Equities - Blog - eFinancialConnect2024-03-29T13:34:53Zhttps://efinancialconnect.com/blog/feed/category/EquitiesItaly Recession, German Orders Signal Euro-Area Strugglehttps://efinancialconnect.com/blog/italy-recession-german-orders-signal-euro-area-struggle2014-08-06T12:30:24.000Z2014-08-06T12:30:24.000ZEfinancialconnect .comhttps://efinancialconnect.com/members/Efinancialconnectcom<div><h1 class="article_title buffer"><a href="http://www.bloomberg.com/photo/italy-recession-german-orders-signal-euro-area-struggle-/-iRrMKIeG5dpY.html" rel="#img_iRrMKIeG5dpY" target="_blank" style="font-size: 13px;"><img src="http://www.bloomberg.com/image/ie0Uv3AdG83c.jpg" /></a><span style="font-size: 13px;">Photographer: Marc Hill/Bloomberg</span></h1>
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<p>Italy unexpectedly returned to recession and German factory orders dropped the most since 2011 as political tensions and slowing global growth threaten the euro area’s recovery.</p>
<p>Italy’s <a href="http://www.bloomberg.com/quote/ITPIRPQS:IND" class="web_ticker" title="Get Quote">economy</a> shrank 0.2 percent in the second quarter after contracting 0.1 percent in the previous three months. German <a href="http://www.bloomberg.com/quote/GRIORTMM:IND" class="web_ticker" title="Get Quote">orders</a> slid 3.2 percent in June from May. Both reports were worse than forecast by economists in separate<a href="http://www.bloomberg.com/quote/GRIORTMM:IND" class="web_ticker" title="Get Quote">Bloomberg News surveys</a>.<span>The figures come on the eve of the European Central Bank’s August interest-rate meeting, two months after it announced an unprecedented package of stimulus measures including a negative deposit rate and targeted loans to banks. Those policies will take time to have an impact, leaving the economy at risk from a crisis in eastern Europe that is already undermining business and investor confidence.</span></p>
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<p>Source:Bloomberg</p>
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<p>Read more at:http://www.bloomberg.com/news/2014-08-06/geopolitical-risks-weigh-on-germany-s-factory-orders.html</p>
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</div>Finance & Women: Is the scenario changing or is this area still male dominated ?https://efinancialconnect.com/blog/finance-women-is-the-scenario-changing-or-is-this-area-still-male2014-06-20T07:55:25.000Z2014-06-20T07:55:25.000ZDhawal Davehttps://efinancialconnect.com/members/DhawalDave198<div><div><p>Traditionally, it is observed that female members in most families are not given importance when it comes to taking financial decisions /planning.</p></div><div><p></p></div><div><p>In contemporary world, in <b>almost </b>every family, at-least one female member is working / earning member and contributing well to total income of the family, in some cases<b> </b>earning<b> </b>more than male members.</p></div><div><p></p></div><div><p>Yet, in majority of cases their opinions are not sought for taking any financial and investment decisions.</p></div><div><p></p></div><div><p><b>Though</b> <b>times are rapidly changing & women are now actively participating in financial/investment decisions, I would still say that this change is rather slow & needs to accelerate & gain momentum.</b></p></div><div><p><b> </b></p></div><div><p><b>Why is the change slow?</b></p></div><div><p><b> </b></p></div><div><p><b>Many questions arise which can be debated & discussed.</b></p></div><div><p><font face="Symbol">·<font face="'Times New Roman'"> </font></font>Is it because “Finance” is still a male dominated area ?</p></div><div><p><font face="Symbol">·<font face="'Times New Roman'"> </font></font>Is it because men used to take decisions related to finance & were responsible for </p></div><div><p><font> failures / successes </font><font>which they do not want to pass on t</font><font>o </font><font>women today ? </font></p></div><div><p><font face="Symbol">·<font face="'Times New Roman'"> </font></font>Is it because <b>women </b>not updated with financial tools/terms?</p></div><div><p><font face="Symbol">·<font face="'Times New Roman'"> </font></font>Is it because <b>women </b>are afraid of taking risks?</p></div><div><p><font face="Symbol">·<font face="'Times New Roman'"> </font></font>Are women afraid of equity / financial market?</p></div><div><p><font face="Symbol">·<font face="'Times New Roman'"> </font></font>Is it that for them investment means <b>gold jewelry, real estate including their</b></p></div><div><p><b> residences </b><b>& </b><b>fixed bank deposits ?</b></p></div><div><p><b> </b></p></div><div><p><font face="Symbol">·<font face="'Times New Roman'"> </font></font>There are so many questions <b>which need concrete answers.</b></p></div><div><p></p></div><div><p>I am taking this topic to all <b>women </b>and their male<b> counterparts</b> <b>for discussion so effective conclusions can be reached.</b></p></div><div><p><b><font> </font></b></p></div><div><p><b><font>My agenda is not to simply discuss. I am gearing up my team to setup an entire women friendly investment advisory division, </font></b><font>which will be run and managed by <b>“women for women”.</b> </font></p></div><div><p><font><b> </b></font></p></div><div><p><font><b>We believe that if a woman can become an earning member and take crucial decisions in her respective job, why can’t she take independent financial decisions? Why must she rely on her husband/father/brother or any male member when it comes to taking decisions in financial investment?</b></font></p></div><div><p><b> </b></p></div><div><p><b>I, specially, request all women who are taking independent financial decisions or contributing to financial and investment decisions of their families, please send your stories as to how and what kind of investment decisions you took/are taking/planning to take for creating wealth.