higher than the other investments, and moreover if you invest for a minimum of period of more than 12months, then there is no capital gain tax even as there is TDS in case of FDs(Fixed Deposits).
Conclusion

'Why should I not invest is FD?' is the most common question asked by many. As explained in the above example, a debt mutual fund could yield more than your FD investment, and equities can give much higher return than Debt funds. This is counter-intuitive and against the popular perception. However, introduction of tax has shown the reality of these decisions.

Stay Smart...Happy investing!!! Maximise Wealth!!!

PS: For investment strategies and for the best stock picks...

mail : kamlesh.konchada@gmail.com

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How to gain maximum by investing in stock market???

There are 3 things you need to know if you want to maximize how much money you make investing in the stock market:

1)  WHAT stocks to buy  2)  WHEN to buy and 3)  WHEN to sell

You must know all three to make the most money.  If you are missing any one of these, then you cannot maximize your returns.  Or worse, you could even lose money.

Of these three, knowing what to buy is by far the easiest.  There are a lot of good stocks out there that will make you solid returns over time.  For example, in the past four years, ten of the thirty stocks in the SENSEX i.e from Bombay Stock Exchange(BSE) Industrial Average have tripled!  That is one-third of the index!  With just a basic understanding of what drives stock prices, an investor can choose more of the stocks that will give this type of return.

The other two — when to buy and sell — that is where most investors get into trouble.  Looking  back, we can see that you could have bought almost any stock in 2009 and have made a profit by 2013.  Many have doubled or tripled or even more than that.  As long as you didn’t pick some deadbeat penny stock, nearly all stocks have gone up since 2009.  But it would have been terrifying to buy back in 2009 after a horrible drop in stock prices in October 2008.  I was in college at the time and was thankful I was not in the markets at the time.  I knew that other people, both amateurs and professionals, were experiencing a freakish hell as the stock market crashed.  However, if you know what to look for, you can make a reasonable estimate and buy somewhere near the bottom for a fine profit.

The hardest of the three is knowing when to sell.  Let’s say you have a nice profit in your stocks.  You don’t want to sell too early if stock prices continue to climb.  On the other hand, you don’t want to lose your profits if the market is headed for another bear market that wipes out 25-50% or more of your profits.  There are ways to know that the bull market is likely going to end soon, and signs that it has very likely already ended.  Like I have said before, a little knowledge goes a long way in the stock market.

So invest safely, trade smartly. Because Making Money Make Sense...

Stocks RISE, Anxiety Rise, Excitement at peak, Is it time to get out of markets???

Is it time to cash out of stocks?

The market has nearly doubled in a little over five years, and with each record close, the temptation grows to take your winnings and flee. If only you had done that in the crashes that began in 2000 and 2008, you might be a lot richer.

Plenty of experts think stocks are about to drop. But many others offer compelling arguments for the rally to continue for years.

The bulls point to a strengthening INDIAN economy that will help companies generate big profits. They also like that companies have plenty of money to keep buying back their own stock, a big force pushing up prices.

The bears argue that, with the CNX NIFTY index closing above 8,000 on Friday, stocks already reflect years of future profit gains. And that forecast is suspect anyway given that so many economies around the world are stumbling.

The BULL and BEAR cases in detail:

BULL CASE: A STRONGER ECONOMY

In the past one month, markets have ended with investors selling in a recession, or bailing out because they anticipated one. The odds of a downturn anytime soon? Not very high, at least based on the latest economic reports and forecasts.

The INDIAN Economy has shown a growth of 5.7% in GDP amounting to 1.842 trillion USD.. One reason is companies are hiring at the fastest pace.

More people working means more paychecks and money to spend. And the good news can feed on itself. People who never lost jobs but were worried about layoffs might start spending more, too. Consumer confidence has hit its highest point.

All this makes it more likely that companies will keep posting higher earnings.

BEAR CASE

STOCKS NOT CHEAP

It's fine to forecast big profit gains well into the future, but what if prices fully reflect expected returns?

That's what SENSEX and NIFTY on. They cite a widely used gauge of stock value called the price-earnings ratio, or the price of a stock divided by its earnings per share. If a share costs Rs100 and financial analysts expect the company to earn Rs5 per share in the coming year, the P/E ratio is 20.

The key here is that low P/Es are considered a better deal. Each dollar you spend on a stock "buys" you many dollars of future earnings. High P/Es buy you fewer future earnings

My Stock Picks for the coming week i.e 8th Sept 2014 to 12th Sept 2014: Hexaware Technologies, GMR Inf, Divis Lab, South Indian Bank, NHPC, IOB.

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Biggest Stock Market MYTHS

Many investors wonder whether or not investing in stocks is worth all the hassle. At the same time, however, it's important to keep a realistic view of the stock market. Regardless of the real problems, common myths about the stock market often arise. Here are five of those myths.

