Categories
MSOStocks

Better to watch Lok Sabha TV?

The Cable Digitization bill was passed by Parliament on 13th December, 2011

The Bill makes it mandatory to digitize analogue cable network for the entire country before the end of 2014 in four phases.

The first phase covering the four metros of Mumbai, Delhi, Chennai and Kolkata is to be completed by 30 June 2012.

This move has proved to be a bonanza for the market capitalizations of Multiple System Operators.

Consider the increase in share prices of these companies from 13th December,2011 till now:

WWIL (14%)

Hathway (46%)

Den (89%)

Moral of the story:Maybe it’s more profitable to watch Lok Sabha TV than CNBC !!

Categories
Nifty

Nifty below its 200 DMA.Should we care?

Nifty is hovering around its 200 DMA of around 5152.

The 200 DMA holds a special attraction for market observers and technicians.

Typically, if the index goes below 200 DMA, it indicates bearish times ahead and if it goes above 200 DMA, it indicates bullish times.

Is this backed by research/empirical data?

The short answer is YES.

Mebane Faber is the co-founder and the Chief Investment Officer of Cambria Investment Management.

He has authored an excellent paper titled “A Quantitative Approach to Tactical Asset Allocation”

This paper is a must read for all market observers.In this, a timing approach is compared with a simple buy and hold approach.

In the buy and hold approach, the investor simply buys the index and holds it thru thick and thin.

In the timing approach, the following simple rules are followed:

BUY RULE

Buy when monthly price > 10-month SMA.

SELL RULE
Sell and move to cash when monthly price < 10-month SMA.

The paper demonstrates the superiority of the timing approach over the buy and hold approach

The catch is effect of commissions,impact costs etc is ignored while computing the returns.In the long run, I am sure they will make a difference.

But the fact remains that avoiding the markets when they fall below the 200 Day DMA enables one to sit out the worst of the bearish times.

Categories
Links

Hot Links: March 29,2012

Some stuff that I am reading this morning:

Bangalore is costlier than Mumbai to live in (ET)

SEBI Watch: Did political pressure play a role in letting off the Tayals? (Firstpost)

India to be the largest economy by 2050 (Financial Express)

Mallya selling stake in United Breweries to Heineken? (Mint)

How to win friends and influence people-a lesson from Rajiv Bajaj (Business Standard)

What do value investors do in turbulent markets? (Advisor One)

Bill Gross on delivering in a delevering world (Pimco)

Gold bumps its head (Bespoke)

Have gold prices peaked? (Big Picture)