Should you buy DHFL at current levels?

Nifty Outlook - Head & Shoulder Pattern

Techno Derivative Trading - Option Selling using Z factor

Run Away Gap, W Pattern, Cup

Technical View on Nifty, TCS & Nestle

# Nifty

#TCS

# Nestle

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Disclaimer : Be careful before following an "Anadi Professor" like me. I am least educated with no qualification & I can go 100% wrong. I am still trying to learn stock market for last many years & I still consider myself as a student of Mr. Market. I wish degree's help people to make money in stock market - but that does not happen. Happy trading and investing. Cheers!!!
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Long Term Portfolio for 5-20 years

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List of 25 Small & MidCap Stocks - #Stock Market #Equity Research #Performance #Price Action

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As Mentioned on 3rd Jan, 2015 - Even if one would have made equal allocation to all 25 stocks above, this is how you would have performed. I post what I do, I can be 100% wrong. Do your own research before following me. Being an "ANADI" I just use the information as per my understanding & knowledge, which is too little in comparison to the market. I respect market's, which always supreme.

Link for reference : https://www.facebook.com/groups/profitidea/permalink/769078643178317/

Ultimate Oscillator - a tool for making money with a combination of (9,18,36)

Developed by Larry Williams in 1976. The multiple time frame objective seeks to avoid the pitfalls of other oscillators. Many momentum oscillators surge at the beginning of a strong advance and then form bearish divergence as the advance continues. This is because they are stuck with one time frame. The Ultimate Oscillator attempts to correct this fault by incorporating longer time frames into the basic formula. Williams identified a buy signal is based on a bullish divergence and a sell signal based on a bearish divergence.

The Ultimate Oscillator can be used on intraday, daily, weekly or monthly charts. It is sometimes necessary to adjust the parameters to generate overbought or oversold readings, which are part of the buy and sell signals. Relatively docile stocks or securities may not generate overbought or oversold readings with the default parameters (7,14,28).

To minimise risk, it is better to use a combination of (9,18,36). It is sometimes necessary to lengthen the time frames to reduce sensitivity and the number of signals.

Buy Signal

There are three steps to a buy signal. First, a bullish divergence forms between the indicator and security price. This means the Ultimate Oscillator forms a higher low as price forges a lower low. The higher low in the oscillator shows less downside momentum. Second, the low of the bullish divergence should be below 30. This is to insure that prices are somewhat oversold or at a relative extremity. Third, the oscillator rises above the high of the bullish divergence.

Sell Signal

There are three steps to a sell signal. First, a bearish divergence forms between the indicator and security price. This means the Ultimate Oscillator forms a lower high as price forges a higher high. The lower high in the oscillator shows less upside momentum. Second, the high of the bearish divergence should be above 70. This is to insure that prices are somewhat overbought or at a relative extremity. Third, the oscillator falls below the low of the bearish divergence to confirm a reversal.

Here are some live backtested charts :- 

Nifty

​SBIN

​Relaxo

​Nestle India

​ITC Ltd

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Hope you found the article and practical understanding useful. Keep reading the "Anadi" like me, if you find something useful. You are most welcome to unfollow me if you don't like it :) 

"The fault, dear investor, is not in our stars—and not in our stocks—but in ourselves...."

Each mistake offers an opportunity to learn from the error and to modify one's approach based on this new information.

A person who never made a mistake never tried anything new. - Albert Einstein

The most used alphabet 'A' doesn't appear in the spelling of 1 to 999
It appears for the first time in 1000 and continues forever.
"Success requires Patience"

Work like you don't need money, love like you've never been hurt, and dance like no one's watching

Some of the interesting quotes(From the Book "The Dhandho Investor"

