Monthly Archives: August 2008

09/08/2008
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Stock Market

What is Sensex?

Sensex is the word which is commonly heard. I wonder how many really know the meaning or ever tried to find it out. I did not know what was Sensex till I started investing.

Sensex is an index which provides an idea as to how the stocks are performing in the market. If most of stocks are bought on a particular day then the Sensex increases and if most of the stocks are sold then Sensex decreases.

How is Sensex formed? Sensex is formed by considering 30 big companies from various sectors such as IT, Power, Oil, Manufacturing, FMG, Retail, Banking and others. Current list of companies present in BSE Sensex can be found from official BSE website. It is basically a collection of various companies stock value.

For eg. Think that Sensex is formed with 5 companies say Infosys, Wipro, BHEL, ICICI and Hindustan Petroleum on 1 Aug 2008. As of today, Infosys is trading @ 100, Wipro @ 50, BHEL @ 20, ICICI @ 30, HP @ 50. On Aug 1 2008 the value of Sensex is determined as 100.

Trade value is 250 (100 + 50 + 20 +30 +50).

Infosys Percentage = (100/250) * 100 = 40%, Wipro = 20%, BHEL = 8%, ICICI = 12%, HP = 20%. This is to show how the Sensex varies with the change in the stock prices of various companies. Assume that after two weeks, the stock prices of the following companies are as follows. Infosys trading @ 120, Wipro @60, BHEL @ 25, ICICI @ 30, HP @ 30.

Trade value is 265 (120 + 60 + 25 + 30 +30).

The value of Sensex is – when trade value is 250 Sensex is 100, when trade value is 265 Sensex is 106. That means if an investor had invested on Aug 1, 2008 Rs. 100 then the value of his investment after two weeks would be equal to Rs. 106. Depending on the trade value the Sensex keeps fluctuating. The big companies that are chosen plays an important role in the Sensex, from the above example it is clear that Infosys plays a major role, if this stock’s value decreases then the Sensex also will decrease considerably and vice versa.

The base value of the Sensex is 100 on April 1, 1979, and the base year of BSE-SENSEX is 1978-79.

At irregular intervals, the Bombay Stock Exchange (BSE) authorities review and modify its composition to make sure it reflects current market conditions.

As of today the value of Sensex is 15167.82 (Market closure – 08/08/08).

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08/08/2008
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Review

Will I buy a iPhone?

Most of the people are willing to buy the iPhone. There is nothing wrong or right about it. It is more of a status symbol than just a phone. The engineers with loads of money just wanna show off flashing their iPhone, that’s it.

Let me get into Technical stuff now. It is not to discourage you from buying the iPhone but providing you the details as it is.

1. As of now, there is no support for 3G in India and I am sure most of them are aware of it. Now what is the point in getting a iPhone which supports 3G?

2. No AD2P on the bluetooth.

A2DP technology is a new music revolution allowing you to send CD quality stereo music from one device to another without wires. A2DP is stereo music sent over Bluetooth without the hassle of plugging cables. Bluetooth Wireless Technology with A2DP technology makes mobile phones, pda’s and computers capable of streaming music directly to products such as the X5 Stereo Headset or the Sonic Portable Speakers.

The Advanced Audio Distribution Profile (A2DP) is just one of the modes available for Bluetooth technology.

3. No sharing of files between phones. (Very sad)

4. No video recording. (Why on earth have a camera then!!)

5. No flash and Java support.

6. No MMS. (What is Apple thinking??)

7. Can’t use the 8GB or 16GB of space in the phone as an external storage media. (Why give so much storage in the first place then?? eh?)

8. Buy stuff from iStore. (Apple this is the biggest mistake, come on, you are in India and I am certain people are not ready to buy anything that comes in for a less price and also when we can get pirate stuff, why to pay for it in the first place eh?)

9. Only one sim per phone. (Give me a break, this is heights. If my sister or brother wants to use, he can’t change the sim. Absolutely bad :(.. How can you think Indians will approve all this eh?)

10. Services – If something goes wrong, (come on it might be a jesus phone but it is afterall a phone, things might go wrong) then you have to give it to only Apple Store and get it fixed. They will charge you dearly.

My Verdict : I won’t buy the phone. It might have great User Interface, sleek and stylish look but after two three months these features won’t still be great for me. I would like to change carriers or share music or files and all that. I am sure Jesus phone won’t allow me to do all that. Then why to pay heavily (22K or so, not sure!!) and later crib about it.

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06/08/2008
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Stock Market

Stock Market – Just Random

For all the engineer-investors out there, Stock Market is just Random. There are no rules or regulations that govern the price increase and decrease of Stocks. It is just random, none can predict exactly the variation of price of various Stocks, if he did so then I am sure he would be one of the millionaires by now. But that is not so, it is highly impossible to predict the outcome.

