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Archive for June, 2006

Note these numbers of note

Posted by Sathyamurthy www.sathyamurthy.com on June 20, 2006

2.5 million: The number of barrels (a barrel is 159 litres) of oil India consumes every day. The US burns 10 times this amount

30 per cent: The growth recorded by the PC market in India in 2005-06 compared to the previous year. HP retained the top slot with total market share of 18 per cent, followed by HCL at 14 per cent, and Lenovo at 9 per cent in terms of unit shipments

48: Number of airports China is planning to open over the next five years. With passenger numbers forecast to grow 14 per cent annually, Beijing plans to spend $17.5 billion on airports by
2010. It is also planning to increase this number further to 220 by 2020

1 billion: The number of songs sold by Apple Computer through the iTunes Music Store thus far throughout Europe as well as in the US, Canada, Australia and Japan

£228 million (Rs 1,778.4 crore): The amount Indian companies spent buying eight British businesses last year, including the £80 million acquisition of Premier Foods’ Typhoo tea brand by Apeejay International

$224 million (Rs 1,008 crore): The amount raked in by The Da Vinci Code in its worldwide opening, the second-biggest debut ever at the global box office, behind the $253 million tally for “Star Wars: Episode III-Revenge of the Sith”

$3.54 million (Rs 15.93 crore): The amount paid by an anonymous bidder for ‘The Hammer’, a Stradivarius violin made in 1707, at Christie’s in New York recently, making it the most expensive musical instrument ever sold at an auction

69.3 points: The value of CII’s business confidence index for April-September 2006, up from the September-March 2005-06 level of 67.2 points. A score above 50 indicates “positive confidence” while a score above 75 indicates “strong positive confidence”

$5.5 billion (Rs 24,750 crore): Annual remittances from 3.5 million Keralites who work abroad. Eighty-five per cent of them are settled in West Asia

Rs 19,990: The price of the XBox360 Core, which will be launched in India in October

Rs. Can’t quantify: The amount depositors have lost while investing for higher returns in shares, mutual funds, fixed deposits of finance companies and chit funds

Crystal Gaze the Indian Stock Markets
Bit of Humour – Southern Style
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Crystal gazing the Indian stock markets