1. Mistakes are the best teachers. One does not learn from success.
2. It's easier to learn the lessons when you don't take the hits in your own portfolio. But when you take the hits in your own portfolio, those lessons stay with you for a long time.
3. Life is a journey and the journey is the destination.
4. Heads I win; Tails, I don't lose much.
5. Minimizing downside risk while maximizing the upside is a powerful concept.
6. Take advantage of Wall Street's handicap by seeking out low-risk, high-uncertainty bets.
7. Rapidly changing industries are the enemy of the investor.
8. Margin of Safety – Always!
9. Fear and greed are very much fundamental to the human psyche.
10. Buffett's rule number one and rule number two are worth keeping front and center at all times. [Rule number 1: Don't lose money. Rule number 2: don't forget rule number one.]
11. Investors always overshoot and undershoot.
12. There is no such thing as a value trap. There are investing mistakes.
13. You make money by waiting.
14. The biggest, the single biggest advantage a value investor has is not IQ. It's patience and waiting. Waiting for the right pitch and waiting many years for the right pitch.
15. I would say, the crossover between entrepreneurship in investing and value investing especially is to protect your downside.
16. I think the thing is that every business ought to figure out who their ideal customer is.
17. What is business if not an endeavour to create wealth?
18. We have all been taught that earning high rates of return requires taking on greater risks. But if an investor can make virtually risk-free bets with outsized rewards, and keep making the bets over and over, the results are stunning.
19. If you went to a horse race track and you were offered 90% odds of a 20 times return and a 10% chance of losing your money, would you take that bet? Heck Yes! You'd make that bet all day long, and it would make sense to bet a very large portion of your net worth with those spectacular odds. This is not a risk-free bet, but it is a very low-risk, high-return bet. Heads, I win; Tails, I don't lose much!
20. [On a successful motel investing strategy] The formula is simple: fixate on keeping costs as low as possible, charge lower rates than all competitors, drive up the occupancy, and maximize the free cash flow.
21. It's all about 'Few Bets, Big Bets, Infrequent Bets.' And it's all about only participating in coin tosses where 'Heads, I win; tails, I don't lose much!'
22. [On Virgin Atlantic] if you can start a business that requires a $200 million 747 jumbo jet and a boatload of employees in a tightly regulated industry for virtually no capital, then virtually any business that you want to start can be gotten off the ground with minimal capital. All you need to do is replace capital with creative thinking and solutions.
23. We begin by eliminating all businesses that are either not simple businesses or fall squarely outside our circle of competence.
24. Capitalism is greed driven… Capitalists strive hard to capitalize on any opportunity to make outsize profits. The irony is that, in that pursuit, they usually destroy all outsized profits.
25. Anytime we are trying to compute odds for the way the future of a given business is likely to unfold, it is, at best, an approximation. We try to adjust for this by ascribing conservative odds.
26. Investing is just like gambling. It's all about odds.
27. Looking out for mispriced betting opportunities and betting heavily when the odds are overwhelmingly in your favor is the ticket to wealth.
28. Arbitrage is a powerful construct and a fundamental tool in the arsenal of any value investor. With arbitrage, we get decent returns with virtually no risk.
29. Sniffing out an available arbitrage opportunity is what prompts entrepreneurs to embark on journeys that have lead to the creation of compelling businesses.
30. Most of the top-ranked business schools around the world do not understand the fundamentals of margin of safety.
31. Most of the time, assets trade hands at or above their intrinsic value. The key, however, is to wait patiently for that super-fast pitch down the center.
32. It is during the times of extreme distress and pessimism that rationality goes out the window and prices of certain assets go well below their underlying intrinsic value. Extreme distress can be caused by macro-events like 9/11 or the Cuban missile crisis. Or they can be company specific.
33. We cannot predict which asset classes are likely to get distressed next. However, if we only focus on a single asset class of stocks, that encompasses thousands of businesses.
34. Wall Street could not distinguish between risk and uncertainty, and it got confused between the two. Savvy investors like Warren Buffett and Benjamin Graham have been taking advantage of Mr. Market's handicap for decades with spectacular results.
35. For me, any sort of tech investment is a very fast five-second pass as they tend to be unpredictable, rapidly changing businesses.
36. The durability of technology moats is many times an oxymoron.
37. I always enjoy reverse engineering Warren Buffett's investments.
38. Invest in Businesses with Durable Moats. As my mom always said, 'Time is the best healer!'
39. I am very reticent to take permanent losses of capital. Buffett's rule number one and rule number two are worth keeping front and center at all times.
40. I am not Warren Buffett, I don't have a 300 IQ.
41. Unlike brain surgery, in investing you can be wrong 40% of the time and still do fine.
42. Buffett says, 'I am a better investor because I am a businessman and I am a better businessman because I am a better investor.' You need the same skills in investing as when you are an entrepreneur.
43. The good news in investing is there are no HR problems. If there are no humans, there are no problems!
44. All industries work with change but you should ideally be investing in businesses with a low rate of change, not a high rate of change.
