Selling something you don't own may seem perverse, but short-selling has become increasingly common as fund managers seek to fully exploit their ability to forecast stock returns.
The concept is quite simple. The short-seller borrows shares in the expectation of selling high and buying low. If a short-seller borrows shares at 100p per share and the price falls to 90p per share, he or she can buy shares at 90p to replace the borrowed shares and keep the 10p per share as profit. Of course, if the price goes up to 110p, the short-seller must buy the shares back at a loss of 10p a share.
While ordinary investors are unlikely to do much short-selling, alternative investment vehicles such as single-stock futures and spread betting do permit smaller retail investors to try their hand. More commonly, though, the technique is the province of experienced fund managers who use it only for certain funds.
In the context of fund management, short-selling is all about stock picking. The manager is able to act on the view that a particular stock or security is overpriced or likely to underperform. If the manager has a strong negative view of a stock, short-selling enables that view to be expressed much more effectively than holding less of the stock relative to the fund's benchmark (under-weighting), or not holding it at all (zero-weighting).
There are other reasons for short-selling. One is to take advantage of perceived pricing differences between different stocks. A manager could take contrary positions in two companies whose share prices are closely related to each other: a long (buying) position in one and a short position in the other. Over time these positions would gradually be reversed (or 'unwound'), with profits earned by the price movements of the positions – assuming, of course, they move in the way the manager expects.
So-called short-sellers saw average gains of 7% in November while the FTSE 100 lost about 4.3%.
Two types of investment fund can make use of a short view. One is absolute-return funds, which look to produce a positive return regardless of market conditions. The strategies for these funds can be quite complex and often rely on sophisticated financial instruments in addition to short-selling.
The other type is the short-extension fund, which is usually benchmarked against a stock market index. Short-extension funds facilitate a limited amount of short-selling, with the short-sold shares balanced by an equal proportion of shares in other companies. In this way, the portfolio remains 100% exposed to the stock market.
One of the more popular examples of a short-extension fund is the 130/30 fund. Here, the fund manager may either invest 100% of the investment capital in long positions and add to it by short-selling an additional 30% (a "bolt-on" approach) or invest the portfolio as one entity, 130% long and 30% short (an "integrated" approach).
The higher the degree of shorting, the more opportunities the manager has to deploy his or her stock-picking acumen. But this can also increase risk, which may not be suitable for more cautious investors.
There are alternative means of gaining the benefits associated with short-selling. For instance, a series of
derivatives instruments can be tantamount to short-selling. These include single-stock futures (an agreement to buy or sell an asset at a specified price and time), single-stock put options (the right, though not the obligation, to buy or sell an asset at a specified price and time), swaps (an exchange of one series of cash flows for another), Contracts For Difference (a cash-settled agreement or contract between two parties) and forward currency contracts (an agreement between two parties to buy or sell a currency at a pre-agreed future point).
The increased risk associated with short-selling means that managers need to have proven stock-picking skills to identify appropriate short-selling opportunities – which, of course, underlines the need for rigorous, careful analysis.
http://scotlandonsunday.scotsman.com/business/The-short-way-to-make.3616145.jp
Saturday, December 29, 2007
Directors make money by buying close to home
FOR as long as I remember, one of the big unanswered questions in stockmarket investing has been whether directors of listed companies who buy their own shares do better than the rest of us.
Deductively, you'd have to say they must do well. After all, they are the insiders.
Now we've got an answer. Keith Nielsen operates a website called www.theinsidetrader.com.au and for years he's been tracking directors' trades. Recently, he had the sense to spend money on research to examine the area.
After monitoring 6000 trades over the past four years, the results are out - and they are compelling. Six times out of 10, when directors buy their own stock, they make money - and on average those returns are double the market return for the year.
The smaller the company, the more likely the directors are to make huge returns. Again, it makes sense, because in small companies the directors can have a thorough understanding of operations. We're not talking about inside trading: this is all above-board, "on market" activity common in every listed company.
Nielsen focuses exclusively on situations in which directors actually spent cash buying shares. He ignores all the other variations by which directors pick up shares, such as stock options and share plans. In other words, he only includes trades where the directors put their hand in their wallets.
And sometimes, when people win, they win big. The largest gain made over the past four years was, ahem, 49,976% made by John Borshoff, of the uranium miner Paladin Energy. He bought 633,330 shares for 1.3 cents each. When the report was signed off for the 12 months to September this year, Paladin shares were $6.77 and Borshoff's $8229 had turned into $4.2 million.
Of course, not every director makes money on every trade. When directors lose, they lose on average 34%.
But mostly they make money. One of the best directors' dealings I have seen reported this year came last Monday, when James Hodgkinson - a director of property trust Goodman and an executive director of Macquarie Bank - put a buy order into the market for Goodman. (This was the day Goodman's rival, property trust Centro, collapsed.) Hodgkinson put down half a million dollars worth of Goodman stock at $4.37; they closed for the weekend at $4.90.
http://business.theage.com.au/directors-make-money-by-buying-close-to-home/20071222-1imw.html
Deductively, you'd have to say they must do well. After all, they are the insiders.
