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True Confidence in Trading

When people wax poetic about their conviction in trades, my emotional reaction is:  Whatever.  A trade is a bet at the poker table.  Some bets will work, some won’t; some you’ll size up, some you’ll fold.  Whatever.  Over time, if you play the odds, you’ll do OK.  Beyond that, it doesn’t make a lot of sense to beat the chest and invite overconfidence bias to replace normal confidence.

Every forecast of a statistical model can be wrong.  Every trading judgment is fallible.  If you have a 50% hit rate on your trades and you trade once a day, on average you’re going to have an occasion in which you lose every day for a week during a trading year.  That doesn’t mean you’re in a slump; it doesn’t mean you should change what you do.  It’s going to happen and you can mentally prepare yourself–and size yourself in such a way that five consecutive losing days won’t take you out of the game.

The goal is not to eliminate losses–that would require omniscience.  Rather, the goal is to  anticipate losses so that you’re never surprised, never overwhelmed, never thrown onto the back foot.  True confidence comes, not from believing that you must be right, but from knowing that you can survive and even thrive if you’re dead wrong.-from TraderFeed

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Ratnakar Bank raises Rs.328 Crores from investors

(Disclosure:I am market making in Ratnakar Bank)

RBL Bank, formerly known as Ratnakar Bank, today said it has raised Rs 328 crore from a group of global investors.

Besides the capital injection by institutional investors, the private lender may hit the market with public offering for shares in 9-12 months, said Rajeev Ahuja, Head of Strategy at RBL Bank.

The capital infusion was led by CDC Group and Asia Capital and Advisors. The bank’s existing investors, including International Finance Corporation (IFC), private sector funding arm of World bank, and Gaja Capital, also participated in this round. This is the third time the private lender has raised money in the last three years.

At present, the Bank has a total business size of over Rs. 21,000 crore and offers its services to over half a million customers. Ahuja said bank has grown business – deposits and advances – by over 40% in 2013-14 and expects to maintain same pace in 2014-15.-from Business Standard

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Ratnakar Bank mulls 1,000 Crore IPO this fiscal

(Disclosure:I am market making in Ratnakar Bank)

Kolhapur-headquartered Ratnakar Bank has drawn up plans to raise about ₹1,000 crore through an initial public offer in the current financial year.

According to Vishwavir Ahuja, MD and CEO, his bank has reached a tipping point, in terms of balance sheet size, profitability and number of branches, with all three parameters seeing robust growth in the last four years.

₹18,000-cr balance sheet

Ahuja said Ratnakar Bank is likely to end FY14 with a balance sheet size of ₹18,000 crore against ₹2,300 crore in July 2010, when the new management took charge.

Further, its profit is expected to be close to the three-digits mark in FY14 against ₹19 crore in 2010-11.

In FY13, the bank reported a net profit of ₹92 crore (₹66 crore in the year-ago period) on a balance sheet size of ₹13,000 crore (₹7,200 crore).

From about 50 branches, predominantly concentrated in Maharashtra and Karnataka, in 2010, the 71-year-old bank, which has been re-branded as RBL Bank, now has 175 branches spread across 12 States.

Pointing out that it has achieved all transformation goals, in terms of balance sheet size, profitability, geographical expansion, technology infrastructure, governance and capital, the new management set out to achieve four years ago, Ahuja said the bank has reached a tipping point whereby the next round of capital raising via an IPO will set the stage for the next three years of growth.

Ahuja said, “We might do it (IPO) in this calendar year or latest in the fourth quarter of this financial year.”

Receives ₹167-cr investment

On Wednesday, the bank received investment amounting to $28 million (₹167 crore) from UK-based CDC Group. In the process, CDC picked up 4.8 per cent stake in the bank.

“The capital will be enough for this year,” said Ahuja.

In the last three years, the bank received investments aggregating ₹1,470 crore in three tranches. Shareholders who invested in the bank include HDFC, Norwest Venture Partners, Cartica Capital, International Finance Corporation, Faering Capital and Gaja Capital Partners.

Ahuja said the bank has managed to raise capital as and when the capital adequacy ratio (CAR) has fallen below 14 per cent. Post the CDC investment, the bank’s CAR has returned to 16-17 per cent.-from BusinessLine

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What trading is all about

Hat Tip Steve Burns

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UK Based CDC Group invests $28 Million in RBL Bank

(Disclosure:I am market making in RBL Bank)

UK-based CDC Group has invested $28 million (Rs 167.3 crore) in private sector lender Ratnakar Bank, a transaction that will see the British development finance institution pick up a 4.8% stake in the Kohlapur-based, private equity-backed bank.

The proceeds will be used by Ratnakar Bank to expand its operations in newer geographies. The investment is also the first direct equity transaction in a bank entered into by CDC under its new investment strategy that was unveiled last year.

“We greatly value the confidence CDC has reposed in our strategy and our commitment to building a sustainable bank that has as one of its key objectives to providing financial services to the larger under-banked and unbanked parts of India,” said Rajeev Ahuja, head of strategy at Ratnakar Bank.

Ratnakar Bank, which has been undergoing a transformation to be a pan-India player, has been pursuing an expansion-focused strategy, based on financial inclusion, agribusiness financing and lending to small and medium-sized enterprises. It has a total business size of over $3.5 billion (Rs 20,917.8 crore) and offers its services to over 5 lakh customers, according to a press statement released by the company.

” We view this is as a unique opportunity to invest in an institution which has a real prospect of becoming a platform serving a population that CDC wants to reach and fostering financial inclusion, financing of SMEs and agribusiness,” said Srini Nagarajan, regional director – South Asia, CDC.

The private sector lender will now look to expand its services into a number of India’s poorer states, including, Rajasthan, Madhya Pradesh and West Bengal, where the penetration of financial services has, historically, been amongst the lowest in the country.

“CDC is strongly aligned with RBL Bank’s strategy to expand and provide a range of financial services to customer segments that are under-served by the market, and our stable investment approach will complement the company’s strong management team as they continue to implement the bank’s growth strategy,” CDC’s Nagarajan said.

The Indian banking sector is growing at a rate of 14% to 16% per year. However, according to reports published by the World Bank, more than two-third of the country’s population are yet have access to formal financial services, a massive hurdle that severely limits their ability to plan, save or borrow to improve their economic prospects.
“The potential impact of RBL Bank’s growth is significant. The bank’s branch network is set to double in five years, creating thousands of jobs, and we also anticipate significant job creation in semi-urban and rural areas through the agri-value chain financing and SME lending activities,” said Holger Rothenbusch, managing director – debt and financial instruments, CDC.-from ET