Prajna Capital - An Investment Guide

“Our favourite holding period is forever.” – Warren Buffett The Indian benchmark index is down 35% plus from its highs. Our 8-year equity cycle depicts some 5-10% correction before the consolidation phase with a max downside of some 15% from current levels. Recovery to the new high would take anywhere between 27-46 months from the previous peak. In such cases how do small retail investors manage their money? The most important point is that many small retail investors do not have expertise to invest their hard earned money themselves. As such, they make wrong investment decisions. Here’s a low down on investment styles and a few rationales. Systematic Investments (SIPs) The best thing about reaping good returns is to plan your investments in systematic manner. Remember, nobody can time the market. So, if you have an investible surplus to be invested into equities, the right way to invest is in a systematic manner. Since, most small retail investors are salaried individuals, the best w...

Dividend-FD combo give you handsome return INVESTORS can earn as high a return as 20% per annum by simply investing in shares for dividend and then re-investing those dividends in fixed deposit to earn interest. We made a portfolio of six stocks, which pay higher dividends than the average and then estimated the return —which an investor would have earned if he had invested in these stocks on April 1, 2003, and held on to his investments till April 1, 2009. The reason why we chose April 1, 2003, as the starting point is that the Bull Run was just about to start then and therefore, prices were very low, resulting in high-dividend yield. And today, we have come full circle as there are so many stocks which are beaten to such an extent that the dividend yield is as high as 10%, in some cases even more. The six stocks, which we have chosen are Tata Steel, Varun Shipping, HCL Infosystems, Chennai Petroleum Corp, Graphite India and Allahabad Bank. Assuming that an investor had bought ...

IT IS a blend of value investing with aspects of behavioural finance . It tends to be bearish when the market is bullish and vice-versa. Welcome to the world of contrarians — who believe in going against the wind. Although it is never easy, remember what doesn’t kill you makes you stronger . The-60 year-old (a contrarian investor) is a firm believer that to be successful, you should invest in out of flavour stocks or sectors that are not of prime interest to most investing community. Rather than investing in then popular sector stocks such as realty, banking and others invested a large chunk of money in sugar stocks in January, when the market was at its peak. His intellectual independence with a healthy dash of agnosticism about consensus views reaped dividends. Unlike the other sector stocks, which are bleeding right now, His decision to invest in sugar, stock saw his portfolio’s worth increasing by almost 30-40%. Here’s an insight into the contrarian world of investing, what...

Lists the 10 biggest financial mistakes investors make in their over-enthusiasm to make quick bucks HAVE you lately started falling short of your investment target or having difficulty in meeting your monthly expenses? Or have you been forced to take one credit card to clear the dues of another? If yes, you’ve got some serious financial trouble ahead, which may be because of some simple financial mistakes you must have made in the past. Surprisingly, not only common but even seasoned investors make financial mistakes, which they sometimes find difficult to rectify. For many aspects of financial planning, there is no going back, at least without some sort of penalty. The good news, however, is that it’s never too late to learn from your own mistakes or those of others. Here are the top 10 financial mistakes people generally make: 1) PUTTING OFF FINANCIAL PLANNING Undeniably, the biggest mistake that people make is to ignore the value of financial planning. Financial planning, in f...

Is the choppy stock market making your heart skip a beat or two? Put your fears aside. Greed (bull) and Fear (bear). These are two words investors often hear and think of, but are unable to control their emotions when it comes to investing. In fact, when stock markets are northbound, their confidence in buying increases considerably. They buy stocks irrespective of their high price-to-earning ratio and are sure to make good money. If, however, the markets enter a bearish phase, their confidence goes down, leaving them wondering where did they go wrong? The chaotic bear market environment then sets the stage for fear to creep into their minds, thus impacting investment decisions. To make sure that you successfully weather the raging market storms, here are six ways to drive out your fears of losing money in a bear market. STAY CALM AND ACT SMART Easy to say than follow. It is true that bear markets spread panic among investors, often causing them to sell all the stocks they hold. But a...