Model Portfolio Update - July 2014

Started this Equity portfolio on 21st March 2013 with Rs. 1,00,000 of capital. As on 23rd July sold of all the residual holdings in the portfolio for profit and sitting on 100% cash of Rs. 1,63,520which will be deployed on any weakness in the market.

Please check here for update on recent activities in the portfolio. If you want to get updates on the activities happening in the model portfolio please subscribe to our facebook and email updates.

Financial Freedom: 8 costly mistakes you must avoid

A recent guide emailed to me by Robert Kiyosaki re-validated some of my beliefs that I had when I hated to be an employee and wanted to be on my own. Following are the 8 most common beliefs (or rather mis-beliefs) that people have, as far as financial freedom is concerned, and which is what doing the exact opposite - holding them back.

  1. Higher Education   = Success
  2. Getting a job solves all financial problems
  3. Work Hard to get richer
  4. Live below your means
  5. Save Money and become rich.
  6. Your house is an asset.
  7. Get out of debt
  8. Invest Diversely in the long term
For details on each of the above dilemmas and how you can overcome them, download the ebook from the following link: 

5 Stocks that are under buy radar of Bank of America Merrill Lynch

Bank of America Merrill Lynch
Since the election outcome, Bank of America Merrill Lynch has recommended buy rating on following stocks with 1 year investment horizon.

Voltas Ltd.

The brokerage house in its report dated 18th June 2014 has recommended a buy rating on the company with target price of Rs.282 in 1 year time frame. They expect sharply higher earnings per share (EPS). Branded AC unit turning profitable is biggest positive for the stock. Mechanical, Electrical & Public Health (MEP) turnaround and better mix will boost margins. Valuations are cheaper than peers and its historical peak.

Do's and Don'ts of Investing in IPOs

Worldwide, IPO markets are often viewed as a lottery, wherein successful allottees are able to sell their holdings at a huge premium on listing. While this went well till 2008, this arbitrage has faded over time at least in India.

Post 1992 the promoters are free to price their offering as per the market demand, which resulted in promoters realizing the maximum value of the issuance. Unlike secondary market, primary market is a promoter to investor transaction where like any other business the seller tries to realize maximum value by adopting all sorts of strategy. Reliance Power was hugely subscribed and then was a huge failure because the company had nothing on ground but the promoters through their Investment bankers tried very hard to sell the future value at an exorbitantly high price. The stock is still languishing below it's IPO price. 

However it's not that always bad to go for an IPO provided you approach them as investments rather than lotteries. One should always consider following points before going in for an IPO:

This stock could generate 10% return in a week

In this super boiling market where people are busy scouting for stock that can pop up 10% or even 20% in a day, and why not this has been the trend since past one week, it is very lethal to buy stocks for ultra short term but expecting superb gains. On repeated requests from my readers, clients and friends, though I stay away from the concept of buying stock for a week or so, I think people can put their bet on Punjab Sind Bank at Rs.63 for last week of this month (26th to 30th). 

Few quick reasons for why this stock...

1. Public sector banks are flavor of the month and even elephants (SBI, BOB)  are dancing with 10%, 20% moves in a single day. SBI, having market value of over 2 lakh crores is up 90% from it's low of Rs.1450. PSB is just 67% from it's low till date. Union bank, OBC, BOB, PNB, Indian Bank are up anywhere between 120 - 200% from it's 52 week low.

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