multibagger

Identifying multibagger stocks for SIP

A mutual fund house selects many stocks from different sectors and multibaggercreates a balanced portfolio. This diversification helps mitigating risk but it also polarizes your funds. Once a sector gets hit, the total fund value comes down. You cannot choose to shift away from these stocks and have to wait till it gets better. It is always wise to select a bunch of stocks yourself and bet regularly. There are more than 7000 stocks in BSE & NSE combined. It is like searching a drop in an ocean, tedious but possible. There are several factors on which a stock is screened before qualifying it as a potential multibagger. Given the technological tools we have today, it is a lot easier than it was a decade back. Before searching for a multibagger we must first decide on our risk capacity.

Ask yourself two questions:
How much can I save from my monthly income?
How much can I save from my monthly expenses?

Spend more time on the second question. Make no mistake, I am not asking you to decrease expenses. Just add a little more to your expense each and every time you spend. In other words, tax yourself. Transfer a percentage of the total expense to your trading account (call it an iTax, myTax or whatever you wish) but do it for every transaction you do. It might sound crazy but believe me, it works wonders!! You can either invest this taxed amount in certain stocks or use it as a risk manager when your stock trades lower than previous highs.

Now let’s search for the drop. Our ocean is made of different sectors and all these sectors are dependent on each other in one-way or other. There is no fool-proof way to find an ever bullish sector. Instead, find a visible problem the world is facing today and the sector which is directly related to solving the problem. For example, pollution is an alarming issue throughout the world and it is only getting worse day by day. Many governments have already started taking steps to control pollution in every possible way. Hence, we can find a stock which deals with pollution control. On the same lines is cyber security. Every business is online and all need to be safe. Companies which offer cybersecurity are going to be in demand, hopefully, in the near future. Next challenge will be to square in on a stock in this sector. That is where fundamentals of a company come in handy. Look at few important factors like Market Cap, Book value, P/E vs Industry P/E and Dividend yield. Check the financial trend of the company. Many growing companies report negative net profit but their net sales might still be increasing which is a positive sign. Above all this is the credibility of promoter group; make sure you have read their activities in the market.
Read more

Systematic Investment Plans Guidelines

Benefits of Systematic Investment Plan (SIP)

“Disciplined investors built their own empire, others just made money”

systematic investment plans

Stock markets are for the rich, who can throw their money at anything and wait for a bigger fortune. This is the biggest myth I have ever heard and also the most common myth among retail investors. In the hindsight, this is the only place where millionaires are made from nowhere. All you need to do is to follow few strategies and stick to a discipline. Among many investment strategies in the stock market, Systematic Investment Plan (SIP) stands out to be the least complicated one. Investing in SIP is like learning to swim. The earlier you invest the greater your returns in the long run. There are two ways to invest in SIP. Either you choose a mutual fund available in the market or you can choose few stocks yourself and keep investing. It is like paying Pre-EMI. When you buy something and pay EMI, you are actually paying an interest to the bank thereby increasing the cost of the product you bought. The bank decides the interest and the EMI. Longer the duration, higher is the interest. You cannot skip an EMI and have to pay it on the specified date.  If you wish to… close in-between, you will have to pay a penalty. The interest rate fluctuates depending on the market condition.

Read more

Contribution of Emotion in Investing

Contribution of Emotion in Investing

EMOTIONS ARE YOUR WORST ENEMY IN THE STOCK MARKET

Contribution of Emotion in InvestingEmotion plays an important role in many aspects of life. Most of the decision we take depend on our emotional quotient either directly or indirectly. It is no different in investing. Though it is impossible to keep emotion out of the equation, it is imperative to keep it under control. In fact, the success rate of our buying/selling decision in stock market depends unswervingly on this factor. There are two extremes between which decision making swings like a pendulum. Most of us react to these extremes. We are either too excited to calculate the risk involved in buying a particular stock or too depressed to identify intrinsic value of a stock when it is down. It is always important to take a balanced and an informed decision. Striking the balance is an art. It needs to be practiced over time. There are scores of channels, magazines and hundreds of analysts who often occupy our mind and ride us through different sectors and stocks. It is this ride which takes us to the extremes.