Now we've got an answer. Keith Nielsen operates a website called www.theinsidetrader.com.au and for years he's been tracking directors' trades. Recently, he had the sense to spend money on research to examine the area.
After monitoring 6000 trades over the past four years, the results are out - and they are compelling. Six times out of 10, when directors buy their own stock, they make money - and on average those returns are double the market return for the year.
The smaller the company, the more likely the directors are to make huge returns. Again, it makes sense, because in small companies the directors can have a thorough understanding of operations. We're not talking about inside trading: this is all above-board, "on market" activity common in every listed company.
Nielsen focuses exclusively on situations in which directors actually spent cash buying shares. He ignores all the other variations by which directors pick up shares, such as stock options and share plans. In other words, he only includes trades where the directors put their hand in their wallets.
And sometimes, when people win, they win big. The largest gain made over the past four years was, ahem, 49,976% made by John Borshoff, of the uranium miner Paladin Energy. He bought 633,330 shares for 1.3 cents each. When the report was signed off for the 12 months to September this year, Paladin shares were $6.77 and Borshoff's $8229 had turned into $4.2 million.
Of course, not every director makes money on every trade. When directors lose, they lose on average 34%.
But mostly they make money. One of the best directors' dealings I have seen reported this year came last Monday, when James Hodgkinson - a director of property trust Goodman and an executive director of Macquarie Bank - put a buy order into the market for Goodman. (This was the day Goodman's rival, property trust Centro, collapsed.) Hodgkinson put down half a million dollars worth of Goodman stock at $4.37; they closed for the weekend at $4.90.
http://business.theage.com.au/directors-make-money-by-buying-close-to-home/20071222-1imw.html
Small savings can make you money
After being relegated to the sidelines in the last few years, small savings schemes are now staging a comeback of sorts. Several changes have been incorporated in recent times, to enhance the attractiveness of small savings schemes.
For example, the Post Office Monthly Income Scheme (POMIS) ranks as a popular scheme that offers assured returns (at 8% per annum) on a monthly basis. This makes the scheme apt for investors seeking regular income.
Not too long ago, the investment limits for POMIS were hiked from Rs 300,000 (for a single account) and Rs 600,000 (for a joint account) to Rs 450,000 and Rs 900,000 respectively. This augured well for investors like senior citizens and retirees who afford importance to regular income.
A press release issued by the ministry of finance earlier this month, mentioned that the bonus on investments in POMIS has been restored (albeit partly). To begin with, the scheme offered a 10% (of initial amount invested) maturity bonus; however, the same was discontinued.
As per the press release, investments in POMIS made on and after December 8, 2007, are eligible for a 5% maturity bonus. And there's more in store.
* Small Savings Schemes: An overview
The gamut of investment avenues eligible for tax benefits under Section 80C stands widened. The press release also mentions that with a retrospective effect (from April 1, 2007), investments in the Senior Citizens Savings Scheme (SCSS) and 5-Yr Post Office Time Deposits are eligible for tax benefits under Section 80C of the Income Tax Act. Clearly, the changes have provided the small savings segment a much-needed shot in the arm.
What should investors do?
At Personalfn, we have always maintained that while investing, not losing sight of one's risk profile is imperative. The aforementioned changes will go a long way in helping risk-averse investors adhere to their risk profile while investing.
Risk-averse investors often grudge the lack of adequate suitable investment opportunities; then there is the need for regular and assured income which has to be addressed. With the enhanced investment limits in POMIS, this issue has been dealt with to some extent. Senior citizens and retirees can now invest up to Rs 1,950,000 in the SCSS and POMIS, and earn a (taxable) income of up to Rs 171,000 per annum to meet their liquidity needs.
The tax benefits on SCSS and the restored maturity bonus on POMIS will make the investments more attractive.
From a tax-planning perspective, the risk-averse investor now has more to choose from. Earlier, Public Provident Fund, National Savings Certificate, infrastructure bonds and tax-saving fixed deposits from banks were the available avenues. 5-Yr Post Office Time Deposits and SCSS (albeit the scheme isn't open for investors across the board) are new additions.
With more attractive and a wider range of offerings to choose from, the onus to make the right choice now lies with investors.
http://inhome.rediff.com/money/2007/dec/28perfin.htm
For example, the Post Office Monthly Income Scheme (POMIS) ranks as a popular scheme that offers assured returns (at 8% per annum) on a monthly basis. This makes the scheme apt for investors seeking regular income.
Not too long ago, the investment limits for POMIS were hiked from Rs 300,000 (for a single account) and Rs 600,000 (for a joint account) to Rs 450,000 and Rs 900,000 respectively. This augured well for investors like senior citizens and retirees who afford importance to regular income.
