Why you should be in equities ? Some logical arguments

Retail investors are helping markets more by staying out than by investing in equities. So from a purely selfish point blogof view, we (current equity market participants) do not mind if you stay away from equities. Park your money in low-interest bearing savings accounts and this will help banks raise cheap funds.

Then, while you earn taxable 9% per year in fixed deposits and 4% in savings accounts, we will continue to buy HDFC Bank, IndusInd Bank, Yes Bank and the like, which are up 3.5 times, 11 times and 5.9 times respectively since December 2008.

Also, remember to pay all your EMI installments on time so that retail loans made by private banks do not get into trouble and we can continue do well owing their stocks. Continue reading “Why you should be in equities ? Some logical arguments”

Expected Return and Risk

The thumb rule that we know higher expected returns are related to higher risk. There have been claims like risk is blogmore than just volatility. Was going through a journal Journal of Portfolio Management, and realized arguing that risk is more than just risk. The term is unnecessarily narrow; securities offer returns for reasons other than risk, as the word conventionally is used.

The four sources of unattractiveness that I came across from the journal:

  • Economic–The common notion of investment risk. The danger that a security might not be able to make required current payments, that these payments might not prove as valuable as expected (as caused, for example, by inflation), or that projected future payments might be less than anticipated. As Ibbotson and Idzorek write, people naturally do not seek these attributes and wish to be compensated for owning them.

Continue reading “Expected Return and Risk”

Why you should be in Stocks?

Investing in the stock market is your personal choice, but most of the real financial gurus have the opinion that blog70% of your investment should be in equities till the age of 45. This does not mean you open a demat account tomorrow and start investing blindly in equities. The best indirect way to equities is through SIP.

For the direct exposure an individual need to invest time along with some basic knowledge. There is no Lakshmi without Saraswati, Here are the individuals who made the impact in the financial market.

I have been using the most of them in my post but here are the best ones.

  • Warren Buffett  – ‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.
  • George Soros  – I’m only rich because I know when I’m wrong…I basically have survived by recognizing my mistakes.”

Continue reading “Why you should be in Stocks?”