A poem to Adani

You took on so much Debt to grow

You became world’s richest with dough.

You stocks had a 3 year hit show

And now this shit-show.

Listing your group companies for stock manipulation,

only aided your debt addiction,

becoming a growth sensation,

But this allegation has brought much aggravation.

The PE ratios of your group stocks are so ridiculous,

That it has become conspicuous.

You got so mischievous,

that you route your funds through Mauritius.

You did all this with the absence of the P-notes,

But, lo and behold, Nirmala has again authorised P-notes.

The report by Hindenburg,

May just be a tip of the iceberg.

For the report has been meticulous,

And for you, it has been strenuous.

The report has gone downtown

The groups’s stock prices have been beat down.

The group’s global bonds are in distress,

While the SEBI seems clueless.

The report mentions your Annual report’s key omissions,

And it has raised suspicions.

It questions your statutory audit,

much to your discredit.

After all this, I wonder why IHC would commit,

Unless you had agreed to remit.

Now that you have cancelled the FPO,

There are now no institutional anchors,

You may soon get margin calls from your bankers.

The Adani Hidenburg boxing match

I heard about the Hidenburg research report over a week ago and read the report on their website 2 days later once everyone was talking about it. While going through the report, the first question remained unanswered: why did they take 2 years for this report? The research seems genuine on all the things dug up, researched and put up.

While the Adanis were busy doing the puppet show to the audience, someone outside the audience saw the Adanis doing the puppet show. This is visible in the counter-transactions shown with the firms outside India and not shown in the annual reports of the Indian companies.

Round 1 goes to Hindenburg! The shock & awe hard punch will hurt Adanis for a long time to come.

The twists in the tale get interesting. Right after the damaging report, the international fund IHC promises to invest $400 million into the accused company. 

Round 2 goes to Adani!

Which company would ever do that unless the other company was a holding company or a govt. nationalising a company or trying to prevent a big bank bust case? This raises a lot of eyebrows and red flag as it is very unusual and non-sensical.

The hidden truth is revealed the next day. Adanis cancel the FPO. This means that the Adanis had to save face and get the FPO successful while ensuring that IHC gets its money back after the jitters of the report. This seems to be a pre-meditated invest and pull back strategy while influencing the other investors into investing into this FPO.

Round 2 was an unexpected double punch going to the Adanis!

I am sure on detailed investigation of the FPO process, the regulators would be able to find this pre-meditated arrangement duping the others (retail investors and few others) into the trap of investing their monies in this FPO only to be forced to get out of it.

Another interesting critique from some people is the timing of the report. I laugh at their questioning. For any investor in a fair market, maximising returns is the objective. This report was timed to maximise the value of the shorts and earn profit. Isn't this is what fair market is all about? Plus maximum visibility for the brand. Who wouldn't do it given the opportunity?

While reading the report,  the Adani strategy to raise funds becomes clear.
Step 1: Keep a number of close set of companies with maximum percentage control on and off the public books. Includes hiring experts in price manipulation like experienced Ketan Parekh.

Step 2: Based on these inflated stock prices, pledge the promoter stocks and raise more loans that is actually possible to fund the investments.

Awaiting to see Round 3!

A good reason to invest in equity for the long term

Many investors may be scared of investing in equity as the risk is high. Moreover, a fall in the markets can cause heavy losses to the portfolio.
A friend of mine recently made a great comment on the stock markets. He said, in the long run, stocks can give a CAGR of 10-25% (an annual growth of around 10-15% continuously year on year). Even if the stock corrects by a big margin, say 25%, it is only on the last year's price and I still have many years of appreciation intact.
This is very true for a large number of large cap stocks.
Something to keep in mind while investing in stocks.
This make it a good reason to invest in equity in the long run.

