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Tue, 27th September 2016

Anirudh Sethi Report

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Archives of “s market” Tag

18 Countries’ Stock Markets As A Percentage Of GDP

MARKET CAPITALIZATION

 

A country’s market capitalization as a percent of GDP is a useful indicator in assessing whether an equity market is under- or overvalued. Making direct comparisons between developed markets and emerging markets can be difficult, however, because the latter tend to have less developed stock markets and lower market capitalization to GDP ratios. A more useful indicator is to compare a country’s ratio to its historic levels. Based on current differences from previous 10 year averages, European markets, especially Italy, Spain, and France, appear particularly undervalued and therefore attractive. Additionally, the BRICs (Brazil, Russia, India, China) countries are currently below their averages, suggesting now may be a good buying opportunity.

Shanghai “Flash rally” on Friday could cost brokerage $65m

Everbright Securities’ fat finger trade in Shanghai on Friday could cost the Chinese brokerage up to Rmb400m ($65.4m), or up to 2 per cent of its equity base, according to estimates by Citi analysts.

Everbright Securities sparked an over 5 per cent flash rally last Friday when it accidentally put through an Rmb7bn trade by its prop trading desk.

Based on that size trade and an estimated 5 per cent trading loss base on the day’s market volatility, Citi’s Paddy Ran says the brokerage could have lost Rmb300-400m, up to 20 per cent of its pre-tax profit for 2012. For China Everbright, a Hong Kong-listed group that holds 33 per cent of Everbright, that could mean it shares the loss to the tune of Rmb90-102m, around 6-7 per cent of pre-tax profit in 2012.

China Everbright lost 5.5 per cent on Friday and is down a further 1.1 per cent today. Everbright Securities in Shanghai is suspended today. Read More 

Dalton, Jones, & Dalton, Mind Over Markets

Mind Over Markets, the book that popularized (and expanded on) Peter Steidlmayer’s Market Profile, was first published in 1990. Anyone who bought the book expecting a self-help manual would have been sorely disappointed because what they got instead was a pretty complicated alphabetic model for organizing the distribution of market data along price and time axes. Twenty-three years later James F. Dalton, Eric T. Jones, and Robert B. Dalton are back with an updated edition of their text, Mind Over Markets: Power Trading with Market Generated Information (Wiley, 2013).

The book itself is organized according to the Market Profile trader’s achievement level—novice, advanced beginner, competent, proficient, and expert—with the greatest time spent on the competent level. The expert trader gets a mere two pages. Read More 

FT-A Nation Of Crooks

SCARY-INDIA15 years ago as middle aged traders on Dalal Street, we saw the emergence of stalwarts like Dr RH Patil and some techies like Jignesh Shah of Financial Technologies. People used to talk in whispers how the Rs 40 stock of FT would make billionaires many times over for Indian investors. The reason was simple, just like Microsoft, FT’s NISE was the only licensed stock trading platform permitted for use on the NSE terminals. The meteoric rise of the NSE and consequently NISE made Jignesh Shah one of the youngest billionaires in the country,
 
Good things do not last for too long in a country run by crooks. In some ways FT’s undoing was to promote a parallel commodities and equities exchange under the acronym MCX-jointly promoted by NABARD and a host of other GOI bodies. It had a successful issue with the IPO listing at Rs 1400 on Day 1. Today the scrip is locked at a lower circuit of rs 150 alongside promoter FTs stock which has lost about 70 per cent of it’s market cap in 2 days.
 
Why? The GOI in a most characteristic cavalier move asked MCX to square all forward contracts on the exchange and for others they reduced them to delivery trade. So much so that no intra-day squaring is allowed unless the first trade was to have been long in any commodity, metal or stock.
 
There is a near certainty now that the MCX, FT and NSEL will either be taken over by the GOI or will go under receivership. If this happens, the UPA 1 and 2 would accomplished what few governments have done in 65 years. A lower circuit on the NSE/BSE, an upper circuit on the BSE/NSE and a closure of a parallel exchange.
 
What beats everyone that if Gold is the only problem affected the FX position of India, why are currency futures being permitted on the NSE. They should have been the first to have been banned, But no sir, larger forces are at play. It is inconceivable for a person without roots to dream of becoming a billionaire in India. That my dear friends rests with politicians and their chums from Sanawar, Doon, Mayo, Scindia and Bishop Cotton.
 
God save this nation!

Warren Buffett’s Father was a Raging Gold Bug

I was doing some evening reading and came across this interesting letter from Howard Buffett,Warren Buffett’s dad.  Howard had a huge impact on Warren’s life so it was surprising to read his stance on gold.  In essence, Howard was a raging gold bug who stated that “paper systems end in collapse” and believed that the government’s debt from WW2 was spiralling out of control and posed a massive problem.  He also believed that the fiat system was the equivalent of surrendering “your children and your country to galloping inflation.”

The reason I find all of this so interesting is that no person on earth has single handedly benefited from fiat money more than Howard’s son Warren.  Yes, inflation has risen substantially since 1948 when he wrote that letter, but American living standards have exploded far higher than the rate of inflation.  In the meantime, few families have benefited from fiat money more than the children and grandchildren of Howard Buffett.

Even more interesting to me, is Warren’s rejection of his father’s beliefs on the way to becoming the world’s biggest beneficiary of fiat money.  Warren not only understands the silliness of building a portfolio around commodities, but he also clearly understands that the national debt does not pose some form of solvency problem in the same sense that a business or household is constrained by.

