Tuesday, 30 April 2013

Quote for the day

“Speculation is dealing with the uncertain conditions of the unknown future. Every human action is a speculation in that it is embedded in the flux of time.”-  Ludwig von Mises

LSL Market Review 30th Apr 2013


Indices trended in and out of the red zone but retail selling forced the main index to falter. High dividend yielding blue-chips were seen trading above their previous closing prices. Treasury yields fell in today’s auction which might indicate that policy rates will see a drop in the next months’ review. Few blue-chips extended their 52-week gains which portrays a healthy market.

ASI fell 14.43 points (0.24%) to close at 5,953.19 and the S&P SL20 index gained points 2.65 (0.08%) to close at 3,365.79. Turnover was Rs. 876.3Mn.

Top contributors to turnover were Colombo Land & Development with Rs. 260.9Mn, Commercial bank with Rs. 117.9Mn and National Development Bank with Rs. 72.3Mn. Most active counters were Colombo Land & Development, Touchwood Investments and Lanka IOC.

Notable gainers for the day were Abans Financial Services up by 20.8% to close at Rs. 34.80, Lanka IOC up by 12.1% to close at Rs. 25.00 and Blue Diamonds non-voting up by 6.3% to close at Rs. 1.70. Notable losers for the day were Ceylon Leather Products down by 6.0% to close at Rs. 4.70, Citrus Waskaduwa down by 5.7% to close at Rs. 6.60 and Ceylon tea Brokers down by 5.7% to close at Rs. 5.00.

Cash amp was 48.5%. Foreign participation was 18.40% of total market turnover whilst net foreign buying was Rs. 85.8Mn.

Monday, 29 April 2013

Quote for the day

"The credibility of any item in finance is inversely proportionate to the amount of publicity it receives."- Michael Scott

LSL Market Review 29th Apr 2013


Retail play was shaky today as most investors were booking profits whilst some were taking new positions to further benefit from the prevailing positive sentiment. A period of consolidation is on the cards as market RSI has reached a high level. Institutional participation was evident but was relatively overshadowed by its retail peers.

ASI gained 5.45 points (0.09%) to close at 5,967.62 and the S&P SL20 Index gained 3.78 points (0.11%) to close at 3,363.14. Turnover was Rs. 846.6Mn.

Top contributors to turnover were Colombo Dockyard with Rs.146.1Mn, Colombo Land & Development with Rs.93.1Mn and Commercial Bank with Rs. 60.6Mn. Most active counters for the day were Touchwood Investments, Colombo Land & Development and Central Investments & Finance.

Notable gainers for the day were Environmental Resource Investments warrant-6 up by 19.2% to close at Rs. 3.10, Environmental Resource Investments warrant-3 up by 17.7% to close at Rs. 2.00 and Convenience Foods up by 9.8% to close at Rs. 220.00. Notable losers for the day were Industrial Asphalts down by 7.0% to close at Rs. 250.10, Citizen’s Development Bank down by 5.7% to close at Rs. 31.50 and Citrus Waskaduwa down by 5.2% to close at Rs. 7.30.

Cash map was 39.63%. Foreign participation was 12.0% of total market turnover with net foreign buying of Rs. 114.6Mn.

Sunday, 28 April 2013

LSL Weekly Market Focus

Interest on blue-chips helped shore up most of the losses caused by profit taking on small and mid-capped counters on Monday. Commercial Bank continued to witness private deals as foreign appetite seems to be focused on banking counters. Retail investors once again proved its thirst for speculation on Colombo Land & Development.

ASI lost 9.82 points (0.17%) to close at 5,872.43 and the S&P SL20 index gained 2.26 points (0.07%) to close 3,338.38. Turnover was Rs. 885.3Mn.

Market ended with positive returns with small caps gaining ground on Tuesday. Lion Brewery and Asiri Hospitals saw crossings of 0.5mn shares at LKR 360.00 and 3.0mn shares at LKR 14.00 respectively. These were the main contributors to the market turnover (a contribution of LKR 188.0mn and LKR 63.4mn respectively) followed by National Development Bank with LKR 56.6mn.

During the day ASI advanced by 11.09 index points (+0.19%) to close at 5,883.52 and S&P SL 20 Index advanced by 6.47 index points (+0.195) to close at 3,344.85. Daily market turnover was LKR 708.6mn.


Indices gained considerable ground helped by gains on Ceylon Tobacco Company and Chevron Lubricants on Wednesday. Retail favourite Colombo Land & Development rallied with solid activity. A major shareholder of Panasian Power reduced their stake whilst Hemas power was the buyer. The latter will be expanding its portfolio of power generating sites in effect. Investors speculated on Ceylon Tobacco Company announcing its interim dividend anytime soon. High dividend yielding counters are expected to see price appreciations in the short-term.

ASI gained 50.21 points (0.85%) to close at 5,933.73 and the S&P SL20 index 13.66 gained (0.41%) points to close at 3,358.51. Turnover was Rs. 975.3Mn.

Retail investors made merry of the prevailing optimistic sentiment on Friday. Retail favourite counters were seen rallying whilst most blue-chips were largely unchanged. Colombo Land & Development, Touchwood

Investments and Colombo Fort Land & Buildings were some of today’s hot picks.

