The Basics of Investing and Trading | Explained and analyzed.

Archive for August 2009

Many analysts, including myself feel that this rally is overdone. It was just in March that the Dow hit the 6500 levels and the Sensex fell to the early 8000s. The economic situation in USA (the largest economy of the world) has improved to some extent as we can see in consumer spending, new jobless [...]

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I opened a set of positions worth about 1.16 lakh Indian Rupees (about 2300 USD) last Monday.I chose blue chips from different sectors.The total return from my portfolio over the last week was INR 8,232 i.e. 7.09%. Such is the world of equities. Bank deposits, in comparison, pay about 7.5 -8 % per year in [...]

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Aug/09

23

A very interesting set of ETFs

I was looking into ways of diversifying my portfolio and came across a set of exchange traded funds that seem to fit my needs perfectly.
Nifty Benchmark Exchange Traded Fund(NiftyBees)
This ETF tracks the S&P CNX Nifty, an index that tracks the performance of 50 of the biggest and most liquid stocks traded on the National Stock [...]

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Aug/09

23

My latest equity portfolio

Current Portfolio
Company – Reliance Industries
Sector -Refining and Petrochemicals
Portfolio Weight -39%
Horizon -Long term
Company -Tata Steel
Sector -Steel
Portfolio Weight -22%
Horizon -Long term
Company -Reliance Communications
Portfolio Weight -22%
Sector -Telecommunications
Horizon -Long term
Company -ICICI Bank
Portfolio Weight -13%
Sector -Banking and Finance
Horizon -Long term
ETF -Nifty Benchmark Exchange Traded Fund
Portfolio Weight -4%
Sector -Index
Horizon -Long term
Stocks that I am eying and planning to buy on [...]

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Income earned as a result of investments may be taxable. The impact of taxes on investment returns can be substantial and can potentially play a significant role in investment strategy. It is possible to minimize the impact of taxes through tax-planning. Thus, all investors should understand the basics of taxation and the tax laws [...]

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Asset Allocation
Asset Allocation is the process by which the total investble capital is distributed across different asset classes. As discussed in the previous article, asset classes are sets of assets that behave similarly and have similar characteristics, e.g. Stocks, Fixed Income Securities, Commodities and Cash (Cash Equivalents).
Investors typically do not invest all their money in [...]

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Assets and Asset Classes
An asset is anything that is expected to provide positive cashflow in the future. This is a rather broad definition and thus encompasses securities (e.g. stocks, bonds), real estate (e.g. land, houses), intellectual property (e.g. copyrights, patents) etc.
Asset classes are assets that have similar features and behave similarly. The main asset classes [...]

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A position
In trader parlance, one takes a “long position” in an asset if he/she buys that asset and takes a “short position” if he/she borrows that asset and sells it.
The difference between investing and trading
Investors are people who buy assets (in this case, stocks) in anticipation of long term appreciation in their value. Traders are [...]

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Buying/Selling stocks
Stocks are traded on stock exchanges. Individual investors generally need to make use of the services of a stock broker to buy/sell shares. Stock brokers carry out transactions on the behalf of clients for a commission. Individuals who want to transact in shares should open an account with a stock broker.
Bid-Ask Spread
Stock brokers [...]

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Definition
Equity Shares, commonly known as stocks are small parts of a company (corporation). Stocks represent ownership of the issuing company and typically entitle the holder to voting rights when major corporate decisions of the issuing company are put to vote.
Rights of the shareholder
Shareholders collectively also appoint the board of directors of the issuing company and [...]

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