Seldom do we think about who gives them ideas?

How much do they make out of their own recommendations?

What are their intentions?

Read more

defeat

I Don’t Believe in Defeat

I Don’t Believe in Defeat

defeat

IF YOU ARE thinking thoughts of defeat problem, I urge you to rid yourself of such thoughts, for as you think defeat you tend to get it. Adopt the “I don’t believe in defeat” attitude.

I want  to  tell you  about some  people  who  have  put  this philosophy into effect with excellent results and shall explain the techniques and formulas which they used so successfully. If you read these incidents carefully and thoughtfully and believe  as  they  did  and  think  positively  and  put  these techniques  into  operation,  you  too,  can  overcome  defeats which at the present moment may seem inevitable.

I hope you are not like an “obstacle man” of whom I was told. He was called an obstacle man because, regardless of whatever suggestion was advanced, his mind instantly went to all possible obstacles in connection with it, but he met his match  and  learned  a  lesson  which  helped  to  change  his negative attitude. It came about in the following manner.

The directors of his firm had a project under consideration which involved considerable expense  and  some  definite hazards as well as success possibilities. In the discussions regarding this  venture  the  obstacle  man  would  invariably say, and always with a scholarly air (invariably this type acts wise, probably a cover-up for inner doubt feelings), “Now just a moment. Let’s consider the obstacles involved.”

Another man, who said very little but who was respected by his  associates  for  his  ability  and  achievements  and  for  a certain   indomitable   quality   which   characterized   him, presently  spoke  up  and  asked,  “Why  do  you  constantly emphasize the obstacles in this proposition instead of the possibilities?”

“Because,” replied the obstacle man, “to be intelligent one must always be realistic, and it is a fact that there are certain definite  obstacles  in  connection  with  this  project.  What attitude would you take toward these obstacles, may I ask?”

The other man unhesitatingly replied, “What attitude would I take toward these obstacles? Why, I would just remove them, that’s all, and then I would forget them.”

“But,” said the obstacle man, “that is easier said than done. You say you would remove them and then you would forget them. May I ask if you have any technique for removing obstacles and for forgetting them that the rest of us have never discovered?”

A slow smile came over the face of the other man as he said, “Son, I have spent my entire life removing obstacles and I never yet saw one that could not be removed provided you had enough faith and guts and were willing to work. Since you want to know how it’s done, I will show you.”

He then reached into his pocket and took out his wallet. Under  the  isinglass  window  was  a  card  on  which  were written some words. He shoved the wallet across the table and said, “There, son, read that. That is my formula, and don’t give me the song and dance that it won’t work either. I know better from experience.”

The obstacle man picked up the wallet and with a strange look on his face read the words to himself.

“Read them out loud,” urged the owner of the wallet.

This is what he read in a slow, dubious voice, “I can do all things through Christ which strengtheneth me.” (Philippians 4:13)

The owner of the wallet put it back in his pocket and said, “I have lived a long time and have faced a lot of difficulties in my time, but there is power in those words—actual power— and with them you can remove any obstacle.”

He said this with confidence and everybody knew he meant it. This positiveness, together with the facts of his experience which were known to all, for he was a remarkable man who had overcome many odds, and because of the further fact that he was not in any sense “holier than thou,” made his words convincing to the men around the table. At any rate, there was no more negative talk. The project was put into operation  and,  despite  difficulties  and  risks,  turned  out successfully.

The technique used by this man is based on the primary fact about an obstacle which is—don’t be afraid of it. Practice believing that God is with you and that in combination with Him you have the power to handle it.

So the first thing to do about an obstacle is simply to stand up to it and not complain about it or whine under it but forthrightly attack it. Don’t go crawling through life on your hands and knees half-defeated. Stand up to your obstacles and do something about them. You will find that they haven’t half the strength you think they have.