Meanwhile, Nestle announced a hefty dividend with the counter moving up around 1.7%.
ASI gained 28.44 points (0.48%) to close at 5,962.17 and the S&P SL20 edged 0.85 points (0.03%) to close at 3,359.36. Turnover was Rs. 1,345.1Mn.

Top contributors to turnover were Lion Brewery with Rs. 194.1Mn, John Keells Holdings with Rs. 114.1Mn and Colombo Land & Development with Rs. 85.8Mn. Most active counters for the day were Touchwood Investments, Colombo Land & Development and Citrus Kalpitiya.

Notable gainers for the day were Touchwood Investments up by 25.8% to close at Rs. 7.80, Colombo Fort Land & Buildings up by 17.0% to close at Rs. 38.50 and Colombo Land & Development up by 12.8% to close at Rs. 52.90. Notable losers for the day were Hemas Power down by 4.8% to close at Rs. 20.00, Namunukula Plantations down by 2.3% to close at Rs. 80.50 and ACL down by 2.0% to close at Rs. 67.70.


Cash map was 60.92%. Foreign participation was 27.23% of total market turnover whilst net foreign buying was Rs. 328Mn.

Saturday, 27 April 2013

Quote for the day

"The success of contrarian strategies requires you at times to go against gut reactions, the prevailing beliefs in the marketplace, and the experts you respect." - David Dreman

10 Deadly Trading Mistakes!

The following are 10 most common but deadly Trading Mistakes, which traders should avoid at all costs. Anyone of them can literally destroy one’s financial dreams and goals!

1. Trading for excitement & thrill Not for profits
Many traders consider stock market as casino and trade for thrill and fun only. As soon as one has a losing trade, he wants to quickly make back the lost money. He thinks about the other things he could have done with the money, regret taking the trade and want to recover as quickly as possible. This in turn leads to further mistakes. Be patient and wait for the next high probability opportunity. Don't rush back in.

2. Trading with a high ego
Many individuals who have remained highly successful in other business ventures have failed miserably in trading game. Because they have a fairly big ego and thought they couldn't fail. Their egos become their downfall because they can not except that they would be wrong and refuse to get out of bad trades. Once again, whoever or wherever has anyone come from does not concern the markets. All the charm, powers of persuasion, number of degrees & diplomas of business management on the wall or business savvy will not budge the market when you are wrong.

3. Three 4-letter words that will kill you! HOPE--WISH--FEAR--PRAY
If you ever find yourself doing one or more of the above while in a trade then you are in big trouble! Markets has own system of moving up & down. All the hoping, wishing and praying or being fearful in the world is not going to turn a losing trade into a winning one. When you are wrong just use a simple 4-letter word to correct the situation-GET OUT!

4. Trading with money you can't afford to lose 
One of the greatest obstacles to successful trading is using money that you really can't afford to lose. Examples of this would be money that is supposed to be used in any other business, money to be paid for college/school fee, trading with borrowed money etc. Ultimately what happens is that when someone knows in the back of their mind that they are risking the money they can not afford to lose, they trade out of fear and emotion versus logic and no emotion. If you are in this situation It is highly recommend that you stop trading until you earn enough to put into an account that you truly can afford to lose without causing major financial setbacks.

5. No Trading Plan
If you consider yourself a trader, ask yourself these questions: Do I have a set of rules that tell me what to buy, when to buy and how much to buy, not just for the next trade, but for the next 10 trades? Before I enter a trade, do I know when I will take profits? Do I know when I will get out if I am wrong? These questions form the first part of a trading strategy. There simply cannot be any expectation of success if we can't answer these questions clearly and concisely.

6. Spending profits before you make them
Nothing is more exciting than getting into a trade that blasts off and puts you into a highly profitable situation. This can cause major problems however, because this type of trade puts you in a highly euphoric state and leads to daydreaming about the huge profits still to come. The real problem occurs as you get caught up in the daydream and expectations. This causes you to not be prepared to get out as the market reverses and wipes off all your profits because you have convinced yourself of the eventual outcome and will deny the reality of the situation. The simple remedy for this is to know where and how you will take profits once you enter the trade.

7. Not Cutting Losses or letting Profits run
One of the most common mistakes made by traders is that they let their losses grow too large. Nobody likes to take a loss, but failing to take a small loss early will often result in being forced to take a large loss later. A great trader is not someone who has never had a loss. Great traders have made many losses. But what makes them great is their ability to recover quickly from a string of losses. 

Every trader needs to develop a method for getting out of losing trades quickly. Research and learn to apply the best methods for placing protective stop loss orders.
The only way to recover from many (small) losing trades is to make sure the winning trades are much larger. After a series of losing trades, it becomes difficult to hold a winning trade because we fear that it will also turn into a loss. Let your profitable trades run. Give them room to move and give them time to move.

8. Not Sticking to your plans & Changing strategies during market hours
If you find yourself changing your strategy during the day while the markets are still open, be mindful of the fact that you are likely to be subject to emotional reactions of fear and greed. With rare exception, the most prudent thing to do is to plan your trading strategy before the market opens and then strictly stick to it during trading hours.

9. Not knowing how to get out of a losing trade
It’s amazing that most of the traders don't have any clear escape plan for getting out of a bad trade. Once again they hope, pray wish and rationalize their position. It must be kept in mind that market does not care what you think. It does what it does and when you are wrong you are wrong! The easiest way to keep a bad trade from going really bad is to determine before you get in, where you will get out.