A press release issued by the ministry of finance earlier this month, mentioned that the bonus on investments in POMIS has been restored (albeit partly). To begin with, the scheme offered a 10% (of initial amount invested) maturity bonus; however, the same was discontinued.
As per the press release, investments in POMIS made on and after December 8, 2007, are eligible for a 5% maturity bonus. And there's more in store.
* Small Savings Schemes: An overview
The gamut of investment avenues eligible for tax benefits under Section 80C stands widened. The press release also mentions that with a retrospective effect (from April 1, 2007), investments in the Senior Citizens Savings Scheme (SCSS) and 5-Yr Post Office Time Deposits are eligible for tax benefits under Section 80C of the Income Tax Act. Clearly, the changes have provided the small savings segment a much-needed shot in the arm.
What should investors do?
At Personalfn, we have always maintained that while investing, not losing sight of one's risk profile is imperative. The aforementioned changes will go a long way in helping risk-averse investors adhere to their risk profile while investing.
Risk-averse investors often grudge the lack of adequate suitable investment opportunities; then there is the need for regular and assured income which has to be addressed. With the enhanced investment limits in POMIS, this issue has been dealt with to some extent. Senior citizens and retirees can now invest up to Rs 1,950,000 in the SCSS and POMIS, and earn a (taxable) income of up to Rs 171,000 per annum to meet their liquidity needs.
The tax benefits on SCSS and the restored maturity bonus on POMIS will make the investments more attractive.
From a tax-planning perspective, the risk-averse investor now has more to choose from. Earlier, Public Provident Fund, National Savings Certificate, infrastructure bonds and tax-saving fixed deposits from banks were the available avenues. 5-Yr Post Office Time Deposits and SCSS (albeit the scheme isn't open for investors across the board) are new additions.
With more attractive and a wider range of offerings to choose from, the onus to make the right choice now lies with investors.
http://inhome.rediff.com/money/2007/dec/28perfin.htm
How to Become a Billionaire
Each year, Forbes releases its list of the 400 richest Americans. The list was particularly notable in 2006, because you had to be at least a billionaire to be included.
As you might expect, a significant number of the folks on the list made their fortunes by investing. That subset includes Warren Buffett (worth $46 billion), Carl Icahn (worth $9.7 billion), and Jim Simons (worth $4 billion).
So here's important lesson No. 1: You can make a lot of money if you learn to manage your portfolio like a pro.
Easier said than done ...
Of course, that collection of billionaire investors offers no clue regarding what strategy is most likely to make you a billionaire. Warren Buffett is a dyed-in-the-wool value investor. That strategy has helped him achieve annual returns greater than 20% for more than 40 years on the back of investments in boring companies with competitive advantages at value prices such as Geico and Washington Post. That investment tack continues in his company's portfolio today, with Tyco (NYSE: TYC), Costco (Nasdaq: COST), and CarMax (NYSE: KMX) among the company's current holdings.
Jim Simons, though, can point to 34% annualized returns at his Medallion fund since 1982, net of what are believed to be some incredibly stiff fees. He favors a mechanical strategy based on computer models that are constantly refined by an army of Ph.D.s.
So while there is no best strategy, important lesson No. 2 is obvious: You gotta dance with the one that brung ya.
Say what?
Colloquialisms aside, all of these investors are astoundingly successful because they've figured out how they make money best, stuck with their strategy in good times and bad, and refined their best practices over time.
Buffett was mocked during the technology bubble when companies that he avoided and professed not to understand as well as others -- companies such as eBay -- were zooming to the moon. But they've come back to earth, and Buffett's still doing just fine today.
Icahn has a reputation as a corporate raider; he's made a lot of money instituting changes at underperforming companies. Although Icahn's recent efforts at Lear (NYSE: LEA) and Biogen Idec (Nasdaq: BIIB) did not end well, don't expect him to go soft. He's worth $10 billion. Why mess with success?
And Simons doesn't try to analyze businesses as Buffett does, because that's not where his expertise lies.
Mimic the masters
The secret to successful investing, then, is not found in any single strategy, but rather in picking the strategy that's right for you and executing it faithfully. As lauded NYU finance professor Aswath Damodaran writes in his book Investment Fables, "Each strategy has the potential for success if it matches your risk preferences and time horizon and if you are careful about how you use it."
That's it. That's the secret. Because if you get too cute -- chasing hot sectors, buying high and selling low, and giving yourself only six months or less to master a given investment strategy -- you're simply setting yourself up for failure.
http://www.fool.com/investing/small-cap/2007/12/29/how-to-become-a-billionaire.aspx
As you might expect, a significant number of the folks on the list made their fortunes by investing. That subset includes Warren Buffett (worth $46 billion), Carl Icahn (worth $9.7 billion), and Jim Simons (worth $4 billion).