Lacuna in Annual Reports

The Annual Reports of listed Indian companies are able to hide a lot of information currently. This should be made available for the general investors to take a more sophisticated analysis of the businesses.
Some of the data that should be incorporated in the annual reports are:
1. Past 3 years and Current External Credit Rating (which is anyway publicly freely available)
2. Long term loans repayment schedules (Investors can then see how much the company will get further stressed in the years going ahead as repayments loom)
3. Securities provided to secure the loans
4. Market Valuation of the properties once in three years (This is anyway done for the sake of banks.
5. Promoter pledging and purpose for pledging
This will allow the investors understand/discover the true/appropriate market value of the companies)

As an investor, I would like to know my company better and these can be a better way for investors to understand their companies.

All hail the projections!

Bigger image available here: http://epaper.timesofindia.com/Repository/getimage.dll?path=ETM/2013/09/30/17/Img/Pc0170800.jpg

Today's economic times report has an article titled "How clouded is our financial forecasting?"

The picture above gives the GDP growth prediction according to RBI's survey of professional economists sitting in the same financial year and making a prediction of the GDP growth at the end of the current financial year.

The numbers are shocking! If this group can get it so wrong, how will analysts of equity research and other analysts work on their assumptions, which are further derived in some way or another on this data.

I think it is time to employ monkeys to predict data as they have amply demonstrated their skills in the monkey funds.

http://www.gizmodo.com.au/2013/04/monkeys-make-better-stock-market-traders-than-people-study/

How to find the truth behind what your (financial) agent tells you?

Here's a list of things that are mentioned here to detect lies by an agent.
How to tell when an agent (insurance, loan) is lying to you
Beyond this, there is one true test because at the end of the day, because actual "Numbers don't lie"*

Many agents typically sell you an investment product saying you pay x amount yearly for y years and the end of it, you get z amount. Plus, there is a bonus amount paid at the end of m years and every n years later. The agent says it as if the bonus is something free, something over and above what the company generally gives/supposed to give. This is just 'playing into' the customer's mind. Since, there are a number of different products, each with its own different flavour and rules, it is very difficult to comprehend what is the real returns expected out of the product. To decipher the real return expected out of the product, do the steps below. If you are not familiar with xls, take help of someone to follow the steps mentioned below:
Ask your agent to give you year wise, the ouflows (investment made, premiums paid, basically money going out of your pocket) and the inflows for every year (typically, a single or multiple bulk amounts at end of a number of years).
Open a new xls and enter the dates, the amount going out of your bank accounts as negative, the expected amounts as positive (in forms of bonus, returns, dividends, etc.) in three different rows.
Add these two amounts (outgo and inflow) in the next row (Row 4). (Click the pic below to zoom)

Then use the XIRR function with the net amounts as the first parameter and the dates as the second parameter to get the real compounded annual growth rate(CAGR).
CAGR describes the rate at which an investment would have grown if it grew at a steady rate. You can think of CAGR as a way to smooth out the returns.
Read more on CAGR

* Numbers don't lie, but reading the numbers in a false context/background/with bias, interpretation of numbers could lead to lies. e.g.: The Indian stock market had gone up by leaps and bounds between the period 2003 and 2008 and those numbers do not lie. But expecting that same kind of growth at any other point in time (as the environment would be different wrt to interest rates, policies, inflation, currency rates, oil prices, global liquidity, attractiveness of Indian stock market vis-a-vis the other global stock markets, investor sentiment, etc.) could be equivalent to lies. If an agent shows you the best period of growth and tells you that this can be expected in the future also, do ask for the worst period of returns and ask him/her why that the worst could not repeat.

Investing in stocks 101

There are many who have decided that they want to jump into investing in the stock market. They might have even opened a demat account and a trading account and now they want to invest. So here is a basic guide to understand a way to start investing in the stock market. The underlying assumption is that you already know what is a stock and that you are participating in the equity of a company.

This is written with an orientation of an Indian investor (with respect to Indian websites/companies/indices, etc.)

1. Know how to choose a trading and demat account. For more details, read http://ajitjagan.blogspot.in/2011/01/choosing-demat-and-trading-account.html

2. Decide what is your investable surplus every month/every six months. This should be the amount you will not have to touch and will be invested for the long term.