10. Falling in love with a stock (Just Flirt)
Many traders get fascinated by just a stock or two and look for opportunities to trade in those stocks only ignoring the other profitable trading opportunities. It is because they have simply fallen in love with a stock to trade with. Such tendencies can be suicidal as for as trading is concerned. It may cost any one dearly.

Source: http://www.stocklinedirect.com

Friday, 26 April 2013

Quote for the day

‘Price is observable and objective while value is perceived and subjective’. – John Murphy

Bourse witnesses across the board revival in sentiment....


Colombo bourse picked up during the week brushing off any negative sentiments that may arise with the significant increase in domestic electricity tariffs. The ASI gained 79.9 points WoW to close at 5,962.2 points (1.4%), whilst the S&P SL20 Index gained 23.3 points WoW to close at 3,359.4 points (0.7%). Indices benefited mainly on the back of the gains made by Ceylon Tobacco (4.4% WoW), Asiri Hospital Holdings (20% WoW), Colombo Land & Development Co (27.5% WoW), Lion Brewery (7.3% WoW) and Chevron Lubricants (6.2% WoW).

Both indexes gained notably during the week amidst the positive trends witnessed in U.S and Asian equity markets. U.S bond yields dropped significantly during the week, indicating the positive sentiment of markets towards the world’s largest economy in the face of current global economic downturn. However, employment and output figures from the Euro zone continued to deteriorate where PMI index fell below 50 for Germany’s industrial output in April indicating contraction. Furthermore, France, Spain, Italy, Portugal, Greece and Cyprus unemployment levels have hit record high levels reaching 10.6%, 27.2%, 11.6%, 17.5%, 27.2% and 14% respectively while the overall unemployment rate for Euro zone economies remain at 12%. Given that EU is U.S’s largest market for her exports, conditions in Europe may affect bilateral trade between the two economic zones in the medium term. However, the continuation of expansionary monetary policy in U.S despite the significant cuts in government spending assisted the rise in U.S markets as opposed to European markets which are engulfed with heavy fiscal tightening.

Upward revision in electricity tariffs is likely to cause a dip in market interest rates and a strengthening of the LKR in the medium run and a further strengthening of the local banking system by improving the asset quality of the two large public banks in the medium term. Sri Lanka’s equity market gained notably during the week partly on account of these developments where the highest contribution was made by the banking, diversified and manufacturing sector counters.

Interest was seen across the board where the week’s turnover level was driven mainly by large cap counters representing a number of sectors such as banking, food & beverages, diversified, land & property, hotels and healthcare. This indicates that buying interest was well spread across both indexes and the positive sentiment has targeted a larger section of the economy. Nevertheless, banking sector counters such as Commercial Bank of Ceylon, National Development Bank, Sampath Bank and Pan Asia Bank contributed circa 20% to the week’s turnover. In terms of the price movement of key sectors, the manufacturing sector witnessed the largest price increase by recording 3.3% WoW gain in the price index while hotels and travels sector increased by 2% WoW. On the back of these developments, the week saw an average turnover of LKR 978.4mn and an average volume of 77.7mn. It is also significant that the volume of shares traded during the week rose by as much as 69.6% indicating the fact that interest on mid and small cap counters have revived and retail participation in the market is gaining in momentum.

Furthermore, Commercial Bank of Ceylon, Lion Brewery, Pan Asia Power, John Keels Holdings, Colombo Land and Development Co and National Development Bank topped the list in terms of turnover during the week.

The week saw foreign purchases amounting to LKR 1,246.6 mn whilst foreign sales amounted to LKR 465.7mn. Market capitalisation stood at LKR 2,284.2bn, and the YTD performance is 5.7%.

Conclusion:

Active participation of investors lifts the ASI to cross 6,000 mark…….
The bench mark index crossed the 6,000 mark on Friday for a short period, whilst the indices made healthy gains for the week on the back of collective contribution made by retail, foreign and institutional investors. The bourse regained momentum with the activities being energized after witnessing profit taking towards the end of the last week. 

Indices trended upwards during the week with majority of the counters ending in the green witnessing substantial price appreciation. Foreign interest was sustained especially in the banking counters where Commercial Bank spearheaded the list, whilst retail favourite counters such as Colombo Land & Development Company, Touchwood Investments, The Colombo Fort Land & Building, and Kalpitiya Beach Resort garnered heavy retail participation. This in turn propelled the ASI to rise sharply with the average weekly turnover being LKR978.4mn.

Further, the Central Bank (CB) revealed that the government crowding out of the private sector has eased for the month of February. Whilst the state borrowing continues to be high, private sector borrowing has witnessed a recovery in February from the slow down witnessed in January. The CB indicated that the government’s reliance on the domestic banking system is likely to come down with the expected adjustments to administratively determined prices and continued fiscal consolidation. It further indicated that the availability of additional funds subsequent to the government’s reduction in borrowings from the banking sector coupled with the options available to the banks to obtain cheap foreign borrowings is likely to stimulate private sector activities by opening doors for new investments. The aforementioned developments coupled with the expected fall in market interest rate are likely to improve equity market activities. Hence, we continue to advice investors to align their portfolios with fundamentally sturdy counters which are trading at attractive multiples and have promising growth prospects.
Source: Asia Wealth Management Research