So here's important lesson No. 1: You can make a lot of money if you learn to manage your portfolio like a pro.
Easier said than done ...
Of course, that collection of billionaire investors offers no clue regarding what strategy is most likely to make you a billionaire. Warren Buffett is a dyed-in-the-wool value investor. That strategy has helped him achieve annual returns greater than 20% for more than 40 years on the back of investments in boring companies with competitive advantages at value prices such as Geico and Washington Post. That investment tack continues in his company's portfolio today, with Tyco (NYSE: TYC), Costco (Nasdaq: COST), and CarMax (NYSE: KMX) among the company's current holdings.
Jim Simons, though, can point to 34% annualized returns at his Medallion fund since 1982, net of what are believed to be some incredibly stiff fees. He favors a mechanical strategy based on computer models that are constantly refined by an army of Ph.D.s.
So while there is no best strategy, important lesson No. 2 is obvious: You gotta dance with the one that brung ya.
Say what?
Colloquialisms aside, all of these investors are astoundingly successful because they've figured out how they make money best, stuck with their strategy in good times and bad, and refined their best practices over time.
Buffett was mocked during the technology bubble when companies that he avoided and professed not to understand as well as others -- companies such as eBay -- were zooming to the moon. But they've come back to earth, and Buffett's still doing just fine today.
Icahn has a reputation as a corporate raider; he's made a lot of money instituting changes at underperforming companies. Although Icahn's recent efforts at Lear (NYSE: LEA) and Biogen Idec (Nasdaq: BIIB) did not end well, don't expect him to go soft. He's worth $10 billion. Why mess with success?
And Simons doesn't try to analyze businesses as Buffett does, because that's not where his expertise lies.
Mimic the masters
The secret to successful investing, then, is not found in any single strategy, but rather in picking the strategy that's right for you and executing it faithfully. As lauded NYU finance professor Aswath Damodaran writes in his book Investment Fables, "Each strategy has the potential for success if it matches your risk preferences and time horizon and if you are careful about how you use it."
That's it. That's the secret. Because if you get too cute -- chasing hot sectors, buying high and selling low, and giving yourself only six months or less to master a given investment strategy -- you're simply setting yourself up for failure.
http://www.fool.com/investing/small-cap/2007/12/29/how-to-become-a-billionaire.aspx
Detroit Considers Sale of City’s Small Parks
Save for a rusty, seatless swing set, the Brinket-Hibbard Playlot resembles many vacant lots pockmarking Detroit’s hardscrabble east side.
Looking across Hibbard Street at what is left of her childhood park, Patricia Scott, whose family lives in the only home remaining on the block, recalled better days.
“There were nine of us kids, and I can remember how we used to have fun over there, when there was a sandbox and some hobbyhorses, and I think a seesaw,” said Ms. Scott, 56. “The way it is now, I think it’s pitiful.”
Detroit’s own assessment of the park is similarly grim, according to a recent report, which said, “Except for an old swing set frame, this appears to be another vacant lot in a neighborhood of many vacant lots.”
Now, some city officials are wondering, Would you like to buy it?
The Brinket-Hibbard playground is one of about 90 municipal parks — mostly small play spaces — that the city of Detroit is considering putting up for sale under a contentious proposal that seeks to condense and consolidate park space and resources in thriving areas. The city would use the money earned from any sales to maintain and possibly expand parks in parts of the city that are more densely populated than, say, areas like the one around Hibbard Street.
The Recreation Department’s master plan calls the proposal “park repositioning,” which officials promote as a clear-eyed way to look at necessary downsizing, a way to align park space with the significant demographic shifts over the last half-century in Detroit, which has lost about a million people since 1950.
But critics say it could further hurt downtrodden areas where parks are equally appreciated, and that green space is too precious to be bartered for money.
“They call some of these parks ‘surplus,’” said City Councilwoman JoAnn Watson, an opponent of the plan, “but I don’t know what the heck that means because there is no such thing as a surplus of something that is necessary for the good and welfare of the community. The very concept of selling off public parkland in somebody’s hope to address a one-time money crunch is not something you do as a big city. We have to protect these parks for future generations.”
Some proponents of the parks say that eliminating a park in a declining neighborhood would make a resurgence much harder.
“It could be a case of penny wise, pound foolish,” said Abe Kadushin of Kadushin Associates, an architecture firm that does a lot of work in Detroit. “I understand the need to make money, if it’s an asset that’s valuable and the city can dispose of it. But it may not be the wisest thing in the long run.”
The proposal seems to have stalled in the City Council’s Neighborhood and Community Services Committee, whose chairwoman is Ms. Watson. But the administration of Mayor Kwame M. Kilpatrick plans to pursue it, possibly along with other options like neighborhood or corporate sponsorships. Though with more than 300 parks — 40 percent of which are in poor condition — sales to developers or other for-profit entities could be most beneficial.