A friend in England sent me a book by Winston Churchill entitled Maxims and Reflections. In this book Churchill tells of the British General Tudor, who commanded a division of the British Fifth Army which faced the great German assault in  March  1918.  The  odds  were  heavily  against  him,  but General Tudor knew how to meet an apparently immovable and  un-defeatable  obstacle.  His  method  was  simple.  He merely stood and let the obstacle break on him and he, in turn, broke the obstacle.

Use that formula which the businessman suggested and you will  develop  this  brand  of  powerful  faith  in  God  and  in yourself. You will learn to know yourself, your own ability, your power to do things. To the degree to which your attitude shifts from negative to positive the mastery touch will come to you. Then, with assurance, you can say to yourself under any and all circumstances and mean it, “I don’t believe in defeat.

defeat-problemsFor example, a woman sent her fifteen-year-old son to us. She said she wanted him “straightened out.” It annoyed her to no end that her boy could never get over 70 in any of his studies. “This boy has a great mind potentially,” she declared proudly.        

“How do you know he has a great mind?” I asked.

“Because he is my son,” she said. “I graduated from college magna cum laude”

The boy came in very glumly, so I asked, “What’s the matter, son?”

“I don’t know. My mother sent me to see you.”

“Well,” I commented, “You don’t seem to be burning with enthusiasm. Your mother says you get only 70’s.”

“Yes,” he said, “that’s all I get, and,” he added, “that isn’t the worst of it. I’ve even received less than that.”

“Do you think you have a good mind, son?” I asked.

My mother says I have. I don’t know—I think I’m awful dumb. Dr. Peale,” he said earnestly, “I study the stuff. At home I read it over once and then close the book and try to remember it. I repeat this process about three times, and then I think that if three times doesn’t get it into my head how am I ever going to get it into my head? And then I go to school thinking maybe I have it, and the teacher calls on me to say something, and I stand up and can’t remember a thing. Then,” he said, “examinations come along and I sit there and just get hot and cold all over and I can’t think of the answers. I don’t know why,” he continued. “I know that my mother was a great scholar. I guess I just haven’t got it in me.”

This negative thought pattern combined with the inferiority feeling  stimulated  by  his  mother’s  attitude  was  of  course overwhelming him. He froze up in his mind. His mother had never told him to go to school and study for the wonder and glory of learning knowledge. She was not wise enough to encourage  him  to  compete  with  himself  rather  than  with others. And she was constantly insisting that he duplicate her success in scholarship. Little wonder that under this pressure he froze mentally.

I gave him some suggestions that proved helpful. “Before you read your  lessons,  pause  a  moment and  pray  in  this manner, ‘Lord, I know I have a good mind and that I can get my  work.’  Then  get  yourself  relaxed  and  read  the  book without strain. Imagine you are reading a story. Do not read it twice unless you wish. Simply believe that you got it on the first reading. Visualize the material as soaking in and germinating. Then next morning, as you go to school, say to yourself, ‘I have a wonderful mother. She is very pretty and sweet, but she must have been an old bookworm to get those high marks. And who wants to be an old bookworm anyway? I don’t want to become magna cum nothing. I only want to get through school creditably.’

“In class, when the teacher calls on you, quickly pray before answering. Then believe the Lord will at that moment help your mind to deliver. When an examination is given, affirm in prayer that God is releasing your mind and that the right answers are given you.”

The boy followed these ideas, and what marks do you think he got the following semester? Ninety! I am sure that this boy, having discovered the amazing work ability of the “I don’t believe in defeat philosophy,” will employ the amazing power of positive thinking in all the affairs of his life.

DEFEAT conclusion:

believe-defeatI could use so many illustrations of the manner in which men’s lives have been revamped by these procedures that this Article would  grow  to  unwieldy  size.  Moreover,  these  are incidents and experiences out of everyday life that are in no way theoretical, but are entirely practical. My mail is literally filled with testimonials sent by people who, having heard or read accounts I have told of victorious life experiences, have felt moved to relate similar occurrences in their own lives.

