Categories
Observations

Rip Van Winkle Trades

Rip Van Winkle trades are trades wherein you put on a trade and forget about it for twenty or more years.

Many times such trades turn out to be the best trades of all.

In the Indian context, some of these trades would have been:

1.Buying agricultural land on the outskirts of any of the metros/cities.

2.Buying blue chip stocks like ITC, Infosys etc

3.Buying prime residential/commercial property in the metros

It is a useful thought experiment to think of Rip Van Winkle trades for the future:

What trades ,if you put on now and not do anything for the next 20 years, can give a great return?

 

Categories
Observations

The mystery of Varun Industries

Varun Industries is an established player in the stainless steelware industry in India.It also has investments in Madagascar in mines & minerals, including uranium, thorium, platinum & gold, gems, rare earths, oil and natural gas, among others

This stock has the dubious distinction of being the worst performing stock of 2012 so far.This stock has been hitting the lower circuit continuously for the last 10 sessions.

The stock has lost around 70% of its value this year.There is no news flow on the company except for the following two factoids:

1.The company informed the Exchange that one of its directors Shri S. Rajagopal has resigned and a new one has been appointed.

2.On 21st-22nd March, 2012 around 20.43 Lakh pledged shares of the promoter (Kiran Mehta) has been invoked.

Its high time the exchanges investigated this matter and solved the mystery for all of us.

Categories
Policy

A game changer?

Its lonely being an equity investor in India.

Consider the following facts:

1.The entire mutual fund industry in India had inflows of only 3099 Crores (around 620 M$) for its equity schemes (including ELSS) for the period Feb 2011- Feb 2012 (source AMFI). Is it any wonder that international mutual funds famed for their equity expertise are shutting shop and leaving this country ?

2.Number of demat accounts opened this year is around 10 Lakhs (1 Million).The total number of demat accounts in this country is around 1.98 Crores.That means only 1.6% of the country’s population has a demat account.Tomorrow, if the stock exchanges shut down, 98% of the country will shrug their shoulders and move on !!

3.Plummeting brokerage commissions , cumbersome compliance rules and lackluster equity markets have led to 6500 sub brokers shutting shop.The remaining brokers too seem to be an endangered species.

The Government has finally made an attempt to broad base the equity cult using the Rajiv Gandhi Equity Scheme.

If Indians love one thing, its a good tax break.

In this scheme, there is a 50 per cent tax deduction to first time retail investors with :

  • Annual income of less than Rs 10 lakh
  • Investment up to Rs 50,000 in a year
  • Investment in the top 100 listed entities in BSE and NSE
  • Lock-in period of three years (this may reduce to a year .)

Critics have complained that this scheme entails green investors doing direct investing instead of going thru the mutual fund route.

But if this scheme works, then it can change the face of the Indian equity markets.

Categories
Links

Weekend Reads-April 05,2012

A long long weekend ahead on account of Mahavir Jayanti and Good Friday.

Here’s what I am reading over the weekend:

An eyeopener-Why Las Vegas is moving to Macau (New Yorker)

How investing turns nice people into psychopaths (Atlantic)

The Yangon spring (Economist)

Cars that can run over 200000 miles (Forbes)

Timeshare prices plummet to 1$ (Smart Money)

An extra ordinary story – The man who wore a sanitary napkin (Open)

One man Army-Gen V K Singh (Tehelka)

Profile of one of my favorite financial analysts Neeraj Monga of Vertias (Outlook )

Tata’s new range of defence vehicles (Team BHP)

The case against kids-Is having kids immoral ? (New Yorker)