45. I was lucky that my father ran a whole bunch of businesses, started, grew and bankrupted them. Many of these businesses were very highly leveraged. My father was always optimistic and he was maximizing leverage on the business. But they would blow up because there was no stability in them.
46. It is desirable to learn vicariously from other people's failures, but it gets much more firmly seared in when they are your own.
47. Traditional airlines are a losing proposition because of various structural issues — your pricing is set by your dumbest competitor, your costs are subject to a duopoly of airplane manufacturers, a duopoly of engine manufacturers, and a duopoly of maintenance guys and all of them can get whatever they want from you. On top of it, your entire workforce is unionised on every front. You don't have any leeway to control cost.
48. I am not bouncing up and down with stock prices. I don't even know what the markets or my stock did today. All of that is just irrelevant.
49. John Templeton used to say that there is no investment manager who is going to be right more than two times out of three.
50. You are always better off buying a business that has a lot of future growth in it because you can hold it for a long time.
51. We like to hold cash so we do not miss out on any long-term opportunities.
52. Buffett says if he could forecast Google's revenues and cash flows at a particular price, he will consider buying it. His problem is that he can't forecast the revenues and cash flows.
53. We will never have another Warren. I think Warren is a very unique person.
54. I believe the best things about Warren have nothing to do with investing. I think, most of the great things I've taken from Warren have more to do with life than investing.
55. Warren pays attention to intangibles, but Ben Graham was very much a tangible guy.
56. When you look at a business, look at it in a broader context of how it fits into the world. And sometimes, if you can see it in a light that the world is not seeing it in, that can give you an edge.
57. [On Charlie Munger saying 'you have 3 choices, yes, no or too difficult.] That's right. And 98% is too difficult.
58. What you want is a business that has a deep moat with lots of piranha in it and that's getting deeper by the day. That's a great business.
59. Charlie Munger likes to say that you don't make money when you buy stocks. And you don't make money when you sell stocks. You make money by waiting.
60. All investment managers' miseries stem from the inability to sit alone in a room and do nothing.
61. I think that the way the investment business is set up, it's actually set up the wrong way. The correct way to set it up is to have gentlemen of leisure, who go about their leisurely tasks, and when the world is severely fearful is when they put their leisurely task aside and go to work. That would be the ideal way to set up the investment business.
62. People think that entrepreneurs take risk. And they get rewarded because they take risk. In reality, entrepreneurs do everything they can to minimize risk. They are not interested in taking risk. They want free lunches and they go after free lunches.
63. Entrepreneurs are great at dealing with uncertainty and also very good at minimizing risk. That's the classic great entrepreneur.
64. My experiences as a businessman have very direct, long-term positive impacts on me as an investor, because when I'm looking at an investment, I now look at it like the way I looked at my first business, which is, the first thing I'm looking at is, how can I lose money on this? And can I absolutely minimize my downside? The up sides will take care of themselves. It's the downsides that one needs to worry about.
65. The only way one should buy stocks is if you understand the underlying business. You stay within the circle of competence. You buy businesses you understand. If you understand the business, you understand what they're worth. And that's the only reason you are to buy a stock.
66. The average Chinese company has three sets of [accounting] books. You know, one for the government and one for the owner's wife and one for the owner's mistress. And so the problem you have is you don't know which set of books you're looking at. [In April 2010]
67. [On not needing to meeting company CEO's.] Not being mesmerized by charisma will probably help you.
68. [In 2010] I have an eye out on the markets, but there's just not a whole lot of value presently. But value can show up tomorrow, for example. So we're not in a hurry. Happy to have a leisurely lifestyle and wait for the game to come to us.
69. You have to make sure that your losers are few and far between.
70. There are so many good ideas around. You don't need to create your own ideas – you can clone them.
71. People who knew Sam Walton would tell you this was not a very brilliant guy. But what he did was he spent an incredible amount of time in his competitors stores… He was looking at every single thing his competitors did every single time.
72. Everything that Microsoft has had any kind of success with has been cloned.
73. [Burger King versus McDonalds carefully choosing sites.] Burger King has two guys to figure out locations and all they do is basically go out and put Burger King's near McDonalds.
74. [On his practice of cloning.] I have nothing new to share. All I'm going to give you is old handed ideas from other people.
75. I started to apply Buffett's approach in 1994 to investing… I had about a $1 million in cash at the time. And I did really well… I had something like 75% annualized returns [In the beginning].
76. Warren Buffett does not delegate any part of the investment process. He does not have analysts.
77. I just wanted to clone what Buffett did.
78. You have to keep learning because world keeps changing and competitors keep learning.
    