</b></p></div><div><p><b> </b></p></div><div><p>All readers are requested to give their comments/suggestions here or they can send their views </p></div><div><p>on <font color="windowtext">dhawaldave@sunflowerbroking.com</font> and <font color="windowtext">preitudave@gmail.com</font></p></div><div><p></p></div><div><p><b><i>Article conceived and scripted by Dhawal Dave – CEO (Sunflower Broking), edited and improved by Preitu Dave – counterpart of this initiative at USA.</i></b></p><p><b><i> </i></b></p></div></div>The Intelligent Investor !!https://efinancialconnect.com/blog/the-intelligent-investor2014-03-07T06:58:50.000Z2014-03-07T06:58:50.000ZAayush Parwalhttps://efinancialconnect.com/members/AayushParwal<div><p>Here are the few big ideas/advice from the latest Warren Buffett letter to the shareholders :</p><p><strong>Being an expert</strong></p><p>You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick “no.”</p><p><strong>Stay in your circle of competence</strong></p><p>Focus on the future productivity of the asset you are considering. If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on. No one has the ability to evaluate every investment possibility. But omniscience isn’t necessary; you only need to understand the actions you undertake.</p><p><strong>Speculation vs Investment</strong></p><p>If you instead focus on the prospective price change of a contemplated purchase, you are speculating. There is nothing improper about that. I know, however, that I am unable to speculate successfully, and I am skeptical of those who claim sustained success at doing so. Half of all coin-flippers will win their first toss; none of those winners has an expectation of profit if he continues to play the game. And the fact that a given asset has appreciated in the recent past is never a reason to buy it.</p><p><strong>Don't look at stock tickers</strong></p><p>Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.</p><p><strong>Dangers in Macro Analysis</strong></p><p>Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important. (When I hear TV commentators glibly opine on what the market will do next, I am reminded of Mickey Mantle’s scathing comment: “You don’t know how easy this game is until you get into that broadcasting booth.”)</p><p><em>In his own words the best investment he has made till date is to buy the copy of the book "<strong>The Intelligent Investor</strong>". Investing in yourself is the best form of investing.</em></p></div>Making sense of P/E ratio – Plotting P/BV with ROEhttps://efinancialconnect.com/blog/making-sense-of-p-e-ratio-plotting-p-bv-with-roe2014-02-08T07:20:18.000Z2014-02-08T07:20:18.000ZChitrank Jainhttps://efinancialconnect.com/members/ChitrankJain<div><p>We have learnt about the price to earnings ratio in our Financial Analysis class and based on it we have often gotten into debates regarding the undervaluation or overvaluation of the subject companies with our colleagues. We are guided by our professors, textbooks etc. that one cannot look at the price to earnings ratio in isolation and reach to any particular conclusion from it.</p>
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<p>To address this limitation the model we are going to discuss here is going to use two inputs P/BV and ROE.</p>
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<p align="center"><b>Price to earnings ratio = Current market price / Earnings per share</b></p>
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<p>EPS actually is return to the equity shareholders on the book value invested in the business.</p>
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<p align="center"><b>Return to equity shareholders = Book value (total net worth) * Return on Equity (ROE)</b></p>
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<p>Using the above two equations the formula for price to earnings ratio can re-written as –</p>
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<p align="center"><b>Price to earnings ratio = (Current Market price/ Book value per share)/Return on equity</b></p>
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<p>P/E ratio has been dissected into these two components because analysis of these two factors historically has shown that the P/BV multiple very closely tracks the changes in the returns on equity. (Analysis shown below)</p>
<p> <a href="http://storage.ning.com/topology/rest/1.0/file/get/1472391?profile=original" target="_self"><img src="http://storage.ning.com/topology/rest/1.0/file/get/1472391?profile=original" width="440" class="align-center"></a></p>
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<p>I took the Price to book value ratio and return on equity (%) of 50 companies forming the NIFTY index and plotted these values on a scatter plot and then generated the best fit line from the coordinates. With a little eye balling we can conclude that most of the coordinates lie close to the best fit line displaying that market is pricing most of the NIFTY 50 companies in line with their Return on Equity (%). Also we can see a strong <b>R-square of 0.736.</b></p>
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<p>From the above, intuitively we can conclude that the coordinates lying above the best fit line show the stocks which are valued above what markets actually generally expect and vice versa for points lying below the best fit line. And higher the distance of coordinates from the best fit line higher will be the extent of over/under valuation.</p>
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<p> Despite low ROE, market may value a particular stock at higher multiples as compared to the market in general because of reasons like high expected future growth and contrary to this higher ROE need not necessarily lead to a higher price to book value ratio because of risks associated with the business/company.</p>
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<p>The above analysis can be done for different indices, sectors etc. depending on the requirement.</p></div>