Trading Wisdom - One Liners


  • Look at your trading as a series of probabilities, do not focus on any single profit or loss.
  • Want what the market wants.
  • Do your homework. Come prepared to each day’s trading.
  • Never take a trade on the open in the direction of a that day’s gap.
  • Don't risk too much of your trading capital on any single idea.
  • Remain flexible.
  • Believe what you see. If the market’s going up or down, it’s going up or down.
  • Anything can happen. The wildness lies in wait.
  • Verify your trading methods or systems.
  • Caveat emptor ("Let the buyer beware.") when buying a trading system or hiring a mentor.
  • Your own personal psychology will express itself regardless of your chosen method.
  • An opinion isn't worth much, your own or someone else’s.
  • Watch how the markets react to the news.
  • Learn from your mistakes.
  • Stay in the now. Don't trade yesterday, today. Don't trade tomorrow, today.
  • Don't worry about a missed opportunity. Another one is on the way. Besides there were several that just passed of which you were totally unaware.
  • If you don't risk, you can't make money. If you lose all your trading capital, you can’t trade. Find balance.
  • Markets don't go in a single direction. The trend will wobble on it’s way to its destination.
  • The trend is your friend. Unless you're a counter trend trader, and then only it’s end is your friend.
  • Tomorrow’s another day, a whole new trading opportunity. Be optimistic.
  • Forgive yourself. Take the lesson, and move on.
Source: Edited Article from - http://www.ruthroosevelt.com

Quote for the day

"Most people invest and then sit around worrying what the next blowup will be, I do the opposite. I wait for the blowup, then invest." - Richard Rainwater

Thursday, 25 April 2013

Top 20 Pitfalls to be avoid in Share Investment / Trading

Following are the top 20 most common investing mistakes which you should avoid:

1 - Putting all your money in one type of investment. If you have all your money tied up in a single investment and something goes wrong, you will lose all your money.

2 - Another mistake investors make is purchasing stocks before their ex-dividend date and then selling them after the dividend is received. In reality, the company's share price would decline on the ex-dividend date by about the same amount of the dividend, and this has absolutely no value for you. But, the dividends received will create a tax liability for you.

3 - Focusing on past performance. Investors usually think that the past performance is a good indicator of future performance but ignoring the fact that best performers can also turn into the losers over a period of time. Past performance is no guarantee of future returns.

4 - Putting too much focus on Number-Based Analysis. Numbers can be used to identify strengths and weaknesses, or to compare various investment alternatives, but numbers alone are not enough in determining an appropriate investing strategy.

5 - One of the biggest investing mistakes that many people make is investing before they are financially ready. To be a successful trader, you should clear up your debts first before using those funds for investment purpose.

6 - Being greedy. This is the most common mistake associated with trading stocks. Don’t be in a hurry to make quick money.

7 - Investing without a plan. It is very important to have a solid plan so that you can be aware of the risks and returns associated with your investment.

8 - Not setting clear goals. A successful investor should set clear and achievable goals with timelines.

9 - Not following the financial plan. Some investors simply invest money on other areas without following the initial plan and this may yield higher risks of losing the money.

10 - Too much diversification. Though portfolio diversification can reduce investment risk, spreading your investment over too many companies will also lead to some problems, you will have too many to properly manage.

11 - One of the most common mistakes that beginners make is forgetting about expenses or not budgeting enough for certain costs.

12 - No patience for potential investment growth. Many investors make the big mistakes of selling a valuable stock too quickly.

13 - Another mistake is to have too much confidence in the ability of your brokers.

14 - Following rumours without doing your own research and analysis.

15 - Timing the market is also one of the common mistakes that many investors make.

16 - Invest in things that you don't understand.

17 - Letting your emotions rule your decisions.

18 - Failing to learn from mistakes.

19 - Focusing only on return.

20 - Being overconfident.
Source: finance learners

Wednesday, 24 April 2013

Quote for the day

"The beautiful thing about the markets, they don’t like you, they don’t dislike you, they just don’t care. They are there everyday. You want to play, you can play. You don’t want to play, don’t play."- Larry Hite

LSL Market Review 24th Apr 2013

Indices gained considerable ground helped by gains on Ceylon Tobacco Company and Chevron Lubricants. Retail favorite Colombo Land & Development rallied with solid activity. A major shareholder of Panasian Power reduced their stake whilst Hemas power was the buyer. The latter will be expanding its portfolio of power generating sites in effect. Investors speculated on Ceylon Tobacco Company announcing its interim dividend anytime soon. High dividend yielding counters are expected to see price appreciations in the short-term.

ASI gained 50.21 points (0.85%) to close at 5,933.73 and the S&P SL20 index 13.66 gained (0.41%) points to close at 3,358.51. Turnover was Rs. 975.3Mn.

Top contributors to turnover were Panasian Power with Rs. 304.8Mn, John Keells Holdings with Rs. 114.3Mn and Commercial bank with Rs. 71.9Mn. Most active counters for the day were Colombo Land & Development, Touchwood Investments and Agstar Fertilizer.

Notable gainers for the day were Industrial Asphalts up by 18.4% to close at Rs. 249.90, Environmental Resource Investments - warrants up by 13.6% to close at Rs. 2.50 and Amana Takaful up by 13.3% to close at Rs. 1.70. Notable losers for the day were Tangerine Hotels down by 14.9% to close at Rs. 68.10, E.B. Creasy down by 4.9% to close at Rs. 951.00 and Lankem Ceylon down by 4.9% to close at Rs. 154.00.