Posted by Sathyamurthy www.sathyamurthy.com on June 19, 2006

Indian stock market is currently in the classic…”kill the bull, trap the bear” phase. Values of many stocks have come down 50-75+% from May 1, 2006. Such a fall in a matter of about a month is unprecedented and various reasons suggest that it is an orchestered fall. Such a game is played to make the weak exit and the strong enter. Stocks have changed hands for sure. Hence lends more credence to the fact that bottom is somewhere near.
Ok, at such times, we lose rationality due to panic/fear but to think of it…money is a mind game not emotional or psychological. What is a share…it is after all a part ownership of the company. And if a company worth Rs100 crore is available at Rs20 crore…how long can panic withhold genuine investors, who know that ups and downs are part of market and market never dies. Suppose if BHEL is made available to you at Rs80…then won’t you be inclined to sell your house and buy as much as you want as you know for sure that in the next cycle of bulls, you are sure to at least sell at 200+, when rationality returns. Then maybe you can move to a bigger better house.
Well, the operator knows that and therefore he never brings down prices to that level wherein fear fades out and people are willing to take increased bets. It’s like jumping from first floor of a building for a prize…out of 100 people, 90 may agree. From third floor, maybe 20-25 may agree (factoring in a fracture or two) and from fifth floor…maybe 1-2 may undertake suicidal attempt. Values are down to Sensex 5000 levels in many cases and match prices prevailing in 2003. Well, in some cases, to levels when Sensex was sub-3000.
Let us tell you the case of Mansukh bhai. When his favourite stock was Rs100. He had clever information that it will come down to 50 and so he waited patiently to buy. Luck favoured him and price did come down to 50 as Sensex plummeted from 12674 to sub-9000. But at that time there was panic all over and sentiment was bruised. There were talks of 6000-7000 in Sensex very soon.
Greed got better of him and he immediately lowered his buy target to Rs30. So money lying idle
waiting to be deployed got pushed further down. The stock reacted from 50 to 62…Mansukh thought it was a technical reaction and how true he was…the stock again tumbled to 46 and Mansukh was cheerful that now his price of Rs30 was but within reach. He had dreams of selling the stock again at a future point of time at 100+ (Note he was sure that 100+ will be back again at a point of time). But from 46, market again bounced and the stock made it to 58 before tumbling again to 50. Mansukh bhai was sure that his (un)reliable sources cannot be wrong and market has to go to 6000 and hence price of 30 has to come. So he still did not deploy the money. The stock then rose to 68 from 50 in a matter of 15 days. Mansukh bhai got a little tensed and put some money at 68 but at that point profit booking came and stock tumbled back to 58 where mansukh bhai sold off at a loss, again feeling that 30 was coming. But in another 10 days stock was 75 again and Mansukh had no idea what to do. From 50 to 75, 50% gain and just because of his oversmartness and lack of discipline coupled with fear and greed, he let opportunity slip out of his hand and now he was suffering a mental block to buy at 75+.
Moral: Money could not be deployed at lower levels though the most popular school of thought says, “buy low sell high”.
OR waiting for the elusive bottom. As explained above, at a certain price, demand overtakes supply and prices therefore rise. Every share has an intrinsic value and you cannot keep investors forever at bay. Sentiment changes in favour in no time hence the best time to buy is when everybody is selling. Time tested theory. Bears make bargain hunting possible and at a point of time all bears turn to bull.
Veena behn, a widow, had invested Rs70,000 of her hard earnings in the same stock at 104 in March as her nephew was a fund manager and he had informed her that within a year the stock would cross 250+ as some corporate development was expected and net profit was expected to improve sharply. In good faith, Veena invested but in three months flat, she saw price tumbling to 85, 75, 60, 52, 46…at every fall she would call the nephew and ask what to do…she at times cursed him also. The nephew knew what was going on in the market and that things would be normal in a few months and asked her to hold on with patience.
But she was not in peace and was having sleepless nights as her Gujarati neighbours constantly kept talking of Rs30 for her stock and how market was in a bear phase. Fear of further downfall was in her mind and like everyone else…she wanted her stock 1) to fly immediately after buying and 2) never go down below the buy price. It’s like asking for too much, isn’t it?
But she knew that she had to believe in her nephew more than anybody else and when in next 4-6 months prices climbed back to 104, she sold off without asking the nephew thinking “saved” without understanding the ploy that getting to exit at buy price means that stock is headed higher. And she will never buy again even at 125.
Lalwani was smarter. He had bought the same stock at 100 but he did not expect a correction more than 75. However, when stock breached 75 and was at 52, he broke his fixed deposit and bought more quantity. His logic was when he saw value at 100, then why should he lose opportunity at 50. He was willing to wait with faith and patience. He had done his homework and was sure company fundamentals were poised to take it to 150-200+ in 1-2 years and for a 200-300% returns in such uncertain times…the risk was worth it (after all, equity means risk).
He was sure…aakhir free mien to stock nahi dega market and bottom has to be somewhere. Even if at 30, he was willing to wait. Today, in less than 2 months of turmoil, his stock is trading at his average price and all agonies have been buried. In 8 months, he sold the stock at 160. Smile back on the face.
But Govindji was unlucky…he got panicky and sold his stock bought at 85 at 48 as he wanted to benefit from the fall and buy back at 30. He forgot that market was smarter. Finally, he had 2 choices, either to buy back at 75 or let go the stock. As human psychology is, he did not have the courage to buy and was cursing himself for acting on unreliable information and impulse.
We had earlier sent the price history of Fortune Info showing how a stock jumps from 22 to 52, tumbles down to 25 again and shoots to 113. All within 3 months. Similarly of Tyche Peripherals, how after buy reports, it fell from 26 to 8 and then jumped to 52…just in 3 months. History has many such evidences in store.
What you should understand from the above is that…
–>If you have the money, buy on declines with a 1-2 year horizon and you may well get 100-200% returns. Avoid fear and greed and start buying in phases. Do not wait for the elusive bottom.
–>If you are stuck up at higher levels and the stock is strong fundamentally, hold on to the stock with faith and patience. Not only your cost price will come back but profit will also be made. Do not trade on your investment. And for God’s sake, do not sell and exit the market…that is what operators want.
If possible, arrange for some more money and average lower or enter some new stock to take advantage when market bounces back.
*There is nothing wrong with the markets and bull run is definitely not over. Maybe the bottom has been made or maybe it is yet to be made. But by June-July, this mayhem will end for sure as you cannot keep a spring down for long. Powerful people who have lost out will come back with a vengeance…remember you are least affected because of your limited investment size (very small stake as compared to them) and these people have the power and lobby to turn the markets. And they will. They will rescue you to rescue themselves.
We expect 11000 to be tested once by July and 12500-13000 anytime from August to October and 16000+ anytime between December-March. Buy with these levels in mind. Even if things do not move as fast as expected…16000 is very much likely latest by December 2007. At this level, your cost+profit is guaranteed.
Further, the correction has removed many excesses from the system, weak players have exited and expectations have come down. Now people are worried about saving capital…a month back they wanted 10-15% gains every 2 days whereas prudent investment philosophy says to expect 15-20% annual returns from stock market. However, many a trader have paid price for their greed and understand now why people work hard to make a living and not enjoy life by playing the markets. It was never easy and it is never going to be. A strategic and informed decision followed by a disciplined execution can alone make you laugh your way to the bank.
For the market to go back in confirmed bull mode, it will take at least 1-2 months. June-July should be months of volatility, with ups and downs creating greed, panic and fear. Rise will be treated with skepticism and disbelief and invite selling and profit booking…falls will be seen as opportunity by many to short sell and also raise hopes of buying lower…this will be followed by consolidation of the market and then a gradual rise which will be accompanied by hesitancy and disbelief again, this time by bulls and bears both…finally when it dawns that market has changed course, money waiting on the sidelines will enter (albeit at much higher levels). You must only be a buyer on declines or hold on to shares…not at all be a seller.
There is nothing wrong with the India story. Our sources say FIIs are gung-ho on India and lot of money is waiting to be deployed. Mutual funds are also at comfort. All MRH (main reh gaya) people unable to benefit from previous rally are just waiting to pump money and hedge funds who have been bruised are equally impatient to buy. So let’s see who bells the cat first….
Digest the pain. You have lived almost 90% of it. Bear 10% more with closed eyes. Do not look much at markets for 1-2 months (i.e. if you cannot buy lower) and you will see things have changed in your favour without doing anything…sometimes time heals faster and is better than any medicine or measure.
Published with thanks to:
Giving market advises for Profitability @ High Probability
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Boss has no Socceritis

