Portfolio: Rejig of the Long Term Portfolio, And Adding Two Stocks

by Paul Joseph July 27, 2015 Featured

We’ve decided to add two more stocks to the Long Term Portfolio. We’ll be adding more as times go by, but here’s the major segment of the change. The rest of this content is only available to premium members. Register for a premium membership today ! Apart from this content you will get our proprietary research and weekly newsletter too! Already a subscriber? Log in now !… (Read On…)

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Real Estate To Fall Big Time, Says Ambit. The Data Seems To Agree.

by Paul Joseph July 20, 2015 Featured

A big Ambit report is doing the rounds – they predict that real estate will fall big time . We are seeing a broad-based real estate pullback, with prices correcting in most tier-1 and tier-2 cities alongside sharp drops in transaction and new launch volumes. The drivers for this slowdown are a mix of supply-side factors (banks have pulled back lending to developers) and demand-side factors (the Black Money Bill has created fear amongst speculators). The result is not just a drop in demand for building materials and challenges for lenders with big mortgage, LAP and housing finance books, but also a generalised slowdown in GDP growth, as the sector which drives 50% of India’s capex and 30% of its jobs conks off. The drivers, they say: Heavy inventory (Mumbai and Delhi have over 10 quarters of unsold apartments) Property prices are falling in Tier 2 cities as well Foot falls at registration offices have fallen Banks have cut lending to RE esp commercial RE Subsidies have been cut, so pilfering and parking in RE has been curtailed Squeeze on black money through the black money bill Rise in the “guidance value” rates that increase the “white” component of a purchase Some Good Charts ICICI has the most exposure to RE: Indiabulls housing has the highest relative LAP (Loan against Property) portfolio: India has one of the highest spreads between rental yields and interest rates: Our view:A Fall is on the Cards We have been noticing a slow down in real estate for around a year now, and it’s looking rough.… (Read On…)

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Premium: How Do You Park Cash For Tax Efficient and Good Returns?

by Paul Joseph July 17, 2015 Featured

We don’t usually do personal finance posts on this forum, but since we’d discussed this a while back on the groups, we thought it’s a good idea to post more information. The rest of this content is only available to premium members. Register for a premium membership today ! Apart from this content you will get our proprietary research and weekly newsletter too! Already a subscriber? Log in now !… (Read On…)

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Cloud Services Eat Up Indian IT Outsourcing Earnings

by Paul Joseph July 16, 2015 Featured

I’ve been bearish on IT in the longer term, and in a long post I explain why I think we are at an inflexion point for Indian IT . Over the last quarter, results have been pathetic: HCLTech , Wipro and Infy showed less than 5% earnings growth YoY, and TCS and Tech Mahindra actually showed -30% or lower earnings growth for the March quarter. While TCS had a one time component (bonus) we saw their recent results for the June quarter showing less than 5% earnings growth YoY. And Wall Street Journal has a story on how cloud services are eating up IT sector earnings : The value of outsourcing deals signed in 2014 shrank 17% to $120.4 billion from $145.5 billion a year earlier, according to consulting company KPMG LLC. Indian companies are losing business to firms that have led the way into the cloud, such as International Business Machines Corp., Inc. … (Read On…)

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Has ICICI Prudential Life Taken To Fake Doctors Prescriptions To Avoid Paying Out Claims?

by Paul Joseph July 14, 2015 Featured

So Manoj Nagpal highlights a consumer forum case in which: Mihan Kisku takes policies worth Rs. 13 lakh from ICICI Pru Life in August 2008 He dies of a heart failure in October 2008 (RIP) In September 2009 – note: ONE YEAR after Mr. Kisku’s death – ICICI Pru Life refuses to pay, saying “material information was not disclosed”. They say he didn’t tell them he had blood pressure problems. His wife took the case to the district consumer forum, where she won and was awarded the full 13 lakh plus 3 lakh compensation. On 31 Jan 2012, more than three  years after Mr. Kisku’s death. ICICI tried more stunts here, claiming that Mr. Kisku didn’t provide the right age proof, but was overruled. ICICI then appealed to the state forum which decided, after THREE YEARs in Feb 2015, that ICICI needs to pay. ICICI Pru Life then took this to the National Commission, which has again ruled in Ms. … (Read On…)