3. Allocate this money between debt (PPF, fixed deposits, bonds, NSCs, etc), equity, gold, property, etc. The idea is that you can have more equity exposure if you are young and that if you are ready for the highest of the risks for highest of the returns.

4. Out of the surplus funds allocated for equity investments, you have two options: indirect investing using mutual funds or direct investment in the stock market.

5. There are broadly two schools of investing in the stock market: Technical analysis and Fundamental analysis and rarely a combination of the two

6. The stocks can further be classified under the fundamental analysis as Growth stocks or value stocks. Some stocks are also invested for some special situations (chances of a delisting, chances of a hostile takeover, policy changes favouring the company, special dividend, bonus stocks, stock splits, buyback of shares, etc.)

7. Now the most important question is "how to you know which stock is good or not to buy? where to get information"? One of the most popular websites in India for financial information is www.moneycontrol.com. For each stock, there is a separate page giving much information about the stock. From the stock prices across the two of the most liquid stock exchanges to volume traded, to financials (standalone/consolidated), news, research reports, comparison between stocks, etc. Be careful about the PE ratio reported on this website as the website takes the standalone earnings per share for the denominator and gets the value wrong in case the company has subsidiaries and has a consolidated financial. Calculate PE on your own. Go through the website's every link to understand many aspects of investing. To know more on the technical terms and what they mean in simple terms, check http://www.investopedia.com/dictionary/#axzz1s7mae7Rt. Do read a lot to understand various strategies, methods, techniques, views, opinions before trying to make your own opinion about the stock/market.

8. Create yourself a free account and put the stocks you are interested in, in the watchlist. You can even keep track of your investments by creating a portfolio.

9. I suggest instead of putting your money into the stock market immediately, I would ask you to spend a month or two choosing 3 stocks to invest in and finally 5 stocks in 3 months to invest in. Imagine you have put in the money when you were interested and put it in the portfolio. Track it as per your desire. Initial investors usually tend to be very anxious about every 1% move up or down. Spend the first three months to get used to the volatility. I hope at the end of the three months, you would have a mixed result. A few of the 5 stocks doing better than the buy price and a few worse than the buy price. Try and analyse what went right and what went wrong in the stocks. I hope you dont get most of the investments right in the first chance as that would make anyone a self-claimed expert and bring arrogance that is sure to ruin the big bets you would most likely place in the next level if you made a lot of right notional calls.

10. Give time and thought to the sector allocation, capitalisation allocation(large cap/mid-cap/small-cap),  minimum investment in a stock (based on your risk apetite and a way to minimise your demat/brokerage charges to make your transactions efficient).

11. Remember one simple rule to make money: "Buy Low, Sell High". This rule looks obvious enough, though its importance can't be emphasised enough. Remember that a stock is never that important as its price. People tend to buy stocks because it is a good popular stock without consideration of its valuation, its future growth prospects, the risks of the company/sector (and at usually high prices and then wonder why they didnt make money).

12. Be careful of what people say/recommend. Is there an ulterior motive for them to recommend something? Don't always trust the "experts". Many a times, your on the ground insights maybe more useful than their expert not knowing much. Listen to experts who talk to you about their wrong calls and their losses. You get to learn from other's losses more than other's successes. Be wary of people who advertise their successes and not their losses.

And All the best! :)

Typical investor behaviour

A WSJ article:

"If people were watching their investments, they would not sit idly by and be victimized, but would act. Instead, people are busy with everything from their favorite TV series to golf, and are blind-sided when they find out about their losses. These people pay the same amount of attention to the political issues and candidates. They are like deer wandering around in the forest with targets painted on their sides."

Investing Dilemmas

The basic dilemmas before buying a stock are:

Will it go lower or should I buy it now?

The classic dilemmas after buying a stock are:

If you are making profit, will it go higher or should I sell now?

If you are making loss, is this a dud stock and should I sell out? Else, will it go lower or should I average it now?

Other dilemmas:

I bought this stock for a long term basis, but it has shot up so fast so soon. Should I sell it now or keep it for long term?