I have asked couple of my friends who are into investing in stocks whether they follow certain rules or not. Even they are not sure, how they make money in the stock market. But they do make money. More on that later.

I have watched many TV channels to gain knowledge about Stocks and Stock market and I have seriously followed many portals to ensure which stock to buy and when to buy. But honestly nothing worked as per the suggestions I got from them. This is my personal experience. I was following a portal and according to the highly sophisticated and educated financial investment managers and experts with decades of experience in the finance industry predicted that certain stock will appreciate by certain percentage. I thought they know everything and I know nothing and following their suggestion should provide me some profit. I bought the stocks that they suggested and as my bad luck was with me, the day I bought the price was appreciating, I was so happy and the next day onwards the price of the stock started falling and it fell to considerable level. :(. I waited for 6 months to break even and I did not bother about profit, I just wanted to sell it and recover the money. But the six months which I waited was a terrible time. Then I realized I am a fool to listen, since at the end of every article and program there was a disclaimer stating that they are not responsible for any financial decisions that is taken by individuals and the individual should consult the financial adviser for making financial decisions. I don’t understand if they are not so sure about it then why run portals and channels for guys like us. I seriously don’t understand anything. I realized then that Stock Market is just random. Things happen randomly, no rules nothing. If you are wiling to take calculated risks then I am sure you can make money.

Randomness rules the Stock Market.

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05/08/2008
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Stock Market

Stock Market and Trading

Stock Market, these days there is so much volatility because of our own heroic engineers. 🙂 They all have money, they just pour in and take out based on their emotions. I was one of them, the moment I realized this I thought I should stop this for my own welfare.

Trading looks fun from outside but honestly it is quite a nightmare, it has had its own effects on me. Whenever the prices of stocks were higher than what I had bought that day I would be really happy and vice versa. The greed of wanting more and fear of losing drove me nuts for quite sometime. I was taking decisions emotionally and not logically or financially. This was my biggest mistake. I learnt the hard way not to take decisions emotionally. 😦

Stock Market as all know is a market place. Market has all variety of goods that the buyer needs. It is the buyer who decides the price of the goods. Of course there are regulations as to how to buy goods and all that, but in general the buyer is the Lord of the game. He decides what he wants to buy and also the price of it. It is not the seller who decides the price, the buyer decides the price.

Are we going to mint money at stock market? That is a tough question to answer. My answer is “No”. You can’t mint money but definitely you can make reasonable amount of money better than the bank interests. But to do that, you need discipline. This is my observation, to make money in Stock market one has to be disciplined. That’s it.

I will be writing more about Stock Market and all related stuff that is needed to be educated before getting into the Stock Market. Keep Visiting. Happy Investing.

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04/08/2008
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Personal Finance

Business-Men and Tax

I read an article today regarding Top Tax payers in India @ indiatimes.com. Please visit the following link for the same : http://timesofindia.indiatimes.com/articleshow/3319521.cms

I am pretty sure that all of you will be knowing about the Ambani brothers. Ambani brothers are the world’ 5th – Mukesh and 6th – Anil richest person ( Forbes List ). Still they don’t figure in the top-200 list of Tax payers. Isn’t that strange? I noted this in the article:

“Talking of industrialists, conspicuous by their absence in the top-200 list are the Ambani brothers, Mukesh and Anil. Their mother, Kokilaben, barely makes it to the list at 195, having paid Rs 4.46 crore as tax.”

I was dumbstruck. I thought Mukesh will be first and Anil will be the second top tax payer in the country. But the truth is not so. Mukesh’s asset is 43 billion dollars and that of Anil’s is 42 billion dollars. Do you think this year they would not have made enough money to become the highest tax payers of the country? I think they would have minted more money than any other Indian. But how come they pay so less tax? I am sure they would have paid taxes legally. I don’t question about their integrity.

All that I want to emphasize in this article is that, only business man can decide how much he wants to pay as tax to the government and not the government which decides how much they need to pay. When the world’s 5th richest person pays not more than 5 crores of tax. You can think how other small business man will plan up their tax and pay to the government. All that you need is good chartered accountant (CA) who writes the accounts just the way you want with the help of loop holes in the law. I don’t mean that they do something wrong and manipulate the income to ensure they pay less tax but what I want to convey is that they are smart enough to find the ways to pay less.

That is what business gives you, the opportunity to mint money and still not pay tax to the government legally. How wonderful is it!! Why is this because, the laws are made by the rich people, for the rich people and to the rich people.

I have realized that if I work for next 50 years in software industry, I can never become rich. Since government and my dear creditors take up the money even before I enjoy my hard earned money. I should be a businessman not a big one even a small one is fine. If you dream of making money, my suggestion, start a business. 🙂

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