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Eat healthy live healthy. Eating healthy today, keeps the Doctor away!

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Monsanto India Limited (MIL) is a subsidiary of the Monsanto Company; US based global biotech food major. The company focuses on maize and agricultural productivity. The company is engaged in the business of production and sale of agricultural inputs, which includes chemicals and hybrid seeds. It has a chemical production unit at Silvassa, hybrid seeds processing and drying units at Hyderabad and breeding stations at Bangalore and Hyderabad. During the FY11, the company's hybrid seeds processing and drying operations at Bellary and Eluru shifted to Hyderabad. MIL has two segments viz seeds and traits and agricultural productivity. The seeds and traits segment consists of the Company's seeds and traits business and genetic technology platforms, which includes biotechnology, breeding and genomics. The agricultural productivity segment consists primarily of crop protection products and residential lawn-and-garden herbicide products.

The revenue distribution of the company in these segments is as follows:

​​As seen in the pie chart MIL generates majority (73%) of its revenue from Seeds and Traits Business.In the year 2011 they launches 3 new product in their maize business viz DKC 9108 for the spring market in the North, DKC 9106 for the Kharif market in Punjab and DKC 8101 for the Kharif season in Karnataka, Andhra Pradesh and Maharashtra. There was a reduction in exports and bulk sale by 80% as a result of lower exports to South East Asia.

Public Private Partnership (PPP):
Through their PPP with Governments of Rajasthan, Gujarat, Odisha and Karnataka they enhanced the yields and incomes of ~ 9 lacs small and marginal tribal farmers. They also launched a pioneering customer connect initiative e – Dr. DeKalb Farm Care (DDFC), a mobile based farmer advisory service.

Business Units, Products and Revenue Share:

Some highlights on numbers:- 

​

Monsanto came in India 50 years ago and was engaged in business of pharmaceuticals and chemicals. It then made Aspirin and chemicals for rubber tyres.

The company, however, discontinued all other businesses and currently focuses only on agrochemical business.

The parent has set up a research and development (R&D) center in Bangalore, which houses around 100 scientists. This R&D base which also does its research in bio-informatics is expected to become R&D hub for Asia.

Parent company

The parent company was incorporated in the year 1901. Almost after a century, Monsanto was merged with Pharmacia & Upjohn globally, in 55 countries, to form Pharmacia Corporation (PC). In October, 2000 PC made a partial initial public offering (IPO) of 15 % of its holding to enable the listing of Monsanto as a stand alone company, focused entirely on agriculture.

This made it a 'Century Old Brand New' company.

This company now works with a mission of 'delivering products and solution to all the food producers and fiber needs for human growth along with conversing natural resources and improving the environment.

The parent company has its single focus on agriculture business. It exited from pharma and chemical business to focus only on agrochemical business.

The feature of this company is now:

Leading provider of agriculture products to farmers.
Its unique platform helps them to provide integrated solutions to:

Improve farm productivity.
Reduce cost of farming.

Its two key biz of operations are ;

Agrochemical productivity.
Seeds and genomics.

Pursue goals that drive value creation for 'farmers' and its 'shareowners.'
15000++ employees worldwide.

Its R&D center in St. Louis, USA was set up in 1994 with the state of the art facility on over 180 acres of land. It has 2100 employees in R&D (including doctors, etc) and has 250 laboratories. It has 100 growth chambers.

The company invests over $ 500 million in R&D every year.