Cash map for today was 70.22%. Foreign participation was 27.2% of total market turnover whilst net foreign selling was Rs. 161.5Mn.

2013 Country Stock Market Performance

Below is a look at the year-to-date performance for the major stock market indices of 77 countries around the world. Through today, the average country on the list is up 4.09% in 2013, and 49 of the 77 countries (63.6%) are in the green for the year.


Japan now ranks first overall with a gain of 30.53%, but keep in mind that its currency has depreciated significantly this year. In dollar terms, Japan's stock market is up 14.04% YTD. This would still rank it 11th on the list, but it cuts the gains in half. In the G7, the US ranks second behind Japan, followed by the UK. After Japan, the US and the UK, the four other G7 countries are not doing very well. France is up just 0.30% on the year, while Italy, Germany and Canada are all down.

All four of the big BRIC (Brazil, Russia, India, China) emerging markets are down on the year as well. China is doing the best of the BRICs with a YTD decline of 1.19%. India is down 1.32%, while Brazil and Russia are now down double digit percentages. Brazil and Russia are both having very rough 2013s through mid-April.
Source: 
http://www.bespokeinvest.com

Tuesday, 23 April 2013

Quote for the day

"Listen to suggestion from people you respect. This doesn't mean you have to accept them. Remember it’s your money and generally it is harder to keep money than to make it. Once you lose a lot of money it is hard to make it back." - Walter Schloss

LSL Market Review 23rd Apr 2013


Market ended with positive returns with small caps gaining ground today. Lion Brewery and Asiri Hospitals saw crossings of 0.5mn shares at LKR 360.00 and 3.0mn shares at LKR 14.00 respectively and closed at the respective 52 week high prices. These were the main contributors to the market turnover (a contribution of LKR 188.0mn and LKR 63.4mn respectively) followed by National Development Bank with LKR 56.6mn.

During the day ASI advanced by 11.09 index points (+0.19%) to close at 5,883.52 and S&P SL 20 Index advanced by 6.47 index points (+0.195) to close at 3,344.85. Daily market turnover was LKR 708.6mn.

Colombo Lanka & Development, Citrus Kalpitiya and HVA Foods were the heavily traded stocks. Ceylon Leather Products – warrants, Asiri Hospitals and Sigiriya Village Hotels ended as top gainers while Talawakele Plantations, Orient Garments and Amana Takaful were among the top losers for the day. Talawakele Plantations today traded excluding the dividend of LKR 2.50 per share.

Foreign participation for the day was 20.3%. Foreign investors were net buyers with a net inflow of LKR 224.1mn, out of which lion’s share of LKR 185mn was captured by Lion’s Brewery. Cash map closed at 57%.

Monday, 22 April 2013

Quote for the day


"The future belongs to those who see possibilities before they become obvious."  -  John Scully

LSL Market Review 22nd Apr 2013

Interest on blue-chips helped shore up most of the losses caused by profit taking on small and mid-capped counters. Commercial Bank continued to witness private deals as foreign appetite seems to be focused on banking counters. Retail investors once again proved its thirst for speculation on Colombo Land & Development.

ASI lost 9.82 points (0.17%) to close at  5,872.43 and the S&P SL20 index gained 2.26 points (0.07%) to close 3,338.38. Turnover was Rs. 885.3Mn.

Top contributors to turnover were Commercial Bank with Rs. 374.8Mn, Colombo Land & Development with Rs. 51.1Mn and Browns with Rs. 35.0. Most active counters for the day were HVA Foods, Colombo Land & Development and Citrus Leisure warrant 19.

Notable gainers for the day were Ceylon leather Products warrant 13 up by 23.5% to close at Rs. 4.20, Citrus Kalpitiya up by 16.7% to close at Rs. 7.70 and Citrus Waskaduwa up by 13.6% to close at Rs. 7.50. Notable losers for the day were Amana Takaful down by 6.3% to close at Rs. 1.50, Lanka Milk Foods down by 5.1% to close at Rs.106.20 and Namunukula Plantations down by 3.6% to close at Rs. 81.00.

Cash map for today was 52.42%. Foreign participation was 24.7% of total market turnover whilst net foreign buying was Rs. 390.7Mn.

Sunday, 21 April 2013

Investment Portfolio Management and Portfolio Theory

Portfolio theory is an investment approach developed by University of Chicago economist Harry M. Markowitz (1927 - ), who won a Nobel Prize in economics in 1990.

Portfolio theory allows investors to estimate both the expected risks and returns, as measured statistically, for their investment portfolios.

Markowitz described how to combine assets into efficiently diversified portfolios. It was his position that a portfolio's risk could be reduced and the expected rate of return could be improved if investments having dissimilar price movements were combined.

In other words, Markowitz explained how to best assemble a diversified portfolio and proved that such a portfolio would likely do well.

There are two types of Portfolio Strategies:

A. Passive Portfolio Strategy:

A strategy that involves minimal expectational input, and instead relies on diversification to match the performance of some market index.

A passive strategy assumes that the marketplace will reflect all available information in the price paid for securities.

B. Active Portfolio Strategy:

A strategy that uses available information and forecasting techniques to seek a better performance than a portfolio that is simply diversified broadly.