Buffett on gold: Read More 

Jubilant Life-FX Makes The Stock Swoon

horror35Multi-unit, multi-location CRAM and injectables producer Jubilant Life has been significantly affected by the INR Depreciation. The corporate carries FX Debt of approximately $ 800 mn taken well before the INR fell 45 per cent in a year against the USD. There are two issues which affect the company. One, there will be a Rs 360 crore hit on FX losses, but these are likely to be capitalised and the second part is the USD 70 mn that is coming up for redemption.
 
Capitalising FX losses can end up help Jubilant report better finances but operationally the corporate will be crippled as FX mismatches of inflows and outflows reduce hedging options, but cash flows will not be protected.
 
FX exposure is the biggest reason for Jubilant under-performance, in addition to the USFDA targeting the Halifax facility for non compliance set standards of production. These are the reason for the stock to lose 50 per cent of it’s market cap in ayear, as against all it’s competitors who have seen their stocks appreciate with the USD.

European Market Closed ,Portugal Crashed

Europe’s stock markets all finished in the red, although Portugal’s 5% tumble was avoided. Spain’s market suffered the biggest falls.

• FTSE 100: down 74 points at 6229, -1.17%

• German DAX: down 81 points at 7829, -1%

• French CAC: down 40 points at 3702, -1.1%

• Spanish IBEX: down 122 points at 7763, -1.56%

• Italian FTSE MIB: down 82 points at 15282, -0.5%

  • Portugal PSI -5.2%

Big Tobacco bets a packet on e-cigarettes

Big Tobacco in the US is raising its bet on the growth of electronic cigarettes to offset the decline of traditional smoking with Reynolds American, the maker of Camel and Pall Mall launching its first smokeless, battery-powered device.

Reynolds, the second-biggest US tobacco company by market share, has hailed e-smoking as a “game-changer” for the industry, with chief executive Dan Delen on Thursday calling the launch a “fantastic business opportunity”.

Reynolds’ move comes as the industry steps up its investment in alternatives to traditional cigarettes. Marlboro-maker Altria, the biggest US manufacturer with about half of the US’s market share, plans to launch its own e-cigarette this year. Lorillard was the first big manufacturer to enter the US electronic market last year with the acquisition of Blu Ecigs for $135m.

Goldman Sachs estimated that the electronic cigarette sector generated sales of about $300m in 2012 while analysts predict that revenues will reach $1bn in the next few years – a fraction of the $90bn US cigarette market but one of the few areas where sales are growing. Read More 

Ten Ways to Trade Like the Legendary Bill O’Neil

If  one of the greatest traders in the world told you how to buy and sell the best stocks for the most profits would you listen? Well we have a chance to do just that with Bill O’Neil’s book “How to Make Money in Stocks”. His lifetime of research on how the market actually works is in his book.  Not his opinions but through studying the markets as a scientist would.

Not only did O’Neil’s firm study the best performing stocks of the past 100+ years but the AAII tested his system among fifty others for 12 years in real time and it won!

From January 1998 through December 2010, the American Association of Individual Investors has conducted an independent, real-time study of over 50 leading investing strategies, including CAN SLIM. The results show that IBD’s CAN SLIM strategy outperformed all other strategies, gaining +2,487.3% while the S&P 500 rose just 29.6%.

“After surveying all the top performing equity managers in the United States, Bill O’Neil was number one. His track record is second to none. And I’ve always wanted to work for the best.”

“In terms of long-term track record, yes. He has the best numbers. If you go back 20-25 years and you stack all the guys together that have been in the market that long, Bill’s got the highest returns. Higher than Peter Lynch. Higher than Buffett. It’s fantastic. I’ve painstakingly studied each of the firm’s market calls from I think it was 1968 onward because I wanted to see exactly where O’Neil was saying buy and sell. It just struck me, this accumulation/distribution and follow-through day technique works great because he’s never missed a major bull or a major bear market.”-Chris Kasher

  1. Do not diversify broadly, instead focus on the leading stocks in the best industry groups.
  2. Cut any loss when the stock is down 7%/8% from your buy point.
  3. Buy stocks that are going up in value, not down.
  4. Add to a position as the stock goes up in value from your buy point not at lower prices.
  5. Buy stocks near their highs for the year not their lows.
  6. Study price charts to discover how the best stocks behaved historically in price action.
  7. Trade long based on the trend of the general market.
  8. Buy the best stocks in the market as they break out of properly formed bases or when they bounce off their 50 day moving averages.
  9. Do not be influenced by others trade your plan.
  10. Buy stocks with the best earnings and sales growth at the right time using charts.

De La Rue speeds cost-cutting as revenues drop in tough market

DELARUEDe La Rue has accelerated its cost-cutting programme, after heightened competition and delays to orders dragged down the banknote printer’s full-year revenues.

The Basingstoke-based company, which this year celebrates its 200th anniversary, said it had cut 100 jobs from its 4,000-strong workforce in an effort to reduce costs in the face of tough market conditions.

 In May 2011, De La Rue launched its strategy to cut costs by £30m a year. The UK passport producer on Wednesday said that it had stepped up this programme to hit £40m of annual savings by the end of its current financial year.

“There have been a small number of job cuts, I won’t deny that, but we have also concentrated on eliminating waste and improving quality. I know such things don’t make good headlines, but they make good business sense,” said Tim Cobbold, De La Rue’s chief executive.

The news came as De La Rue reported a 21 per cent drop in volumes of banknote paper to 8,700 tonnes, as rivals such as Giesecke & Devrient of Germany and France’s Oberthur stepped up their production, drove down prices and ate into the British group’s market share. Read More