Archive by Author charu
coins

High Dividend Paying Companies – The Two Sides of a Coin

I was reading a book called “Investment Fables” written by Aswath Damodaran and came across a very insightful chapter on High Dividend Stocks. I realized that most of us know the good side of such companies. So let me highlight some of the interesting facts which constitute the other side of such companies. High dividend paying companies are considered a superior investment option by its proponents. A comparison is made between such companies and government bonds. They argue that you get the “best of both the worlds”, i.e. companies which give high dividend are like bonds with price appreciation, thus making them appear as less risky and high return investment avenues. While this is true to some extent, it has its limitations too. Mostly we tend to ignore the downside risks associated with such companies and fall prey to the believers of high dividend paying companies. We should be thorough […]

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How to decide whether a company is worth investing in or not?

I earlier shared my views on how to look around us for great investment worthy companies. Spotting a great company is just the first step. We also need to make sure that the company we are going to invest in is also fundamentally very strong. Before I delve into to this topic, let me share a very basic fact with all of you. How do we make profits when we invest in a company? Price appreciation Dividends Let’s take the first and the primary reason why we can profit from investing in stocks. A stocks price can rise for two reasons: Speculation in the short term Company performs well We have no control over speculation. It is highly risky and a short term phenomenon, whereas in the long run, what matters is a company’s Performance. Thus, if and only if a company performs well, will the markets pay a higher […]

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How to Spot Great Companies?

Many of us wonder where to find good investment worthy companies? Where do I begin is a big question and looms large in the minds of investors. Most of us get stock tips and recommendations. All that is fine, but how can I search for a good company on my own? I’ll tell you what I do. I have a simple method of spotting great companies. I look around myself. What is it that I like the most? Where do I shop most often? Are there any brands towards which I have a special liking? Or is there some brand I definitely support, defend, love, etc. You must be wondering how this will help you with stock investing. Well let me tell you one thing. Fundamentally strong companies always have a moat. Now you must be wondering what the heck is a moat? Don worry it only sounds complicated, but […]

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Bear Market – Up to 70% Off!!!

Bear Market – Up to 70% Off!!!

Imagine: You are on a Safari trip to Jim Corbett, high on spirits you get down to cherish the serene environment and you see a bear approaching what do you do? Tuck in your arms and play dead. Fighting back can be extremely dangerous. Similarly in a bear market it can be awfully risky because it is quite difficult for an investor to make stellar gains, Right isn’t it? Wait for a moment, this is not really the truth! This is the most common myth you’ll find all around you! Sounds strange and contrary to the common belief? Yes it does because this is how most of us feel during bearish times. But what is a bear phase? Isn’t it just a downturn in the market or is it something else? Let me help you know it better. Think about this: you have been dreaming about that designer pair of […]

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Riding the Cycle – Cement Industry

I was analyzing the cement industry and realized for the first time what cyclicality means in its true sense. This industry posed a lot of challenges, it chew my head, made me study harder, and finally gave me a better understanding! I would like to share some of that wisdom and experience with all of you. I analyzed some 12 companies from the cement industry which belong to BSE 500. I’m a value investor so I started by looking at the past 10 years growth rates. As I glanced through each company, I realized that there was a red patch (implying growth rates either negative or less than 10% YoY) and a green patch (implying growth rates in excess of 10% YoY) in a similar pattern. It became highly difficult for me to predict a future growth rate for the next ten years based on the past 10 year’s performance. […]

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Category:Economy