Investment Valuation in India

Growth Investing vs Value Investing                                                          There are a myriad different ways to assess and select stocks and other investment opportunities, two most important strategies are Growth and Value Investing. Growth Investing Growth investing involves picking and investing in stocks that have good growth potential. Usually a growth stock is one whose revenues, cash flows and earnings (profits) are expected to grow at a rate which is higher than the industry or overall market. Growth stocks usually do not pay dividends and concentrate on reinvesting the profits as they expect to generate higher returns. Growth stock investing typically does not put much...

It is nearly impossible to document all ideas, issues, terms and techniques that an investment analysis professional encompasses during his or her work. Analysts often use one or more of the strategies while analysing a potential investment opportunity. Personally I believe that no literature can be complete and authoritative on this subject, though many authors, including myself, have attempted to cover as much as possible. This article only aims at stimulating and imaginative and holistic approach to dealing with investment matters and what questions one should be asking while analysing a company. What is the size of the firm (large, small)? What stage is the company and industry in (new, mature, declining)? Who are the customers of the company (individuals, industry, institutions)? Is the company project oriented (drugs, mining, oil & gas producers, construction)? How is the company socially responsible (is it a source of pollution, land contamination)...

Imagine a situation where you grow old and have managed to buy a house. However, you could not save enough for your retirement. You certainly need money to manage your day to day finances since you are retired and have no fixed source of income or your income is not enough to meet your finances. Reverse Mortgage is the answer for you. Reverse Mortgage is a type of mortgage available to senior citizens in which a home-owner can borrow money against the value of his/her home. No repayment of the mortgage (principal or interest) is required until the borrower dies or the home is sold. After accounting for the initial mortgage amount, the rate at which interest accrues, the length of the loan and rate of home price appreciation, the transaction is structured so that the loan amount will not exceed the value of the home over the life of the loan. [1] How does it work? Reverse Mortgage in India Realising the potential benefits of Reverse Mortgage, the Union Budget 2007-...

4 things to look for in an investment New investors are often interested in purchasing a company's stock but are not sure where to begin. These four characteristics should serve as helpful guidelines in your search for a good investment. 1. What is the price of the entire company? When doing research, it is important that you look at more than just the current share price - you need to look at the price of the entire company. The "cost" of acquiring the entire corporation is called market capitalization (or market cap for short) and is frequently referred to by financial professionals. In short, the market cap is the price of all outstanding shares of common stock multiplied by the quoted price per share at any given moment in time. A business with one million shares outstanding and a stock price of $50 per share would have a market cap of $50 million. This market capitalization test can help keep you from overpaying for a stock. Consider the case of eBay and General Mo...

Seven Questions to ask before Investing When putting together a portfolio of companies, there are seven basic questions that every investor should ask. The answers can help uncover competitive strengths and weaknesses, providing a better understanding of the economics and market position of the business. 1. What are the sources of the company’s cash flows? John Burr Williams taught us that the value of any asset is the net present value of its discounted cash flows. Before the investor can even begin to value a business, he has to know what is generating the cash. It is important to be specific and avoid making assumptions. Take Coca-Cola, for example. Billions of people across the world are familiar with Coke’s products. When you see it on the shelf of your local grocery store, you may have concluded that it was the Coca-Cola Company that sold the bottled goods to the grocer. In reality, a look at the most recent 10K reveals that, although the company does sell some finished bevera...

Seven Major Mistakes done by Traders 1. Lack of Knowledge and No Plan It is surprising that some people expect to trade the stock market effectively without any effort. However, if they want to take up golf, for instance, they will happily take several lessons or at least read a book before heading out onto the course. The stock market is not the place for the poorly informed. Although learning what you need is easy, you just need someone to show you the way. The contradictory extreme of this is those traders who spend their life looking for the Holy Grail of trading. The fact is that there is no Holy Grail. But the excellent news is that you don't require it. Indian trading system is highly successful, easy to learn and low risk. 2. Unrealistic Expectations Many beginner traders expect to make huge money over a trading week. The stock market can be an enormous way to restore your current income and for creating wealth but it does need time. Not a lot, but of course some tim...