As  you  finish  this  article please  say  the  following  line aloud: “I don’t believe in defeat.” Continue to affirm that until the idea dominates your subconscious attitudes.

Wyckoff Chart Reading

Chart reading

The Wyck­off Method is one of the four time­less approaches to mar­ket analy­sis (the other three being Dow The­ory, Shabacker’s chart pat­terns, Elliott Wave The­ory and Gann’s swing trad­ing approach). It was devel­oped in the early part of the 20th Cen­tury and has been con­tin­u­ously refined through the present day. The Wyck­off Method is a vital, clas­sic approach to trad­ing which reads the mar­ket through price bars and vol­ume. Although tech­ni­cal indi­ca­tors may be used, they are unnec­es­sary under the Wyck­off Method.

Richard D. Wyck­off was a Wall Street bro­ker and trader in the early part of the 20th Cen­tury. Wyck­off was a bro­ker and wit­nessed the oper­a­tions of the largest traders of his day first hand as an ‘insider’ and learned to trans­late their activ­i­ties in the ticker tape and bar charts. As he watched traders and investors make poor trad­ing deci­sions based on rumor, opin­ion and guess­work, he wrote a newslet­ter that quickly became so widely read on Wall Street that it would often affect stock prices. He later wrote courses for traders and books on tape read­ing (includ­ing the first day trader’s man­ual) and his expe­ri­ences on the Street.

The Wyck­off Method has been used by astute traders for nearly 80 years. It is a com­plete method for under­stand­ing and trad­ing the mar­kets. It is used effec­tively by day traders, swing traders and investors in all mar­kets includ­ing equi­ties, com­modi­ties, index futures and FX with equal suc­cess. Many of today’s top mar­ket tech­ni­cians acknowl­edge Wyck­off as the basis for their under­stand­ing of the mar­kets, and the Method has spawned spin-offs such as VSA.

Dr. Gary Day­ton is an expert in the Wyck­off Method. He has stud­ied and applied Wyck­off for the past decade and has been men­tored by an acknowl­edged Wyck­off mas­ter. Dr. Gary is also an out­stand­ing edu­ca­tor of the Method who con­veys the Wyck­off Method and prin­ci­ples in a sim­ple and con­cise man­ner eas­ily under­stood by his students.

The Strongest Market Signal

 

The two approaches to market timing—predictive and confirming—almost always give conflicting signals when analyzing movementsof the same time domain. That is okay because they are usedfor different purposes and have different goals. If contrary opinionsays that the market has reached bottom over the intermediateterm, the other approach—trending indicators for the intermediateterm—almost always indicates that the trend is still down.This is normal. Why? Because it is normal that investors becomevery bearish (furnishing us with buy signals using contrary opinion)as prices are plummeting and at their low. The large price dropmakes the trend indicators point down, but the predictive indicatorsare showing that the end of the decline has been reached andhigher prices are ahead.However, there are times when the two approaches do not giveconflicting signals, and these are very important to note. When predictiveindicators such as contrary opinion strongly indicate higherprices, and the confirming indicators have already confirmed thestart of a slight uptrend, that is the strongest buy signal there is.There is nothing more reliable or important than when this unusualsituation happens.Why is this so? It is expected that, as prices move up, more andmore investors will become bullish. When, however, the bearish sentimentstays high or even moves higher as prices also move higher,that is not expected, and so it is the sign of a very strong stock market.At these moments, what is happening is that no one believes theupward price movement is real or that it will last. This skepticism isthe fuel needed to keep the movement going, usually for some time.The same holds true when both categories of indicators are confirmingthat prices are declining. If contrary opinion is extremelybullish and stock prices have already started down, so much so thattrend-following indicators are confirming the downtrend, there is no more reliable or important sell indicator.