If private buyers emerge for most of the parks in question, the city estimates it can raise $8.1 million from selling the land (about 124 acres) and more than $5 million a year in tax revenue, while saving hundreds of thousands of dollars on maintenance.
“It’s an opportunity to look at where we can put parks closer to people,” said James Canning, a city spokesman. “We’ve constantly looked for ways to make government more efficient, and we see this whole idea of possibly repositioning parks as promoting an increased quality of life for those living in our neighborhoods.”
Some experts say the idea makes sense. While many cities and states are preoccupied by figuring out how to grow, several, like Detroit and New Orleans, are grappling with how to shrink, an alternative that is rarely pleasant. Recently, a melee erupted when the New Orleans City Council voted to demolish four public housing projects (to be replaced by fewer units for poor people).
http://www.nytimes.com/2007/12/29/us/29parks.html?hp
Looking across Hibbard Street at what is left of her childhood park, Patricia Scott, whose family lives in the only home remaining on the block, recalled better days.
“There were nine of us kids, and I can remember how we used to have fun over there, when there was a sandbox and some hobbyhorses, and I think a seesaw,” said Ms. Scott, 56. “The way it is now, I think it’s pitiful.”
Detroit’s own assessment of the park is similarly grim, according to a recent report, which said, “Except for an old swing set frame, this appears to be another vacant lot in a neighborhood of many vacant lots.”
Now, some city officials are wondering, Would you like to buy it?
The Brinket-Hibbard playground is one of about 90 municipal parks — mostly small play spaces — that the city of Detroit is considering putting up for sale under a contentious proposal that seeks to condense and consolidate park space and resources in thriving areas. The city would use the money earned from any sales to maintain and possibly expand parks in parts of the city that are more densely populated than, say, areas like the one around Hibbard Street.
The Recreation Department’s master plan calls the proposal “park repositioning,” which officials promote as a clear-eyed way to look at necessary downsizing, a way to align park space with the significant demographic shifts over the last half-century in Detroit, which has lost about a million people since 1950.
But critics say it could further hurt downtrodden areas where parks are equally appreciated, and that green space is too precious to be bartered for money.
“They call some of these parks ‘surplus,’” said City Councilwoman JoAnn Watson, an opponent of the plan, “but I don’t know what the heck that means because there is no such thing as a surplus of something that is necessary for the good and welfare of the community. The very concept of selling off public parkland in somebody’s hope to address a one-time money crunch is not something you do as a big city. We have to protect these parks for future generations.”
Some proponents of the parks say that eliminating a park in a declining neighborhood would make a resurgence much harder.
“It could be a case of penny wise, pound foolish,” said Abe Kadushin of Kadushin Associates, an architecture firm that does a lot of work in Detroit. “I understand the need to make money, if it’s an asset that’s valuable and the city can dispose of it. But it may not be the wisest thing in the long run.”
The proposal seems to have stalled in the City Council’s Neighborhood and Community Services Committee, whose chairwoman is Ms. Watson. But the administration of Mayor Kwame M. Kilpatrick plans to pursue it, possibly along with other options like neighborhood or corporate sponsorships. Though with more than 300 parks — 40 percent of which are in poor condition — sales to developers or other for-profit entities could be most beneficial.
If private buyers emerge for most of the parks in question, the city estimates it can raise $8.1 million from selling the land (about 124 acres) and more than $5 million a year in tax revenue, while saving hundreds of thousands of dollars on maintenance.
“It’s an opportunity to look at where we can put parks closer to people,” said James Canning, a city spokesman. “We’ve constantly looked for ways to make government more efficient, and we see this whole idea of possibly repositioning parks as promoting an increased quality of life for those living in our neighborhoods.”
Some experts say the idea makes sense. While many cities and states are preoccupied by figuring out how to grow, several, like Detroit and New Orleans, are grappling with how to shrink, an alternative that is rarely pleasant. Recently, a melee erupted when the New Orleans City Council voted to demolish four public housing projects (to be replaced by fewer units for poor people).
http://www.nytimes.com/2007/12/29/us/29parks.html?hp
Did you make money in 2007?
What is the best way to invest in stocks? In 2007, you could have made money by throwing a dart at a list of stocks and investing in whichever name it landed on. During the year, eight out of 10 stocks scored gains. You would have lost money only if your dart was unlucky enough to land on one of the other two.
In all, 2,126 stocks, constituting 82 per cent in the 2,590 actively-traded stocks on the Bombay Stock Exchange (BSE), witnessed an appreciation in prices as on Christmas-eve. With four sessions still to go before the year ends, that situation may change, but not substantially.
So far, you didn't need much luck. To hit big money, though, your dart would have had to land on something that took off like a rocket during the year. Take this little-known company called Cals Refineries (Cals what?). If you had invested Rs 10,000 of your life's savings last year on December 29 in Cals, your investment would be worth Rs 2.34 lakh on Christmas-eve this year. You would have done equally well with Lloyds Metals, with the same Rs 10,000 growing to Rs 2.17 lakh.