The global R&D focuses on:

Biotech and chemical discovery
Molecular breeding
Breeding and testing

Its customer focus technology platform includes:

Wed management
Pest Management
Grain yield
Crop productivity
Feed, food and fiber
Plant protiens

The company claims to have integrated functions, identified bottlenecks and created solutions resulting in better and faster sources of value creation.

Global agrochemical biz

There is a great scope for the agrochemical business due to the following reasons:-

The current food production will be inadequate to satisfy the growing demands of the future. It is expected that while the population will be higher by 30 % in 2020, the food demand would increase by 75 % from the current levels.

New land resources for development is nearly exhausted.

And current farming practices are not sustainable. Thus there will be demand for new technology in the agrochemical business and this business is bound to grow rapidly.

Monsanto has always lead the agrochemical company.

Product innovation are in the form of:

• Acetanilides
• Roundup
• Bio technology
• Genomic

Marketing innovation are in the form of:

• Roundup price elasticity (Roundup is sold in 125 countries).
• Supply agreement (with Dow, Dupont, etc)
• Seed acquisition (invested $ 6 billion in seed acquisition)
• Growing licenses
• Down stream alliances

Competition:
The company faces competition from BASF, Syngenta, Bayer, Dow, Dupont. However, Monsonto claims to have grown with the highest growth rate in the industry in the recent past. It further hopes to become a leading player in the biotech segment.

Thus Monsanto is different from other companies because:

• It has strong chemistry business (products like Roundup, Harness, Pgilac)
• It has strong seed business (products like Asgrow, Hartz, Dekalb)
• Growing in Traits business which helps farmers to manage insect pressure better.
• It is said to be Coca-Cola of agrochemical business 

Monsanto has right assets and capability in place to succeed. It has the right strategy and focus. It is the organization which has aligned with growth strategy and has created a 'winning' environment.

Indian Integration
Monsanto India was the first company in India to take a bold decision of integrating its Indian agrochemical operation. This:

Is in line with global realignment
Confirms the parent's commitment to Indian farmers and shareholders.

Currently it is a premier agrochemical input company in India.

The company's position in the Indian industry:

• It is a company with access to robust product pipeline.
• It is a company committed to market development and farmers value.
• It is a company, which is committed to long-term and sustainable growth in India.

Future

Fundamentals for growth

• Stable macroeconomics indications.
• Continued economic liberalization.
• Growing population (expected to grow at 1.5% to 1.8% PA)
• Increasing personal income levels.
• Need to grow 100 million tonne (50% more than current levels) more food by 2020 to meet the growing population demands.
• Need to increase food productivity:
• New technology / agrochemical inputs hold the key. This will ensure increase in productivity.
• Monsanto India is a leading provider of seeds, herbicides and Traits.

Mission:
To provide unique products and solution that will help enhance agrochemical yields and improve enviornment quality in a sustainable way resulting in growth of the company's revenues and incomes.

The company has 5 operating principles. They are:

• All employees to take the ownership of the company's success.
• Deliver highest quality product and technology.
• Building strong relationship (with dealers, customers, farmers, etc)
• Creating a great place to work.
• Conducting itself with integrity.

3 Phase Buying Strategies Suggested [Always buy in SIP ways]

ü  1st Phase  : Buy at the current price range Rs 2800 – 2900 [30% of investment]

ü  2nd Phase : Add if the price falls down to Rs 2100-2200 [30% of investment]

ü  3rd Phase  : Add if the price falls down to Rs 1400-1500 [40% of investment]

I just bought on my own research :) Risk is always associated in stock market - do your own study before investing :) Will you buy the stock? I don't know. It's really up to you. Moreover, you can rationalize whatever you choose :) 

ADX - Simple tool to make money!

The average directional movement index (ADX) was developed in 1978 by J. Welles Wilder as an indicator of trend strength in a series of prices of a financial instrument.
 ADX has become a widely used indicator for technical analysts, and is provided as a standard in collections of indicators offered by various trading platforms.

The ADX is a combination of two other indicators developed by Wilder, the positive directional indicator (abbreviated +DI) and negative directional indicator (-DI).
The ADX combines them and smooths the result with an exponential moving average.

ADX is a lagging indicator that measures the trend strength without regard to trend direction.

