Munger:Ben Graham had a lot to learn as an investor

I don’t love Ben Graham and his ideas the way Warren does. You have to understand, to Warren — who discovered him at such a young age and then went to work for him — Ben Graham’s insights changed his whole life, and he spent much of his early years worshiping the master at close range.  But I have to say, Ben Graham had a lot to learn as an investor.  His ideas of how to value companies were all shaped by how the Great Crash and the Depression almost destroyed him, and he was always a little afraid of what the market can do. It left him with an aftermath of fear for the rest of his life, and all his methods were designed to keep that at bay.

I think Ben Graham wasn’t nearly as good an investor as Warren Buffett is or even as good as I am.  Buying those cheap, cigar-butt stocks [companies with limited potential growth selling at a fraction of what they would be worth in a takeover or liquidation] was a snare and a delusion, and it would never work with the kinds of sums of money we have. You can’t do it with billions of dollars or even many millions of dollars.  But he was a very good writer and a very good teacher and a brilliant man, one of the only intellectuals – probably the only intellectual — in the investing business at the time.- said Charlie Munger

The skills needed to make money

James Altucher lists the skills required to make money:

  • how to sell (both in a presentation and via copywriting)
  • how to negotiate (which means win-win, not war)
  • creativity (take out a pad, write down a list of ideas, every day)
  • leadership (give more to others than you expect back for yourself)
  • networking (a corollary of leadership)
  • how to live by themes instead of goals (goals will break your heart)
  • reinvention (which will happen repeatedly throughout a life)
  • idea sex (get good at coming up with ideas. Then combine them. Master the intersection)
  • the 1% rule (every week try to get better 1% physically, emotionally, mentally)
  • “the google rule” – always send people to the best resource, even if it’s a competitor. The benefit to you comes back tenfold
  • give constantly to the people in your network. The value of your network increase linearly if you get to know more people but EXPONENTIALLY if the people you know, get to know and help each other.
  • how to fail so that a failure turns into a beginning
  • simple tools to increase productivity
  • how to master a field. You can’t learn this in school with each “field” being regimented into equal 50 minute periods. Mastery begins when formal education ends. Find the topic that sets your heart on fire. Then combust.
  • stopping the noise: news, advice books, fees upon fees in almost every area of life. Create your own noise instead of falling in life with the others.

Foreign Investors to be allowed to increase stake in Stock Exchanges

Hat Tip: Shivam Bose

Disclosure:I am market making in the shares of Bombay Stock Exchange

In a move that could increase the stake of foreign investors in Indian stock exchanges, the government is considering a three-fold increase in the single-investor investment ceiling.

Currently,a foreign portfolio investor (FPI) investment in an exchange is capped at 5%.

The finance ministry has written to the regulatory authorities to increase the ceiling to 15%, said sources. The proposal is said to have in-principle approval from the Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI).

The move would bring the FPI investment limit in line with those for financial institutions such as insurance companies and banks.

The government allowed the foreign investors to invest in stock exchanges in 2006, with an overall cap of 49%. This latter cap is likely to be unchanged.

BSE and the National Stock Exchange (NSE), the two large nationwide bourses, are likely to benefit from the increase in limits. BSE has eight foreign investors, which cumulatively own about 31% in it. The shareholding of Deutsche Boerse Group and Singapore Exchange Ltd are a little below the 5% ceiling.

NSE has about 20 foreign shareholders, holding around 36%. Cyprus’ Gagil and Goldman Sachs own 5% each; Citi Group has around 2%.

“The finance ministry has received representations stating that the present limit of five% is a deterrent in attracting long-term anchor and strategic foreign investors in stock exchanges. Following which, the ministry has sought comments from both Sebi and RBI,” said a person privy to the matter.

A higher foreign investor limit will not only encourage more investment in Indian bourses but help in exchange of technology and products, said exchange officials.

“A five% limit on the shareholding of any single investor or investor group is too small to encourage them to take sufficient interest in growth of the exchange,” said an official associated with one, asking not to be named.-from BS

Standard Life keen to raise stake in HDFC Life

Disclosure:I am market making in the shares of ICICI Pru Life

STANDARD Life is expected to use some of the financial firepower it has gained from the £2.2 billion sale of its Canadian operations to boost its presence in the Indian market.

The Edinburgh-based firm, which last week said investors were in line for a bumper £1.75bn windfall following the sale of its Canadian arm to Manulife, already has a 26 per cent stake in HDFC Life, one of India’s largest life insurers, and chief executive David Nish is keen to see that holding strengthened. After handing back the bulk of the Canadian sale proceeds to shareholders, the group will have about £450 million left over, which it said would be used for “general corporate purposes”.

Rather than seeking out a fresh takeover target, sources said that Standard Life was now more likely to focus on the organic growth of its UK business and lifting its stake in HDFC Life.

With Narendra Modi’s BJP sweeping to victory in May’s general election, the country’s government is planning to implement rules allowing foreign investors to own up to 49 per cent of local firms.

Nish has already said that he would “look positively” on any opportunity to increase the group’s holding in HDFC Life, which has more than 400 branches and almost 14,000 employees around the country.

Life insurance penetration in India is about 3.2 per cent of gross domestic product in terms of premiums a year, much lower than Japan’s level of more than 10 per cent and almost 6 per cent in Australia.

State-owned Life Insurance Corporation of India controls about 70 per cent of the life insurance market, but the Modi administration is “more open to inward investment and foreign ownership”, said Garry White, chief investment commentator at Charles Stanley.

The new regime could open up more opportunities for other companies with local joint ventures, such as the Dutch parent group of Edinburgh-based insurer Aegon UK.-from Scotsman


Who is right?The Buyer or The Seller?

Investing is not a game against nature, but against other investors. Both buyers and sellers are acting on the same information but doing opposite things. Who is right? The recent earnings and dividends reported is history and the seller already enjoyed the benefits. As a buyer you are buying an unknown future. Investing is a game of probabilities and possibilities but not certainties. A rational investor should understand this. If not he is a damn fool.-from SeekingWisdom