1. Investing in Stocks Is Just Like Gambling.
This reasoning causes many people to shy away from the stock market. To understand why investing in stocks is different from gambling, we need to review what it means to buy stocks. A share of common stock is ownership in a company. It entitles the holder to a claim on assets as well as a fraction of the profits that the company generates. Too often, investors think of shares as simply a trading vehicle, and they forget that stock represents the ownership of a company.

In the stock market, investors are constantly trying to assess the profit that will be left over for shareholders. This is why stock prices fluctuate. The outlook for business conditions is always changing, and so are the future earnings of a company.

Gambling, on the contrary, is a zero-sum game It merely takes money from a loser and gives it to a winner. No value is ever created. By investing, we increase the overall wealth of an economy. As companies compete, they increase productivity and develop products that can make our lives better. Don't confuse investing and creating wealth with gambling's zero-sum game.

2. The Stock Market Is an Exclusive Club For Brokers and Rich People.
Many market advisors claim to be able to call the markets' every turn. The fact is that almost every study done on this topic has proven that these claims are false. Most market prognosticators are notoriously inaccurate; furthermore, the advent of the internet has made the market much more open to the public than ever before. All the data and research tools previously available only to brokerages are now there for individuals to use.

3. Fallen Angels Will Go Back up, Eventually.
Whatever the reason for this myth's appeal, nothing is more destructive to amateur investors than thinking that a stock trading near a 52week low is a good buy. Think of this in terms of the old Wall Street adage, "Those who try to catch a falling knife only get hurt."
Suppose you are looking at two stocks:

• X made an all-time high last year around Rs 500 but has since fallen to Rs 100 per share.
• Y is a smaller company but has recently gone from Rs 5 to Rs 10 per share. 

Which stock would you buy? Believe it or not, all things being equal, a majority of investors choose the stock that has fallen from Rs 500 because they believe that it will eventually make it back up to those levels again. Thinking this way is a cardinal sin in investing! Price is only one part of the investing equation (which is different from trading, which uses technical analysis). The goal is to buy good companies at a reasonable price. Buying companies solely because their market price has fallen will get you nowhere. Make sure you don't confuse this practice with value investing, which is buying high-quality companies that are undervalued by the market. 

4. Stocks That Go up Must Come Down.
The laws of physics do not apply in the stock market. There's no gravitational force to pull stocks back to even. Over 10 years ago, TCS's stock price went from Rs 269 to  Rs 620 per share in a little more than five year. Had you thought that this stock was going to return to its lower initial position, you would have missed out on the subsequent rise to Rs 2550 per share over the years.

We're not trying to tell you that stocks never undergo a correction. The point is that the stock price is a reflection of the company. If you find a great firm run by excellent managers, there is no reason the stock won't keep on going up.

5. A Little Knowledge Is Better Than None
Knowing something is generally better than nothing, but it is crucial in the stock market that individual investors have a clear understanding of what they are doing with their money. Investors who really do their homework are the ones that succeed.

Don't fret, if you don't have the time to fully understand what to do with your money, consult a financial advisor.

The Bottom Line
Forgive us for ending with more investing clichés, but there's another old adage worth repeating: "What's obvious is obviously wrong." This means that knowing a little bit will only have you following the crowd like a lemming. Like anything worth anything, successful investing takes hard work and effort. Think of a partially informed investor as a partially informed surgeon; the mistakes could be severely injurious to your financial health.

Trade Like a Top Hedge Fund
What can technical traders see that you don’t? There are different websites like moneycontrol.com, nseindia.com, ndtvprofit.com, Investopedia.com.  Check Five Chart Patterns You Need to Know, your guide to technical trading like the pros.

Hope you got the myths

waiting for your feedback

Regards

Kamlesh

DON'T PREDICT THE MARKETS ,TRADE THEM!

Very often people start to predict the markets ( eg. what happens tomorrow with NIFTY or SENSEX?). No one can predict markets, No one! Actually no one can predict anything in life.Except god men, astrologers, magicians and liars ( And I haven't seen many such rich people.)

Markets, however can be anticipated by using intelligence and most importantly can be traded to make money.Trading is a process which gets over only when you successfully have the money out of the market and starts when you have the money in your account.Taking calculated decisions is what investing/trading is all about.Education and training helps the process.

Trading is very different from technical analysis (TA)- also called charting.It is a much higher concept of which technical analysis is a small part.What, when, how much and what not to do after reading the charts is called trading.Adding, managing and removing money ( positions) from the market is called trading. It is a dynamic process and changes with the market conditions.Its like playing chess with the markets and is amazingly stimulating on an intellectual level and greatly rewarding - financially and emotionally.

What differentiates charting and trading is the the emotional part. Physiology and cultivated emotional response mechanism is what either makes or looses money.Trades/Investments have to be planned;TA is mere observation of the markets and to find out what is happening in the markets now ( as opposed to predicting the markets). Once you know what is happening in the markets NOW with as much possible accuracy is that you can anticipate them.

Trading is the culmination of the following concepts. Hi risk reward ratio, demand supply, gamblers fallacy, Cognitive biasing, Inverse pyramiding, stop losses, Regression to mean, Martingale,.....

How many such do you know ......?