ADX is formed by combining two other indicators which are positive directional indicator (abbreviated +DI) and negative directional indicator (abbreviated -DI).

Positive Directional Indicator is calculated based on differences between current high and previous high over recent trading periods. Similarly Negative Directional 

Indicator is calculated based on differences between current low and previous low over certain recent trading periods.

ADX will range between 0 and 100 and is usually calculated based on 14 time-periods. Usually 20 is used as the key level for analysing ADX.

Since ADX enables one to quantify trend strength, it helps to identify the strongest trends as well as range conditions. So, appropriate trading strategy can be used. In trending conditions, one can enter on pullbacks and trade in direction of the trend where as in range conditions, one can trade on reversal either at support (bullish) or at resistance (bearish). In range conditions, another strategy can be to combine ADX with RSI (overbought and oversold) signal.

Different researchers have come out with various ways to interpret ADX. Some of the popular ones are as below:

1

​.​

ADX below 20 indicates absence of trend and similarly ADX above 25 indicated strong trend. So, avoid trending strategies when ADX is below 20 as the market will be range bound and price action happens sideways.

2

​.​

 Increasing ADX values above 20, indicates increasing trend strength, thereby uptrending ADX confirms either bullish or bearish trends supporting decision to either buy or sell.

3

​. ​

ADX crossing over 25 from below especially after being below for 30 bars or so, indicates that price has broken out of range with sufficient strength and that now trend trading strategies can be profitably deployed.

4

​. ​

ADX above 50 indicates extremely strong trend.

5

​. ​

ADX value pulling back below 40 indicates trend getting exhausted and likely to reverse.

6

​. ​

ADX crossing below 20 from above especially after being above for 30 bars or so, indicates that market is likely to be rangebound and accordingly risk management strategies can be put in place to handle change in trend momentum.

7

​. ​

Trend is deemed to be uptrend when (+DI) line is above (-DI) line and ADX is above 20.

8

​. ​

Trend is deemed to be downtrend when (+DI) line is below (-DI) line and ADX is above 20.

9

​. ​

When ADX is above 20 and +DI line crosses over -DI line, buy signal is indicated.

​    ​

When ADX is above 20 and -DI line crosses over +DI line, sell signal is indicated.

ADX indicator scale

If ADX is between 0 and 25 then the stock is in a trading range. It is likely just chopping around sideways. Avoid these weak, pathetic stocks!

Once ADX gets above 25 then you will begin to see the beginning of a trend. Big moves (up or down) tend to happen when ADX is right around this number.

When the ADX indicator gets above 30 then you are staring at a stock that is in a strong trend! These are the stocks that you want to be trading!

You won't see very many stocks with the ADX above 50. Once it gets that high, you start to see trends coming to an end and trading ranges developing again.

​Applied ADX on live charts with 100% Success Rate :- 

1) Nifty :- ​

​

​2) Infy :-​

​

3) Reliance :-

​

​4) Maruti :-​

​

5) ITC :- 

​

Whether to follow it or not, it is completely your choice. To me this looks simple and easy to interpret and make money. Happy Trading :) 

Intrinsic Value & Book Value - Concept Checker

​
​

Intrinsic or fundamental value is the perceived value of an investment's future cash flows, expected growth, and risk. The goal of the value investor is to purchase assets at prices lower than the intrinsic or fundamental value.

​ ​

Intrinsic value is an all-important concept that offers the only logical approach to evaluating the relative attractiveness of investments and businesses. Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life.

The calculation of intrinsic value, though, is not so simple.  Intrinsic value is an estimate rather than a precise figure, and it is additionally an estimate that must be changed if interest rates move or forecasts of future cash flows are revised. Book value, an easily calculable number, though one of limited use.

​ 

The book value of an entity is an accountant's view of the value of the company. The book value could be the intrinsic or fundamental value if you believe the accountants' estimate of assets and liabilities are the true value and there are not intangible values to be considered. But accounting methodology makes it rare that the book value would be a good indication of the real or fundamental value.

You can gain some insight into the differences between book value and intrinsic value by looking at one form of investment, a college education. Think of the education's cost as its "book value." If this cost is to be accurate, it should include the earnings that were foregone by the student because he chose college rather than a job.