Even with minor luck, you would have doubled your money. Share prices of 840 companies (which account for nearly one-third of the actively-traded stocks) doubled in 2007. However, the number of multi-baggers (stocks that multiplied 10 times of more) stood limited at 13. The returns among multi-baggers varied from 1,019 per cent (10 times) to 2,344 per cent (23 times). Not surprisingly, smaller companies surged the most. Sahara Housing surged 2,008 per cent from Rs 45.50 to Rs 959.
• Check out our Yearender Special
Sixty-nine stocks gave returns between 501 per cent and 1,000 per cent and 755 stocks between 100 per cent and 500 per cent. Not a bad year for investors who had the courage and the tenacity to hold on to their investments.
However, in value terms, the largest wealth creator was - you guessed right - Reliance Industries. The market value of this Mukesh Ambani flagship more than doubled (119.47 per cent) from Rs 1,77,025 crore to Rs4,05,285 crore - a gain of Rs 2,28,260 crore. The share price of Reliance Industries moved up from Rs 1,270.35 to Rs 2,788 during the year.
The next three slots were occupied by public sector undertakings (PSUs). The government is sitting on huge paper wealth. MMTC, with a Rs 1,22,986 crore market capitalisation gain, ranked second after Reliance, followed by NTPC (Rs 82,331 crore) and ONGC (Rs 80,710 crore). Larsen & Toubro ranked fifth with a gain of Rs 78,551 crore in 2007.
Telecom major Bharti Airtel recorded a rise of Rs 64,905 crore while Anil Ambani's Reliance Communications witnessed a market value gain of Rs 53,207 crore in 2007.
http://sify.com/finance/fullstory.php?id=14580498
In all, 2,126 stocks, constituting 82 per cent in the 2,590 actively-traded stocks on the Bombay Stock Exchange (BSE), witnessed an appreciation in prices as on Christmas-eve. With four sessions still to go before the year ends, that situation may change, but not substantially.
So far, you didn't need much luck. To hit big money, though, your dart would have had to land on something that took off like a rocket during the year. Take this little-known company called Cals Refineries (Cals what?). If you had invested Rs 10,000 of your life's savings last year on December 29 in Cals, your investment would be worth Rs 2.34 lakh on Christmas-eve this year. You would have done equally well with Lloyds Metals, with the same Rs 10,000 growing to Rs 2.17 lakh.
Even with minor luck, you would have doubled your money. Share prices of 840 companies (which account for nearly one-third of the actively-traded stocks) doubled in 2007. However, the number of multi-baggers (stocks that multiplied 10 times of more) stood limited at 13. The returns among multi-baggers varied from 1,019 per cent (10 times) to 2,344 per cent (23 times). Not surprisingly, smaller companies surged the most. Sahara Housing surged 2,008 per cent from Rs 45.50 to Rs 959.
• Check out our Yearender Special
Sixty-nine stocks gave returns between 501 per cent and 1,000 per cent and 755 stocks between 100 per cent and 500 per cent. Not a bad year for investors who had the courage and the tenacity to hold on to their investments.
However, in value terms, the largest wealth creator was - you guessed right - Reliance Industries. The market value of this Mukesh Ambani flagship more than doubled (119.47 per cent) from Rs 1,77,025 crore to Rs4,05,285 crore - a gain of Rs 2,28,260 crore. The share price of Reliance Industries moved up from Rs 1,270.35 to Rs 2,788 during the year.
The next three slots were occupied by public sector undertakings (PSUs). The government is sitting on huge paper wealth. MMTC, with a Rs 1,22,986 crore market capitalisation gain, ranked second after Reliance, followed by NTPC (Rs 82,331 crore) and ONGC (Rs 80,710 crore). Larsen & Toubro ranked fifth with a gain of Rs 78,551 crore in 2007.
Telecom major Bharti Airtel recorded a rise of Rs 64,905 crore while Anil Ambani's Reliance Communications witnessed a market value gain of Rs 53,207 crore in 2007.
http://sify.com/finance/fullstory.php?id=14580498
How You Can Make More Money
This could very well blow your mind ...
Nearly $700 billion has been deposited in stock mutual funds since the beginning of 2007. That brings the rapidly rising grand total of money stashed in stock mutual funds to an astounding $6.6 trillion.
That's enough cold, hard cash to build a land bridge to Asia.
OK, maybe that's a stretch
But if you think $6.6 trillion is a lot of money to be invested in stocks, consider that there's another $4.7 trillion invested in bonds and money market funds. It's less, sure, but it's still a full 39% of the total.
In other words, American investors have a lot of money invested -- and that money seems to be invested far too conservatively.