At what price should I average it? At 5% below previous buy, or 10% or 20% or some other number? I obviously cannot keep averaging it at a lower price as it would affect portfolio and sector concentration.
What amount should I keep in cash waiting for opportunities to buy that may arise in the market?

Expert views aka Dumb analyst reports

I have come across many equity research reports which have a target price for a company which is some single digit % downside. But whats shocking is the recommendation of 'hold' next to it. Why should any investor hold on to investments that are not going to grow, but shrink by any number. If the investor sold it and kept the money in the bank, he could earn a single digit positive % return on the amount. The difference between the two scenarios can be a double digit % return.

It is interesting to note that many have instituionalised this kind of stupid thinking by defining the 'hold' range as "+5% to -5% over a year". Why should anyone hold on for an investment for over a year for a maximum of 5%? Isn't a fixed deposit better with higher returns and no equity risks?

The wise men

Once upon a time, some time ago, there were a group of men who were very very rich and owned around 40% of the world's resources. They had land, industries, gold and what not. They were wise and understood how to maintain and grow their wealth throughout time. They very well knew that value is in the thought of the beholder. If the thought of value in something vanishes, the value in the product is zero. To further help themselves, they thought upon an idea to globalise the world to make use and exploit the best of everything. Further, they spread the benefits of globalisation and free market access. At this point of time, they realised that with free markets, value is being interfered by the exchange rates. The group of wise men, decided that they will have to be proactive and move as a group to maintain order and control of the maintenance and growth of their precious valuables in the world. Since they own a substantial part of the world, and markets are never deep enough for them, they could influence the markets with ease. Moreover, they realise the people's psychology and the various govt.'s response to the situations they would create. They start buying into an 'item' initially and start spreading the word how that would be the next 'big' thing in the world. The high risk takers and loyalists start buying it immediately. As the value of the 'item' increases, more people start believing the prophecy and start buying it while all the while the wise men's value increases. After a few years, the wise men believe that they have milked the 'item' to its limit and their value has stopped growing at a fast rate. Further, before someone else calls that the 'item' is overvalued, they start selling the 'item' and buying into another 'item'. And the next prophecy of how this item is undervalued and how it is the next 'big' thing, starts to grow. This cycle keeps repeating over periods of time and the only people who are always in the green are the wise men and the loyalists, while the general public is bled and slaughtered each time when they start buying at the height of the cycle and when the wise men are selling it to the blind public. These "items" could be various currencies, gold, silver, commodities, bonds, houses, land and what not. The frequency with which these wise men are interchanging the 'items' has increased in the recent years. It is not clear whether another set of 'wise men' are on the street trying to call shots on an item which is different from the first set of wise men. This fight between the two sets of wise men having contradictory ideas on some 'items' is probably being seen in the high volatility of the markets. E.g: Crude oil falling by around 6% in a week, INR moving by 1% in a day, gold falling by over 9% in 5 days.

Moral of the story: Besides the all the financial porn being thrown by the media at us and all the talk of finding value, in the end it seems you just have to stick to the side of the 'wise men' if you want to make money/store value. If only, we could easily pinpoint who are these 'wise men' and know their next move.

P.S: This is just one of the hypothesis I have to show that most people have know idea of how the market could be working against you all the time. At times, I feel like one of the little guys who feel like they are born to just get exploited by the 'wise men'.

Heightened uncertainty

There was a time, sometime ago, a few years back actually, when things could be predicted "long term". Today, that word if used either tends to show your lack of knowledge on anything, or a surprise that he isnt already perished along with the dinosaurs.

Today, almost nothing can be predicted even for 5 years (or less). Not even govt. bonds. Not sure when a govt will topple and default on all the previous commitments/bonds. The existence of worldwide currencies (e.g:euro) is at stake. Gold, once upon a time long term investment is at peaks and nobody is entirely sure why its rising. Whether it is because it is supposed to be a hedge against inflation (as traditionally "they" say), or against currencies, or against a no growth scenario...?

Oil is also equally uncertain. the volatility in this commodity has been huge despite nowhere near corelation to its demand, which is more or less steady.