Moreover, there are three more types of Portfolios:

1. The Patient Portfolio:

This type invests in well-known stocks. Most pay dividends and are candidates to buy and hold for long periods ...

Perhaps forever!

The vast majority of the stocks in this portfolio represent classic growth companies, those that can be expected to deliver higher earnings on a regular basis regardless of economic conditions.

2. The Aggressive Portfolio:

This portfolio invests in "expensive stocks" (in terms of such measurements as price-earnings ratios) that offer big rewards but also carry big risks.

This portfolio "collects" stocks of rapidly growing companies of all sizes, that over the next few years are expected to deliver rapid annual earnings growth.

Because many of these stocks are on the less-established side, this portfolio is the likeliest to experience big turnovers over time, as winners and losers become apparent.

3. The Conservative Portfolio:

They choose stocks with an eye on yield, as well as earnings growth and a steady dividend history.

Whichever strategy or type you will use, managing successful portfolios are a bit like cultivating gardens!
Although the fruits of one's labors do not appear immediately, it is essential to maintain discipline and vigilance while focusing on the eventual harvest.

Discipline and vigilance must always characterize your management style. Stick to a core strategy with a low-risk profile, reflecting a more disciplined, value-oriented and diversified approach.
When markets rise many investors feel comfortable just to be participating. But when markets start gyrating investors start taking more critical looks at their portfolios.

On several occasions, stock prices will experience substantial increases or severe declines.

Amidst these ups and downs, follow your strategy, and as a refuge, concentrate mostly on dividend paying stocks and attractively priced companies that are poised for positive change.

Sweating over your portfolio?

You can beat the indexes and funds!

There are three ways to win:

1. Rational Analysis

2. Crystal Ball and

3. Inside Information!

But ...

You'd better leave the last two methods to fortune tellers and spies!

You should always focus on rational financial analysis with fundamental screening and charting.
Source:http://www.greekshares.com

Saturday, 20 April 2013

Quote for the day

“As investors, we also always have to be aware of our innate and very human tendency to be fighting the last war. We forget that Mr. Market is an ingenious sadist, and that he delights in torturing us in different ways.” - Barton Biggs

Colombo Bourse sturdy as global stocks witness volatility....


The activities at the bourse regained strength subsequent to the ending of the holiday season. The ASI gained 42.37 points WoW to close at 5,882.3 points (0.7%), whilst the S&P SL20 Index gained 2.58 points WoW to close at 3,336.12 points (0.1%). Indices benefited mainly on the back of the gains made by Colombo Land and Development Company (18.6% WoW), DFCC Bank (3.2% WoW), Lion Brewery (4.5% WoW), Hatton National Bank (2.1% WoW) and Hemas Holdings (7.5% WoW).

Sri Lankan stocks continued to gather momentum during the week recording healthy turnover and volumes where the bourse gained WoW for the third consecutive week. Institutional and foreign participation was strongly rooted in mid and large cap counters, while retail participation was also at a relatively high level during the week presumably owing to the expectations over the downward trend in the market rates. UNESCAP(United Nation Economic and Social Commission for Asia) revealing its 2013 annual report mentioned that the country’s economic growth is expected to be propelled by easing of its monetary policies and fiscal policies whilst key sectors such as agriculture is also expected to improve after the setback witnessed during 2012 due to adverse climate conditions.

World stocks witnessed a volatile ride during the week in light of IMF’s lowered economic growth projections for world economy, which also predicted that US spending cuts could slow the growth of the country and the phase of recovery in EU. MSCI world index reversed its course during the week to close at a dip of 1.2% WoW, ending the continuous rally as the outlook for growth in the global economy waned.  

Furthermore, the week marked the earnings season of US companies. As per the data published by the Bloomberg 74% of the 90 companies in the S&P 500 have exceeded the analyst earnings estimates while 50% exceeded revenue projections as at Friday.

Moving to the Colombo Bourse, the week’s turnover level was largely driven by banking sector stocks, of which Pan Asia Bank played a prominent role due to a colossal crossing witnessed on Tuesday. Counter witnessed C. 15% of its issued quantity that accounted 44mn shares being transferred to Japanese investor Bansei Securities Co.Ltd at LKR21. The deal enhanced the year to date net foreign inflow of the bourse to reach LKR7.9bn as at Friday. 

Furthermore, representing the banking sector Commercial Bank of Ceylon, Hatton National Bank and Nations Trust Bank also enticed heavy institutional and retail activity to join the top weekly turnover calibre. Reaffirming this Banking, Finance and Insurance sector index witnessed a WoW gain of 0.9% while the diversified sector index also witnessed a WoW gain of 0.3% mainly due to the investor interest witnessed in John Keells Holdings. On the back of these developments, the week saw an
average turnover of LKR 1bn and an average volume of 45.8mn.

Furthermore, Pan Asia Bank, Free Lanka Capital Holdings, Seylan Merchant Bank, Citrus Leisure and Commercial Bank of Ceylon topped the list in terms of volume traded during the week.

The week saw foreign purchases amounting to LKR 2,365.4 mn whilst foreign sales amounted to LKR 1,033.2mn. Market capitalisation stood at LKR 2,253.2bn, and the YTD performance is 4.2%.

Conclusion:

Interest at the Colombo Bourse sustained after New Year festivities...

