Valuation theories

“… the problem was not that no one cared about intrinsic value. Rather, by the late nineties it seemed that few even believed in the concept.” From the book “Bull” by Maggie Mahar

A classical sign of a raging bull, when the old valuation theories are thrown out of the window and new justifications are being presented – and these are justifications of the current situation only.

Read the chapter “On Valuation” for further details …

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Uncertainty

“More than anything, Wall Street craves certainty.”

From the book, “Bull” by Maggie Mahar

The reality is: the future is always uncertain. Those who can see the future are called visionaries, but majority are randomly right while knowing the unknowable.

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What is a no-brainer investment?

“It was a no-brainer: higher risk equals higher return. What junk bond investors had forgotten is that higher risk does not guarantee higher returns; it merely offers the chance of higher returns. When they closed their books on the eighties, they discovered that they had lost the gamble. Ovewr the course of the decade, money invested in the average junk bond grew just 145 percent – substantially less than the 177 percent investors would have earned in US Treasuries, without taking any credit risk whatsoever.”

Whenever someone says an investment is a “no-brainer”, one is indicating that you don’t need any brains to figure out that there is money to be made.

However, in real life, majority of such no-brainer investments turn out to be no-brainers in another way: You do not need any brains to understand the high risk involved.

Be careful. Losing an opportunity is far better than losing your capital.

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Riding The Roller Coaster recommended by Brijesh Dalmia

A leading financial planner, a mutual fund trainer, a leadership trainer, and a leader himself Brijesh Dalmia recommends “Riding The Roller Coaster – Lessons from financial market cycles we repeatedly forget”. The book features in the list of suggested reading for IFAs.

Thank you Brijesh!

You can read the article here.

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Testimonial on www.amazon.in

 

 

“Amit takes us down the memory lane and re-caps the previous rallies and the turmoils. It is very interesting when he says that markets do fall because they do rise. The book is punched with interesting observations from similar books and mixes a good bunch of humour in between. This is a good read to set our expectations as an investor. Very good guide when we need help to learn the right behaviour in the market, as an investor. I enjoyed reading & learning.”

Rohit Shah on http://www.amazon.in