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The Value Of Money

From Manish Chauhan's Facebook page, I got to this fascinating video about the value of 5 rupees (by Veyilon Thirai, Tamil with English subtitles)

I

I've had my instances in my childhood too, of knowing the value of money. It would cost two rupees for three minutes at a video game, and you had to finish the seven or eight levels of Super Mario in that time to qualify as a champ. It would take me a couple days running errands, like getting milk or vegetables, where my folks would let me keep the 50 paise or so that would be left over as change. (I'd ask if I could keep it, but most of the time I just wouldn't give the small coins back :) )

Ramki on DLF's Sudden Rise, and My View

In a recent Conversations piece, I spoke with Ramki about a few stocks, and in them was DLF. The suggestion was to buy DLF only if it dipped to 185, but since then the stock tapered down and has rallied like crazy. Ramki has mentioned this on his blog -- and kudos to the fact that he's admitted that the stock didn't quite follow through!

A few days back, during my interview with Deepak Shenoy, I had suggested that one should wait for at least 185 to buy the stock as I continued to be bearish for that stock (it was trading around 210 at that time, in late Feb). I returned from my holidays and looked at the chart, and wow, this stock has rallied some 30% from a low of 208.50. So what happened there?

Put mildly, I was caught on the wrong foot. Let this serve as a reminder to all that no technique can assure a positive outcome, no matter how (supposedly) clever the analyst is! So how can one guard against serious losses, then? First of all, understand whether the recommendation is to BUY or SELL. When I speak of a preferred buy level, it is not a recommendation to sell. A buy or sell recommendation will come after considering various factors. It has to be a low-risk trade either way, but always bear in mind that there is still ‘some’ risk. To survive in the market, we need to ensure that the risk we take is affordable. So we decide both our position size and the stop-loss level when initiating a trade.

If you ask me what one should do in DLF now, I will probably be loathe to give you a straight answer, because the signals are still conflicting. Why chase something that already went wrong?

This is deeply humbling and one of the reasons why I keep stop losses is the fact that sometimes stocks misbehave. You can't obviously over analyze the stock to find reasons, but the entire market is up and has taken DLF with it.

DLF - After the Rise

In a Conversation with Ramki, we had spoken of the stock being bearish and that a good buy point was 185. The stock has since rallied to 275 - what should you do now?

Deepak takes you through what could have been a stop loss for the past trade, and what you could do now.

(6 min)

At Pragati: Open Up The Rupee

Last month, I wrote for Pragati on issues with Paypal recently and why the real solution is to Open Up The Rupee:

PayPal, the company that pioneered payments and money transfers on the internet, recently announced a change in the payment system for Indian residents, by setting a limit of $500 per transaction. Furthermore, users cannot use money credited to them to directly buy goods or services—they will have to get the money paid into their bank account first. PayPal said this change was made in order to comply with Reserve Bank of India (RBI) regulations and, regrettably, did not give any further details.

Many Indians use PayPal—shoppers who buy books or software online, electronic retail entrepreneurs, and freelancers who are paid online for ad hoc or small projects. Typically, they would receive and store money at Paypal, and use it to pay for goods or services, or to make small donations. With these new changes, they must withdraw any received money immediately so the intermediation costs go up—users can still pay others through PayPal with a credit card, but that means paying fees at both ends of the transaction.

The limit of $500 per transaction hurts the bigger players who heavily relied on PayPal as it is trusted by their US customers. Now they have to tell customers to split transactions into chunks of $500—a process that is tedious and appears unprofessional.

The new regulation was announced in a circular by RBI, which stated that the Foreign Exchange Maintenance Act (FEMA) laws do not allow for storing of export proceeds abroad. PayPal is therefore required to put all such money into a pooled account at a “Category 1 I-Bank”, and then transfer it to the exporter’s bank within seven days. The seven-day limit is the RBI restriction, wherein interest needs to be paid above that time (in addition, you have to be a bank); PayPal is required to report in detail all transactions over the $500 limit.

...

(Read the full article)

Indian Private Banks - Most Expensive in Asia

A CLSA report I got by email recently had this graph which stunned me:

CLSA P/E by country

 

Conversations with Manish Jain: Tech, Advisors and Mega Deals

In a 20 minute free form conversation, Manish from MProfit speaks with Deepak from MarketVision talk about:

  • Technology and Trading in India
  • How Distributors have started to become Advisors and,
  • The Reliance - DE Shaw deal.

Manish and Deepak worked together briefly during Deepak's Moneyoga days of building algo trading systems in Bombay. According to Manish's twitter profile - he loves Cars, technology, finance, fitness and a certain fruit from Cupertino, Calif.  He moved to India 5 1/2 years back to focus on technology driven businesses. His latest venture is MProfit - a desktop portfolio management software.

(As a disclosure, there is no commercial relationship between our companies)
 

Visit MarketVision at http://www.marketvision.in
Visit MProfit at http://www.mprofit.in

Manish also writes at http://www.celestri.org.

What is "Short Delivery"?

What is "Short Delivery" and Auctions on the NSE?

Can you buy a share and still not get it, two days after you purchase? And if you sell it without actually having it, what happens?

Deepak Shenoy takes you through:

  • The concept of short delivery
  • Auctions on the NSE
  • Why you get your shares four days later instead of just two
  • How you might be penalized for selling what you don't own
  • Why this is important even if you are a "Buy Today, Sell Tomorrow" (BTST) trader.

(7 min)

Sokol is not So Cool

image David Sokol, (now former) executive at Warren Buffett's Berkshire Hathaway, recently disclosed that

  • he bought 2,300 shares of Lubrizol on December 13, the day he told Citi to arrange a meetting between Lubrizol and Berkshire for a potential acquisition.
  • Supposedly the first overture was rejected by Buffett.
  • By Jan 7, Sokol had bought 96,400 shares of Lubrizol.
  • Soon after, Berkshire bought Lubrizol, and David S. made off with $3 million as per today's valuation.

Video: China's Ghost Cities and Malls

An incredible video by the Australian SBS DateLine on China. 64 million apartments are empty!

 

Inverted CD Yield Curve

Quick post about CD yields today. CDs are Certificates of Deposit, trade in the fixed income markets at sizes of a crore or more, and are issued by banks. Think of them as big fixed deposits. This data is for 29 March 2011.

CD Yields 29 March 2011