For this exercise, we will ignore the important non-economic benefits of an education and focus strictly on its economic value. First, we must estimate the earnings that the graduate will receive over his lifetime and subtract from that figure an estimate of what he would have earned had he lacked his education. That gives us an excess earnings figure, which must then be discounted, at an appropriate interest rate, back to graduation day. The

rupee​

 result equals the intrinsic economic value of the education.

Some graduates will find that the book value of their education exceeds its intrinsic value, which means that whoever paid for the education didn't get his money's worth. In other cases, the intrinsic value of an education will far exceed its book value, a result that proves capital was wisely deployed. In all cases, what is clear is that book value is meaningless as an indicator of intrinsic value.

Compounding is the 8th Wonder of the World, Power of Equity Compounding is the 9th wonder of the world - Unlock the real truth behind stock market!!!

​

This is what 10,000 in Stock Market can do for you & still people say money is not made in stock market. Wipro Stock has multiplied by 7,04,265 times or an annualised return of 48.22% over 34 years.

Film actor Rajesh Khanna bought a bungalow in iconic Carter Road in Mumbai for Rs.3.5 lakhs in 1970. His heirs sold it recently for Rs.85 crores. The property has multiplied by 2428 times or an annualized return of 19.38% over 44 years.

Samudhra Mahal in Mumbai is another expensive property. A flat purchased in 1970 at Rs.700 per sq.ft was sold at Rs.1,18,000 per sq.ft in 2013. Money multiplied by 168 times in 43 years. This works out to an annualized return of 12.66%

In 1963, Godrej paid Rs.1 lakh to buy his first house, a 2916 sq.feet apartment at Usha Kiran, Carmicheal road, in tony South Mumbai. In 2011 he sold it for Rs.25 crore. Money multiplied by 2500 times over 48 years or an annualized return of 17.70%

The first three properties can be bought and owned by cream or elite of the society who are worth at least tens of crores, mostly hundreds of crores.

Power of equity is least understood in this country.

If you can withstand notional loss (if you don't book) in portfolio during bear markets, not worry about daily price movements, it is possible to make much better money than what can be made out of best of real estate.

Give at least the same importance to equity as you give to real estate.

You don't mind holding real estate for 20 or 30 years. Please do the same for equity ignoring bull and bear markets, notional profits and losses.

Many of you have been investing for last couple of years. Stay the course for at least another 15 to 20 years completely ignoring market fluctuations. You would be amazed at the fortune created for your retirement or to pass on to your children.

Their are many examples of wealth creation in stock market, it is important that you realise the Power of Equity. Another such example is CIPLA, see what it did. Cipla Stock has multiplied by 2,32,886 times or an annualised return of 43.83% over 34 years.

​

Remember : Compounding is the 8th Wonder of the World, Power of Equity Compounding is the 9th wonder of the world - Unlock the real truth behind stock market :) 

Diagonal Put Time Spread Strategy: Live Call

Buy Nifty 8500 Dec 2015 Strike Put @491.50

Sell Nifty 8100 Oct 2014 Strike Put @116

Net Debit = 491.50-116 = 375.50

After Oct expiry, keep selling next month or far months calls. Cost would reduce significantly & profits would maximise tremendously. 

Live Execution done today:

Relative Strength Index

Relative Strength Index

The relative strength index (RSI) is a technical indicator used in the analysis of financial markets. A technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset.

It is intended to chart the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period. The indicator should not be confused with relative strength.

The RSI is classified as a momentum oscillator, measuring the velocity and magnitude of directional price movements. Momentum is the rate of the rise or fall in price. The RSI computes momentum as the ratio of higher closes to lower closes: stocks which have had more or stronger positive changes have a higher RSI than stocks which have had more or stronger negative changes.

The RSI is most typically used on a 14 day timeframe, measured on a scale from 0 to 100, with high and low levels marked at 70 and 30, respectively. Shorter or longer timeframes are used for alternately shorter or longer outlooks. More extreme high and low levels—80 and 20, or 90 and 10—occur less frequently but indicate stronger momentum.