Activities at the Colombo bourse picked up with New Year festivities drawing to a close whilst some profit taking in blue chip and Banking & Finance stocks was witnessed towards the latter half of the week. Interest in Banking & Finance sector counters continued during the week and took on a different dimension spurred by the steep drop in gold prices witnessed over the week. This raised concerns amongst investors towards Banking & Finance stocks that have high exposure to gold backed loans (i.e.: Pawning). 

However our analysis reveals that the impairment losses incurred on pawning is historically low compared to other categories of loans and hence a drop in value of gold is unlikely to lead to widespread defaults due to the sentimental value placed by borrowers on gold which is used as collateral. Hence we expect this development not to have a significant adverse impact on the asset quality of the domestic banking sector. 

However, a persistence of the downward trend in gold prices could affect the future loan growth from this sector which accounts for over 12% of the total loans disbursed by the banking system.

Despite some sell down being witnessed in some blue chip counters, the outlook for the domestic economy appears to be favourable with both the IMF and the UN-ESCAP expecting Sri Lanka’s GDP growth to reach 6.3% and 6.5% in 2013E respectively. Whilst expecting a general slowdown in global economic activity, the IMF expects Sri Lanka to continue to record the fastest growth rate for the South Asian region in 2013E. Further, the Central bank’s decision to keep policy rates stable for the month of April as well its commitment towards lowering market rates would augur well for equity valuations. Reaffirming the above, foreign investor expectations of the Colombo bourse continue to remain broadly positive as indicated by the YTD net foreign inflow of approx. LKR 7.5 bn to date.
Source: Asia Wealth Management Research

Bob Farrell's 10 Market Rules to Remember

Bob Farrell was an acclaimed market strategist at Merrill Lynch from 1967-1992. Bob guided clients through the bull market of the late 1960's, followed by the bear markets of the mid-1970's, then the Great Bull Market which began in 1982.

Most of the good analysts in those days focused on the markets,and individual stocks, rather than trying to make huge macro bets on the economy. Consequently, they tended to have more success over time.

In any event, Mr. Farrell came up with these "Market Rules to Remember", which I believe still have relevance today. I thought they might be useful to post on my site.

1) Markets tend to return to the mean over time.

2) Excesses in one direction will lead to an opposite excess in the other direction.

3) There are no new eras — excesses are never permanent.

4) Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.

5) The public buys the most at the top and the least at the bottom.

6) Fear and greed are stronger than long-term resolve.

7) Markets are strongest when they are broad and weakest when they narrow to a handful of blue chip names.

8) Bear markets have three stages — sharp down — reflexive rebound —a drawn-out fundamental downtrend.

9) When all the experts and forecasts agree – something else is going to happen.

10) Bull markets are more fun than bear markets

Friday, 19 April 2013

LSL Weekly Market Review 19 Apr 2013

Retail participation was up and running soon after the festivities on Tuesday which was promising for all stakeholders. Block trades on banking counters helped to prop up turnover levels with PABC seeing a 15% stake being split amongst 6 trades. Banking counters were also seen regaining momentum whilst Lion Brewery touched an all-time high price of Rs. 340.00.


ASI gained 12.80 points (0.22%) to close at 5,852.68 and the S&P SL20 index gained 18.03 points (0.54%) to close at 3,351.57. Turnover was Rs. 1,580.0

On Wednesday, sentiment remained strong buoyed by interest on blue-chips. Foreign accumulation of blue-chips has seen local investors also building their appetite for equities.  Banking counters and John Keells Holdings continued to be the dominant performers in the market. Retail activity is rallying around the surge in foreign buying. However, investors are cautioned to stick to value investing to minimize unwarranted speculation.

ASI gained 15.85 points (0.27%) to close at 5,868.53 and the S&P SL20 index gained 10.42 points (0.31%) to close at 3,361.99. Turnover was Rs. 611.5Mn.

On Thursday, retail activity surged ahead of institutional interest on stocks. Low-capped and mid-capped counters saw continued retail speculation. Blue-chips retreated on mainly losses on banking and financials. Lower yields on treasuries seemed to have spurred retail activity with the CBSL expecting lower rates going forward.

ASI gained 23.30 points (0.40%) to close at 5,891.83 and the S&P SL20 index lost 10.84 points (0.32%) to close at 3,351.15. Turnover was Rs. 800.9Mn.

Indices closed lower mainly on the losses on blue-chips on Friday. Most banking counters lost marginally on thin volumes. Ceylon Tobacco Company surged ahead with a dividend announcement around the corner. Retail activity which was rallying around foreign was seen taking an off-day. Colombo Land in particular received plenty of retail activity today. Negotiated deals on Commercial Bank took the lion’s share of the turnover.

ASI dipped 9.58 points (0.16%) to close at 5,882.25 and the S&P SL20 index lost 15.03 points (0.45%) to close at 3,336.12. Turnover was Rs. 1,033.9Mn.

Top contributors to turnover were Commercial Bank with Rs. 520.4, Nations Trust Bank with Rs. 54.9Mn and Colombo Land & Development with Rs. 53.3Mn. Most active counters for the day were Colombo Land & Development, Citrus Leisure warrant 19 and HVA Foods.