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Why does RBI Sell Bonds, Like It Has Done Today?

by Paul Joseph July 14, 2015 Featured

RBI is doing an OMO sale of government bonds today, and has sold Rs. 8270 cr. worth bonds. Why? This is a good question. Why does RBI sell bonds? Who gets the money? Answer: Not the government. Sure, RBI sells government bonds (as a merchant banker) on every Friday. That’s when the government gets money. A lot of it. 15,000 cr. will be sold just this Friday. But that’s not the same thing as this OMO sale. When the government sells bonds, the RBI is just a banker, organizing the sale through an auction. But RBI also owns some government bonds on its own. RBI is a separate entity and has its own balance sheet, and on that, it owns assets like dollar reserves, rupee bonds etc. It doesn’t buy them from the government (it’s not allowed to) but it buys them from the market, as purchase operations. It has done this consistently in the past, buying bonds on the market as required.… (Read On…)

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Greece Has To Kneel, Beg and Completely Capitulate, Says New Deal

by Paul Joseph July 13, 2015 Featured

Greece finally has a deal. We don’t know if this is agreed upon in pure exhaustion after 17 hours of negotiations, but it’s something that involved total capitulation by Greece . It is even worse than the deal that Greece was getting earlier (before the referendum). It gives Tsipras, the Greek PM, three days to get the major demands passed through the Greek parliament. We saw a few things earlier, in our post, which I’ll paste here: What Now? By July 15, Tsipras must do the following, through parliament: they have to raise the sales tax, and cut pensions. Any misses in the deficit/surplus expected will automatically trigger some very specific spending cuts Greece must keep the statistics and the privatization piece completely independent of the Greek government (or limit the influence) Once this is done, the parliaments of Germany, Austria, Holland, Finland and others that previously opposed a deal will have to say okay to doing the bailout.… (Read On…)

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Macronomics: IIP Sectors Show Alaming Slowdowns in Key Sectors

by Paul Joseph July 11, 2015 Featured

The rest of this content is only available to premium members. Register for a premium membership today ! Apart from this content you will get our proprietary research and weekly newsletter too! Already a subscriber? Log in now !… (Read On…)

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International Madness: China Shuts Itself Down, Bans Large Shareholder Sales, NYSE Shuts On A Tech-Glitch

by Paul Joseph July 9, 2015 Featured

AChina’s continuing to go absolutely bonkers. After a market crash of 30% that still leaves it about 70% higher than a year back, the Chinese Authorities have banned people from selling . Which as you might realize, is the stupidest way to stop the market from crashing. These people can’t sell for the next 6 months: Shareholders that own more than 5% Executives and directors of companies And Trading Halts, and Even Cops! To stop their shares from falling further many companies are telling stock exchanges to halt trading in their shares . The suspensions have locked up $1.4 trillion of shares, or 21 percent of China’s market capitalization, and are becoming increasingly popular as equity prices tumble. If not for the halts, a 28 percent plunge in the Shanghai Composite Index from its June 12 peak would probably be even deeper. Some of these companies, it seems, have pledged shares and borrowed money .… (Read On…)

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Why You Shouldn’t Buy ULIPs: After We Confuse You, We Underperform Everything

by Paul Joseph July 7, 2015 Featured

I don’t generally write about ULIPs but once in a while it’s useful to see how bad these products have been. We wrote a long post about HDFC Crest which was being missold by bankers as if it was a fixed deposit. See: Don’t Buy HDFC Crest, It’s Not a Fixed Deposit Now there are many reasons why the ULIP is a bad product. Very little insurance Useless Guarantee High Costs (that are removed as fees in terms of number of units, thus making it non-transparent too!) Elusive Tax Benefits And Lastly Substandard returns compared to other instruments. But Just Compare Returns, No? Forget all the fees and all that. That’s highway robbery and terribly disgusting behaviour but what you can do, these are relationship managers with targets who don’t give a damn. One day, banks will be classified as brokers and we’ll get our day in court. Meanwhile, let’s see how bad the performance of a ULIP is.… (Read On…)

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