During the good olden days, assume maximum fluctuations where near 20% a year, meaning both the crest and the through. Today, just the crest or the through have a minimum movement of 20% a year, irrespective of whether it is currencies, gold or oil (or even interest rates in India).

Are all the companies factoring their worst case scenerios in reality in their business plans? I think not. They should ideally be more conservative and have more cushion for a negative surprise currently, and for the next few years. 

What does this entail for investing in particular? Previously, we used to bet for growth alone assuming all the above mentioned factors as constant or with a little movement. But today, these assumptions cannot be taken for granted. They entail enormous effect on the results and each of these are inter-co-related in many different known and unknown ways and levels. The effect of one can either neutralise the effect of the other or compound the effect of the other and this influence can change day to day. Today you need to better analyse more than one variable to get to the base and expected scenario.

There is some opportunity in all this afterall. The high volatility in everything obviously means there is more money to be made with the highs and the lows as there is to lose money also. The question is are you treating this as a cautious opportunity or as a complete threat?

What a conviction!

Goldman Sachs added Sintex Industries to the India conviction buy list on 6 September 2011 and on 16 November 2011, it has removed the company from this list "based on account of European exposure and FCCB concerns." Weren't these factors present even when the company were added to the list?
Conviction is when you trust something especially at hard times, not backing off and selling it at the sign of the first trouble (share price from ~Rs.150 to ~Rs.93)

Reduce tax on short term profits

Transactions work in a funny way when taxes are involved. Here's a demonstration:
Here's how to lower your average buy price of a share with tax benefits:
Assume you have bought a share of scrip A @ 700. Now the share has fallen to 600 within a week/month. Assume you buy 1 more share, this time @600 and also sell one share at the same price.
Looking from a layman's/superficial perspective, these 2 transactions are wasteful and costs are involved (brokerage and taxes on the transaction) as no useful purpose has been solved.

Now lets look at this from the tax perspective:
As shares sold is always in FIFO (First in first out) in India, your would have effectively sold the first share at a loss of 100(sell@600- buy@700). This gives rise to a short term loss of 100 which is adjustable against other short term profits. Assume you have made a 100 short term profits in some other transactions. Then, your net tax payable is 15% * (100-100) = 0. So you have effectively saved 15% taxes on the amount of losses if you have profits elsewhere in other transactions. Now, your effective by price of A is also 600 (the price of the second share you bought). The lower buy price will help you break even and make profit faster.

Lets extend the case. Assume that after a year of buying the second share, the price has reached to 630. If the 2 seemingly dummy transactions had been done, then you would have saved 15 in short term taxes by adjusting against other short term profits and when you sell this at 630, you make a long term profit of 30 (Sell@630 - Buy@600). And since long term equity capital gains is taxed at 0%, the total profit/loss you would have made is -100+15+30 = -55.
If these two dummy transactions had not taken place, your buy price would have been 700 and sell price would be 630, meaning a loss of 70. Note that long term losses are not adjustable against anything.
So, you can effectively reduce your losses or taxes and also make more profits by taking an immediate short term loss and entering into a counter transaction by buying an equivalent amount at the same price(assuming you have short term profits).
This is not only applicable for buying and selling at the same price, it is also very much applicable if you bought the second share at at a rate less than the selling of the first share.

Reinvestment opportunities

Suppose you have made an investment three years ago at a cost of 100. Today, say the investment is worth 160. Your rate of return for 3 years is 60% and your compounded annual rate of return is (160/100)^(1/3) =16.96% per annum.

Suppose you expect the investment to go upto 165 in another quarter but under some risk that it may also go down, what do you do and what should you do? 

At the rate of 165, your profits would be 65 instead of the previous 60, at a new annualised rate of return of 18.16% from the previous ~17%. Should you now go for it?