When price moves up very rapidly, at some point it is considered overbought. Likewise, when price falls very rapidly, at some point it is considered oversold. In either case, Wilder deemed a reaction or reversal imminent.

RSI Formula:-

Interpreting Failure Swings: -

Wilder thought that "failure swings" above 70 and below 30 on the RSI are strong indications of market reversals. For example, assume the RSI hits 80, pulls back to 71, then rises to 81. If it falls below 71, Wilder would consider this a "failure swing" above 70.

Andrew Cardwell has developed several new interpretations of RSI to help determine and confirm trend. First, Cardwell noticed that uptrends generally traded between RSI 40 and 80, while downtrends usually traded between RSI 60 and 20. Cardwell observed when securities change from uptrend to downtrend and vice versa, the RSI will undergo a "range shift."

Next, Cardwell noted that bearish divergence: 1) only occurs in uptrends, and 2) mostly only leads to a brief correction instead of a reversal in trend. Therefore bearish divergence is a sign confirming an uptrend. Similarly, bullish divergence is a sign confirming a downtrend.

Reversals

Cardwell discovered the existence of positive and negative reversals in the RSI. Reversals are the opposite of divergence.

For example, a positive reversal occurs when an uptrend price correction results in a higher low compared to the last price correction, while RSI results in a lower low compared to the prior correction.

A negative reversal happens when a downtrend rally results in a lower high compared to the last downtrend rally, but RSI makes a higher high compared to the prior rally.

In other words, despite stronger momentum as seen by the higher high or lower low in the RSI, price could not make a higher high or lower low. This is evidence the main trend is about to resume. Cardwell noted that positive reversals only happen in uptrends while negative reversals only occur in downtrends, and therefore their existence confirms the trend.

Practical understanding through trading over the years & effective trading ranges: -

1) It is always better to work on RSI of 27 days rather than 14 days for 73:28

2) Positive ranges results in buy on dips near 40 RSI but not sell at 80. When I say buy on dips, it would be more fruitful to sell a far OTM Put or bullish derivative strategy near RSI of 40 rather than buying future.

3) Negative ranges results in Sell on Rise near 60-65 but not buy at 20. When I say sell on rise, it is far better to sell far OTM call or bearish derivative strategy than selling future.

4) It is always safe to work on 14 days RSI of 85:15 on stocks with good liquidity

5) Conventional ​14 days RSI of 80:20 works well on indexes

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Thank you​. ​Comments and feedback would be appreciated. 

Rules For Traders - Simple Reminder

1. Buying a weak stock is like betting on a slow horse. It is retarded.

2. Stocks are only cheap if they are going higher after you buy them.

3. Never trust a person more than the market. People lie, the market does not.

4. Controlling losers is a must; let your winners run out of control.

5. Simplicity in trading demonstrates wisdom. Complexity is the sign of inexperience.

6. Have loyalty to your family, your dog, your team. Have no loyalty to your stocks.

7. Emotional traders want to give the disciplined their money.

8. Trends have counter trends to shake the weak hands out of the market.

9. The market is usually efficient and can not be beat. Exploit inefficiencies.

10. To beat the market, you must have an edge.

11. Being wrong is a necessary part of trading profitably. Admit when you are wrong.

12. If you do what everyone is doing you will be average, so goes the definition.

13. Information is only valuable if no one knows about it.

14. Lower your risk till you sleep like a baby.

15. There is always a reason why stocks go up or down, we usually only learn the reason when it is too late.

16. Trades that make a lot of intellectual sense are likely to be losers.

17. You do not have to be right more than you are wrong to make money in the market.

18. Don't worry about the trades that you miss, there will always be another.

19. Fear is more powerful than greed and so down trends are sharper than up trends.

20. Analyse the people, not the stock.

21. Trading is a dictators game; you can not trade by committee.

22. The best traders are the ones who do not care about the money.

23. Do not think you are smarter than the market, you are not.

24. For most traders, profits are short term loans from the market.

25. The stock market can not be predicted, we can only play the probabilities.

26. The farther price is from a linear trend, the more likely it is to correct.

27. Learn from your losses, you paid for them.

28. The market is cruel, it gives the test first and the lesson afterward.

29. Trading is simple but it is not easy.

30. The easiest time to make money is when there is a trend.