Do markets really move together?

This post was co-published on capitalmind.in exploring whether global markets really move together… It was going so well. Carrying on from a blockbuster 2017, the NIFTY had risen almost 6% in 2018 by Jan 29th. And then the jitters started. By the end of the 1st week of Feb, we were down almost 2% for the year, after a budget that added Long Term Capital Gains taxes for Indian stocks after 13 years. As of this writing, the NIFTY is roughly back to where it started the year, with expectations that more volatility will follow. One way to look at the

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Confessions of a value investor

For the longest time in my investing experience, I felt like a bit of a fraud, when calling myself a “value investor”, the phrase so prominently visible on the header of this site. Here’s why. The definition of value investing, as introduced by the oft-quoted Ben Graham is quite simple: The strategy of selecting stocks that trade for less than their intrinsic values. Sounds simple enough. List all stocks along with their market prices (A). Add intrinsic value (B) as a column. Compute difference B minus A and voila! The stocks with the largest differences are your value stocks. Buy. Wait for

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China is no stranger to stock market bubbles

The on-going “excitement” about China and stock market bubbles has everyone in a tizzy. A little over a month ago, I was surprised to notice that the Shanghai composite index had doubled within a year! China Composite Index up 49% YTD. 1 year return of 136%! What’s behind the craziness? https://t.co/pPXQE28FKD — The Calm Investor (@CalmInvestor) June 1, 2015 Sure enough, Chinese stocks have corrected dramatically over the last few days, but one year returns still stand at close to 90%, compared to much more modest returns for the Nifty (India), S&P500 (U.S) and Dax (Germany) Zooming out five years,

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How to buy your first stock

Let’s say you recognize the corrosive nature of inflation, doff your hat to the marvel that is compounding and realize why equities are critical to wealth-building. Good going already. You’d now like to build your very own stock portfolio that you hope will grow your wealth manifold over the years. Fantastic! So, how do you find your first stock? Where to look One way is to flip through the pink papers or to CNBC to see what stocks the talking heads are eagerly touting as the next big thing. It is also probably the worst way. Reading the Financial Times to prepare for markets

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Predicting stock market returns

At a glance While predicting market performance is nearly impossible, there are lessons to be learnt from looking at past performance We take the predictive power of three popular valuation metrics; Price-to-Earnings, Price-to-Book and Dividend Yield P/E as a valuation metric performs better than P/B and yield as a lead indicator of annual returns As of early Jan 2015, the Nifty is trading at 21.2x earnings, more expensive than 80% of all trading days in the last 16 years Higher the P/E at the time of purchase, lower the returns achieved for the Nifty Current P/E levels indicate marginally negative

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