Yes, those numbers are a quick-and-dirty way to arrive at that conclusion. But -- and it's a big "but" -- to our way of thinking here at The Motley Fool, investors with a timeline of 10 years or more should be holding no more than 10% of their investable assets in bonds -- let alone anything in money markets.
Yet we clearly do ...
Dumb and dumber-er?
American investors aren't dumb. We're uninformed -- a reason for the mad rush of money into professionally managed mutual funds since 1996. Fund assets under management have increased nearly 11% annually over the past decade, as the number of funds available for investment has increased from 6,293 to 8,726, according to the Investment Company Institute.
And fund companies are cashing in. Fidelity Select Brokerage -- a sector-tracking fund that counts Lazard (NYSE: LAZ) and Jefferies Group (NYSE: JEF) among its top holdings -- is up 13% annually over the past 10 years. That's nearly 7 percentage points ahead of the S&P 500 index.
Pay up for ... junk
Of course, the majority of the funds out there fail to beat or even match their benchmarks, despite holding some solid stocks. Take John Hancock Growth Trends (JGTBX), for example. The fund has been walloped by the S&P 500 to the tune of more than 3 percentage points per year since 2002. And despite holding recent gainers such as IBM (NYSE: IBM) and Partner Re (NYSE: PRE), positions in losers such as Cardinal Health (NYSE: CAH) have the fund trailing the index by nearly 4 percentage points over the past year.
But poor stock-picking isn't the only reason the fund's customers are underserved. They're also paying the fund's managers an absurd 2.35% expense ratio -- which means investors are starting out 2.35% in the hole. That's a big hurdle to overcome.
And while the fund's managers probably love cashing their fat checks, your payments to them are preventing you from doing the same!
We pay you to what?
The Investment Company Institute recently broke down the workforces at these fund companies by job function. Would it shock you to discover that just 31% of the folks working in this enormous and profitable industry are actually dedicated to picking and researching investment opportunities?
In other words, 69% more are not.
And while some of these excess workers perform critical functions, such as ensuring regulatory compliance, another good chunk are focused on sales and marketing. But why draw a distinction? Your absurd fees pay for all of them.
Cut the fat. Pick your own stocks.
Is it a big step? Yes. Is it an impossible one? Heck, no. Here are three time-tested tips to get started:
1. Invest only money that you won't need for at least three to five years.
2. Keep investing money on a regular basis, and never try to time the market's machinations.
3. Diversify your portfolio broadly enough so that a few bad surprises won't ruin your returns.
Of course, that's only the tip of the iceberg.
Make it happen
But if you'd like to learn more about valuing and picking your own stocks, consider joining our Motley Fool Stock Advisor investing service. There, Fool co-founders David and Tom Gardner bring you regular interviews and investment lessons from top business leaders, keep you up to date on breaking market news, and help answer your questions on the service's dedicated discussion boards.
And here's the best part: They also pick two stocks each month that they believe will beat the market for the next decade or more. Since inception in 2002, those picks are beating the market by 45 percentage points on average. You can see each and every one of them by trying out the service free for 30 days. Click here for more information. There is no obligation to subscribe.
http://www.fool.com/investing/general/2007/12/29/how-you-can-make-more-money.aspx
Nearly $700 billion has been deposited in stock mutual funds since the beginning of 2007. That brings the rapidly rising grand total of money stashed in stock mutual funds to an astounding $6.6 trillion.
That's enough cold, hard cash to build a land bridge to Asia.
OK, maybe that's a stretch
But if you think $6.6 trillion is a lot of money to be invested in stocks, consider that there's another $4.7 trillion invested in bonds and money market funds. It's less, sure, but it's still a full 39% of the total.
In other words, American investors have a lot of money invested -- and that money seems to be invested far too conservatively.
Yes, those numbers are a quick-and-dirty way to arrive at that conclusion. But -- and it's a big "but" -- to our way of thinking here at The Motley Fool, investors with a timeline of 10 years or more should be holding no more than 10% of their investable assets in bonds -- let alone anything in money markets.
Yet we clearly do ...
Dumb and dumber-er?
American investors aren't dumb. We're uninformed -- a reason for the mad rush of money into professionally managed mutual funds since 1996. Fund assets under management have increased nearly 11% annually over the past decade, as the number of funds available for investment has increased from 6,293 to 8,726, according to the Investment Company Institute.
And fund companies are cashing in. Fidelity Select Brokerage -- a sector-tracking fund that counts Lazard (NYSE: LAZ) and Jefferies Group (NYSE: JEF) among its top holdings -- is up 13% annually over the past 10 years. That's nearly 7 percentage points ahead of the S&P 500 index.
Pay up for ... junk
Of course, the majority of the funds out there fail to beat or even match their benchmarks, despite holding some solid stocks. Take John Hancock Growth Trends (JGTBX), for example. The fund has been walloped by the S&P 500 to the tune of more than 3 percentage points per year since 2002. And despite holding recent gainers such as IBM (NYSE: IBM) and Partner Re (NYSE: PRE), positions in losers such as Cardinal Health (NYSE: CAH) have the fund trailing the index by nearly 4 percentage points over the past year.