It sure looks tempting to get a rate of return of 18.16% with a little risk, but this is identical to driving a car looking at the rear mirror. Let me explain. There are two ways to look at the rate of return. One rate of return based on the investment done 3 years ago and one assuming you are investing today. With the old investment, yes, your calculation comes to an attractive 18.16%. But assuming you are investing 160 today, you are expecting a rate of return of a mere 5/160= 3.125%. The truth is that you have already made most of your money till now and your marginal rate of return is only some 3 odd %. 

By keeping the investment, the truth is that you are actually wanting to make an investment giving a rate of return of ~3 % in a quarter with the risk of a downside too and not the 18.16% per annum that the calculation shows. The question to be asked is "Is this what you really want when you could have other more worthwhile investments to make which can give you better returns?". 

The comfort of previous returns makes people biased to calculating from a historical perspective and make them feel that the investment is good. By doing so, you are indifferent to reinvestment opportunities and are  missing real opportunities that will make you more money.

Scrips and their personalities

Each scrip has a unique character/personality to it. It is defined by both its internal strengths, weaknesses & policies and the external perception of these vis-a-vis other scrips.

Each scrip behaves in a way that is particular of its industry, maturity of the company, liquidity of the shares, segmentation based on capitalisation, debt levels of the company, EPS, expected future growth, dividend policy, stock split/bonus shares, volatility of the stock, seasonality of the sector, overall economic/business  cycle, correlation to interest rates, correlation to the historical PE of the industry, correlation to its own historical PE, how the mkt usually treats this stock to each event(excitedly/anxiously with lot of volatility or indifference with hardly any movement), mindshare and brand image it occupies in its investors among many other things.This is something that is not usually taught in the books. Experience in the markets teaches you this. It is important for every short term investor to follow the scrips through the ups and downs and be able to predict how much and how long will the scrip prices rise/fall due to the event, just as one knows and understands a family member's reaction to various life's events. You cannot estimate the right reaction and the depth of the reaction precisely, but you know that the person would be upset or excited to hear it. Since each scrip has a personality of its own, its important to understand them to deal and profit from them.

Choosing a demat and trading account

There is a lot of confusion between a trading account and a demat account to a person new to the field of investing. The charges corresponding to them is even more confusing and many hidden(by marketers).

Let me first give a brief difference between the two and then explain the corresponding charges they have. Next, give a list of key criteria to consider which demat and/or trading account one should go for.

A demat account is like a savings bank account. It keeps your shares or rather the count of the shares of each scrip (A scrip is a company name whos shares you own!) you own. Just like your bank account keeps your money or rather a count of the amount of money you own.
A trading account is required for you to buy or sell shares.

The explanation of the charges is given here:

The key criteria for selecting these accounts are:

1. Your purpose/usage. In short, how frequently are you going to buy/sell and is it intraday or delivery based. Choose the Broker whose charges are lowest according to your transaction style.

2. Look at a complete solution and not just one individual product like a demat account. After all, the money in the savings account will be linked to your trading account for buying/selling shares and the trading account will be linked to your demat account for storing the shares. Suppose you have a Savings account with Financial group 1, and the trading account with financial group 2 and group2 trading account does not have a partnering arrangement with group 1, you will be forced to open a new savings account with Group 2 itself. Similar with the relationship between the trading account and the demat account. Usually, most non-bank brokerages have tie-ups with the popular banks for savings bank accounts and demat accounts, but brokerages in a banking group company may have only the same bank as its partner.

3. Internet based trading: Some of the brokerages try to make their websites very fancy and use hi-fi new web technologies(typical example is Flash on websites) or need some installation of their trading application on the user's side. But they don’t understand is that your company's internet browser may not be technologically enabled (say, no flash is installed) and you are not allowed to install softwares in the office. Then the whole point of getting a trading account and associated demat accounts/bank account linkages,etc are pretty much useless. Not totally useless as most/all brokerages have a trading desk that you can call and order them to buy/sell. Sometimes,  your call can be on hold when opportunities emerge in the markets for minutes only (Remember gains to be made on IPO listing when the price starts dropping after hitting a high).