Posted by Sathyamurthy www.sathyamurthy.com on June 17, 2006

I am a cricket fan out and out and like many Indians out there watch Tennis with good interest too.

I promise you I have been having interest in Tennis watching even before Sania Mirza burst into the scene with her tight t’shirts and thigh gripping shorts.

Then I watch billiards and snooker (don’t know the difference between the two, however).

When I wanted to go little ungentlemanly I used to watch (like many of my countrymen) Hockey, especially when India played Pakistan.

In a nut(?)shell I have interest in the indoor and outdoor games that had smaller balls in play.

As far bigger balls that were kicked around, I do not have much interest, though it is a rage world over especially when there is this once in four years event called World Cup. Quite a lot of people around the world, cutting across time lines, stay awake to watch Soccer irrespective of whether their country was in contention or not. They simply pick one team to support and tango on.

It is also a fact that people bunk offices to be able to watch the game.

These are the times when humorists on the net come up with interesting mail forwards (who is the author?). One such forward was sent to me on email (!) by my room-mate who sits in front of the computer 28 hours a day plus the six or seven hours he sleeps in front of it.

I found the forward interesting enough to be shared with you folks.

Memo to staff: Get some work done By Melvin Durai

From: Company president
To: All staff

Subject: Low productivity

It has come to my attention that productivity has dropped drastically since Friday, June 9th. I’m not sure what’s going on, but please be assured that I’m monitoring the situation closely and will suspend or terminate employees who aren’t pulling their own weight. For the company to be successful, it’s important for all of us to work hard. We need to learn from the examples set by the following managers, whom I’m pleased to recognize.

John Tembo, Human Resources Manager: I was walking past John’s office and heard him and several employees shouting “Goal! Goal! Goal!” When I knocked on the door, John told me they were watching a training video to help them achieve company goals. I have nominated each of them for our Employee of the Month Award. It’s important for all of us to focus on goals. As John said, “Without goals, our team will lose.”

Carlos Mendez, Sales and Distribution Manager: Carlos called me on Friday morning to say he was ill and couldn’t come to work. His doctor had diagnosed him with a rare illness called socceritis. The illness affects patients for at least a month and there’s a chance of relapse every four years. As you can imagine, I was rather shocked and saddened. I wondered how we could manage without Carlos for so long. Perhaps Carlos read my mind, for he immediately put me at ease. “I’ll come to work, boss,” he said. “The illness isn’t contagious. I just need to return home to get 90 minutes of rest a few times a day.” What an example Carlos is setting for all of us. I am nominating him for our Courage and Inspiration Award.

Ravi Narayanan, Product Design Manager: As of Friday, Ravi is testing an innovative program he developed called WHFH (Work Hard From Home). He believes it will not only increase productivity in his department but also lower costs considerably, particularly the cost of buying coffee and doughnuts. Ravi came to work briefly on Tuesday and I overheard him saying to another manager, “South Korea 2, Togo 1.” I asked him about it and he said, “That’s the number of customers we have in each country.” I was extremely pleased. I didn’t realize we had a customer in Togo. I am nominating Ravi for our Innovative Spirit Award.

Hans Mueller, Advertising Manager: Hans, as you know, is always looking for new ways to advertise, new ways to reach potential customers. Since Friday, he has been personally manning an information booth at the ESPN Sports Bar. I paid a surprise visit to the bar and heard Hans talking to an employee about something called “World Cup.” He told me it’s an acronym he’s using to motivate employees: WORLDCUP (Working Overtime Results in Less Disappointment and Creates an Upsurge in Productivity.) I am nominating Hans for the High Motivation Award.

Ming Yu, Technology Manager: I found Ming coming out of a bathroom stall with a small battery-operated TV. He said he’s testing a video conferencing system that will enable employees to continue to work while doing their business. A few minutes later, I heard Ming telling his assistant how many customers we have in certain countries. I was proud to hear all the numbers, but disappointed to realize we have no customers in America. That’s a huge market that we’re missing out on. In any case, I am nominating Ming for the Bathroom Productivity Award.
(Football world cup 2006 FIFA Argentina Brazil England Costa Rica Germany France Italy Ronaldino Ronaldo Maradona Soccer Pele Beckham penalty kick corner hand of god goal)

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