But poor stock-picking isn't the only reason the fund's customers are underserved. They're also paying the fund's managers an absurd 2.35% expense ratio -- which means investors are starting out 2.35% in the hole. That's a big hurdle to overcome.
And while the fund's managers probably love cashing their fat checks, your payments to them are preventing you from doing the same!
We pay you to what?
The Investment Company Institute recently broke down the workforces at these fund companies by job function. Would it shock you to discover that just 31% of the folks working in this enormous and profitable industry are actually dedicated to picking and researching investment opportunities?
In other words, 69% more are not.
And while some of these excess workers perform critical functions, such as ensuring regulatory compliance, another good chunk are focused on sales and marketing. But why draw a distinction? Your absurd fees pay for all of them.
Cut the fat. Pick your own stocks.
Is it a big step? Yes. Is it an impossible one? Heck, no. Here are three time-tested tips to get started:
1. Invest only money that you won't need for at least three to five years.
2. Keep investing money on a regular basis, and never try to time the market's machinations.
3. Diversify your portfolio broadly enough so that a few bad surprises won't ruin your returns.
Of course, that's only the tip of the iceberg.
Make it happen
But if you'd like to learn more about valuing and picking your own stocks, consider joining our Motley Fool Stock Advisor investing service. There, Fool co-founders David and Tom Gardner bring you regular interviews and investment lessons from top business leaders, keep you up to date on breaking market news, and help answer your questions on the service's dedicated discussion boards.
And here's the best part: They also pick two stocks each month that they believe will beat the market for the next decade or more. Since inception in 2002, those picks are beating the market by 45 percentage points on average. You can see each and every one of them by trying out the service free for 30 days. Click here for more information. There is no obligation to subscribe.
http://www.fool.com/investing/general/2007/12/29/how-you-can-make-more-money.aspx
Recycle Your Dusty Equipment and Make Money
There is a service called Second Rotation. The service buys your used electronic gadgets after you enter in basic information such as if the manual's still there and the condition of the item. If you agree, Second Rotation will allow you to print a shipping label. Once they receive the item, they will issue you a check or make a Paypal deposit.
While you can probably get more money on certain items on Ebay or through a direct private party offer on community sites like Craigslist, Second Rotation will help you part ways with items you don't use. I am not sure what they do with the item, but at least it won't end up in the trash down the road. This way, you earn a little green for being green.
http://www.pocketnow.com/index.php?a=portal_detail&t=news&id=4886
While you can probably get more money on certain items on Ebay or through a direct private party offer on community sites like Craigslist, Second Rotation will help you part ways with items you don't use. I am not sure what they do with the item, but at least it won't end up in the trash down the road. This way, you earn a little green for being green.
http://www.pocketnow.com/index.php?a=portal_detail&t=news&id=4886
iTunes Says, "But that's where we make our money!"
It's pretty easy to tell where iTunes makes the bulk of its money based on how it responds when you try disabling some of the media preferences.
Hop into your iTunes preferences and start unchecking media sources, you'll find that some uncheck without a fight while others throw up messages like this:Outside of those two, you can turn off any of the other options without a fight. Wonder why that is? The other ones provide access to free content. No money in Apple's pocket means it can be hidden without a fuss.
Okay, so maybe it isn't quite that cut and dry. They do make money on games and ringtones, but I get the feeling that they don't see this as a big enough business today to force on people.
The one you can't turn off no matter what is Music. Even if you only use iTunes to download podcasts or watch movies, you have no choice but to be constantly reminded that you're not using iTunes they way Apple decided you should.Podcasts, then radio and music would be how I'd rank my iTunes listening preferences. I've also switched to Amazon as my first choice for buying music, so the default version of the iTunes Music store isn't exactly helpful either.
http://www.technologyevangelist.com/2007/12/itunes_says_but_that.html
Hop into your iTunes preferences and start unchecking media sources, you'll find that some uncheck without a fight while others throw up messages like this:Outside of those two, you can turn off any of the other options without a fight. Wonder why that is? The other ones provide access to free content. No money in Apple's pocket means it can be hidden without a fuss.
Okay, so maybe it isn't quite that cut and dry. They do make money on games and ringtones, but I get the feeling that they don't see this as a big enough business today to force on people.
The one you can't turn off no matter what is Music. Even if you only use iTunes to download podcasts or watch movies, you have no choice but to be constantly reminded that you're not using iTunes they way Apple decided you should.Podcasts, then radio and music would be how I'd rank my iTunes listening preferences. I've also switched to Amazon as my first choice for buying music, so the default version of the iTunes Music store isn't exactly helpful either.
http://www.technologyevangelist.com/2007/12/itunes_says_but_that.html
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