4. Think long term. In case you have got yourself a demat account and you have existing shares in it and you want to move to another demat account, transfer of shares is not cheap. One of the demat accounts I checked was charging Rs.50  per company scrip that is to be transferred. If I have 20 companies, it is going to cost me 50*20=Rs.1000. Others may charge differently, based on number of shares or amount worth or anything. Please find out what this amount is, in case you are ever tired of useless service and you want to change the demat account. These transfer rates are never mentioned anywhere. Buyers beware!

5. Opening one of these: Bank account, Demat Account, trading account is not easy anymore. One needs address proof, identity proof, registered mobile number for instant authorisation, etc. Gone are the days when you can walk to a new city and get one of these as if you were getting a cup of coffee in a shop. Think about the long term implications before closing any of these. Can you ever open another one without much effort?

Happy account creations! :)

Generating Alpha - Indian Mutual fund Industry

I am surprised that so many mutual funds know so much about the industry they work in and have enough good relationships with the companies' management to give them accurate information about their financing and profit numbers, not to mention where their industry is heading, what their competition is doing and what are the risks they are facing. The research reports I see are really good to read and understand too. But why is it that such informed fund managers not able to produce an alpha (Alpha is a risk-adjusted measure of the so-called active return on an investment. In short, the higher the Alpha, the better the fund managers stock picking skills). The Indian mutual fund industry has missed out on two good rallies one in 2009 and one this year. I see a systemic problem here. They never seem to know when the tide is coming and are constantly caught unawares. The current Indian mutual funds work mostly in a bottom-up approach (I am not refering to the top-down or bottom-up way with respect to sectors and the indian economy, but the bottom I am refering to is the Indian economy and sectors and stocks while the top refers to the global economy). Despite the fact and the characteristic of the Indian stock market that the majority of the investors's money comes from abroad, the mutual fund managers do not give enough importance to the money flow from abroad. They just believe in buying the right stocks and wait till the tide comes and the stocks rise. Though they the mutual funds talk about foreign money and majorly do secondary reasearch on international research reports, I dont think they are talking to foreign portfolio managers and FIIs who are putting and pulling money out of the Indian markets. If the fund managers understand the FIIs concerns and understanding and get the pulse of their investing mood/climate, they can buy stocks just before the tide is going to come and get out before the tide goes back, generating alpha for the investors.

Revenge v/s Aim

If a person wrongs you intentionally or otherwise, you can either leave it and carry on with your more important things in your life or take revenge in a variety of ways(scheming, embarrasing, character assasination, confront him, etc). But if a company wrongs you by way of making losses(intentionally by fraud or otherwise), you cant take revenge in any effective manner. The company cant make up the money it has lost of its shareholders just because you didnt like it making losses. At maximum, you can try to change the management with your shareholder vote or shout at the shareholder's meeting or sell the stock and get out.

The best way to respond in the stock market for a company that has made losses for you is to dump it if you dont see any future prospect of it making profits and carry on with your life with other important things and opportunities. 

Everyone enters into the stock market with the aim of growing their portfolio/money/assets, but many of us hold back selling the loss making stock and want it to make up for the loss it has made. Sorry to dissapoint you, but get your emotions out of investing and start thinking logically. Dont forget that no one can take revenge on companies in the stock market and it would be fool hardy to be there holding the loss making company shares just to take revenge or blindly being hopeful on it. Dont miss the other opportunities while crying over spilt milk!

Beggar "demands" more money

RBI recommended that banks not enter the already competitive life insurance business as the break even time is high and it is a capital intensive business. Then there was news that LIC may ask for a banking license. The chairman in an interview said it is a decision of the board and he cant confirm or deny it. LIC has a listed subsidiary called the LIC housing finance. The rumour news went that LIC housing finance went and RBI license to open a bank. The funny part is that LIC housing finance is a small company and goes asking(begging) for money from the parent LIC every few years once it has completed disbursing its loans and wants to grow further(Capital Adequacy Ratio concept). What could be the height of the competition? Both parent and subsidiary opening different banks and fight it out... Fortunately, I am sure the LIC board is smarter than this rumour :)