Notable gainers for the day were Colombo Land & Development up by 8.9% to close at Rs. 41.50, Kelsey Homes up by 8.8% to close at Rs. 16.00 and Beruwala Walk Inn up by 8.7% to close at Rs. 2.50. Notable losers for the day were SMB Leasing down by 10.0% to close at Rs. 0.90, Amana Takaful down by 5.9% to close at Rs. 1.60 and Ceylon Leather Products down by 5.6% to close at Rs. 3.40.

Cash map for today was 38.99%. Foreign participation was 34.7% of total market turnover with net foreign buying at Rs. 491.0Mn.

The Stock Market is like a Beautiful Woman

The stock market is like a beautiful woman, always:
appealing
challenging
fascinating
captivating
mystifying.

Appealing
The stock market appeals to everyone - the ignorant and illiterate, barbers and bartenders, brokers and bankers, best and brightest, professionals and people from all walks of life.

Generally, the stock market is perceived as a marketplace to get-rich-quick, make a fast buck, make a killing and turn rags to riches.

Challenging
The stock market challenges all kinds of players - gamblers, speculators and investors. In the game of sports, amateurs play against amateurs, professionals challenge professionals, and olympians compete with olympians on different level playing fields; whereas in the stock market, novices, amateurs and professionals challenge each other on the same level field.

No wonder so many losers who think they know the stock market lose to so few who know how to “play” and win the stock market game.

Fascinating
The stock market fascinates everybody. It is an animal market - buying and selling sheep, deer, bulls, bears, dogs, cats and pigs.

Winners buy sheep “cheap” and sell deer “dear”. Losers buy deer “dear” and sell sheep "cheap”. Winners are the bulls and bears. Losers are the dogs and cats. "Bulls make money, bears make money, pigs do not"…. a Wall Street axiom.

Captivating
The stock market captivates different types of players. Gamblers bet on a "story" such as hot tips, insider information, rumors and gossip. Speculators trade on technical charts and price fluctuation. Investors rely on fundamentals and value.

Winners take credit for their skill and smartness. Losers blame everyone (tipsters, stock brokers, investment advisors, portfolio managers, politicians, etc.) and everything (stock market, crisis and bad luck, etc.) except themselves.

Mystifying
The stock market mystifies people. In the marketplace, people "buy low" at wholesale prices, "sell high" at retail prices and make profits. In the stock market, people "buy high" at retail prices and "sell low" at wholesale prices and suffer losses.

"Buy low, Sell high" is a stock market wisdom. It is common sense, but not so common. "Buy high, Sell low" instead of “Buy low, Sell high” is mystifying.

Knowing, understanding and appreciating this beautiful woman is the art of winning the stock market game.
Source: http://dominictan.com

Thursday, 18 April 2013

Quote for the day

“Many people pray to be kept out of unexpected problems.
Some people pray to be able to confront and overcome them.” - Toba Beta

LSL Market Review 18th Apr 2013


Retail activity surged ahead of institutional interest on stocks. Low-capped and mid-capped counters saw continued retail speculation. Blue-chips retreated on mainly losses on banking and financials. Lower yields on treasuries seemed to have spurred retail activity with the CBSL expecting lower rates going forward.

ASI gained 23.30 points (0.40%) to close at 5,891.83 and the S&P SL20 index lost 10.84 points (0.32%) to close at 3,351.15. Turnover was Rs. 800.9Mn.

Top contributors to turnover were Hatton National Bank with Rs. 92.1Mn, Cargills with Rs. 63.0Mn and Hatton National Bank non-voting with Rs. 55.4Mn. Most active counters for the day were Citrus Leisure warrant 19, Colombo Land & Development and Touchwood Investments.

Notable gainers for the day were Environmental Resource Investments-Warrant 14 up by 20.0% to close at Rs. 1.80, Singalanka up by 16.9% to close at Rs. 76.00 and Citrus Leisure warrant 19 up by 16.1% to close at Rs. 3.60. Notable losers for the day were Kotagala Plantations down by 5.2% to close at Rs. 52.80, Nations Trust Bank down by 3.0% to close at Rs. 61.00 and Browns Investments down by 2.8% to close at Rs. 3.50.

Cash map for today was 54.08%. Foreign participation was 27.71% of total market turnover whilst net foreign buying was Rs. 159.85Mn.

Wednesday, 17 April 2013

Quote for the day

“If stock market experts were so expert, they would be buying stock, not selling advice.” - Norman R. Augustine

LSL Market Review 17th Apr 2013


Sentiment remained strong buoyed by interest on blue-chips. Foreign accumulation of blue-chips has seen local investors also building their appetite for equities.  Banking counters and John Keells Holdings continued to be the dominant performers in the market. Retail activity is rallying around the surge in foreign buying. However, investors are cautioned to stick to value investing to minimize unwarranted speculation.

ASI gained 15.85 points (0.27%) to close at 5,868.53 and the S&P SL20 index gained 10.42 points (0.31%) to close at 3,361.99. Turnover was Rs. 611.5Mn.

Top contributors to turnover were John Keells Holdings with Rs. 101.3Mn, Nations Trust Bank with Rs. 74.6Mn and Ceylon Tobacco Company with Rs. 40.2Mn. Most active counters for the day were Blue Diamonds, Nations Trust Bank and Citrus Leisure warrant 19.

Notable gainers for the day were Environmental Resource Investments up by 23.1% to close at Rs. 1.60, Citrus Leisure warrant 19 up by 19.2% to close at Rs. 3.10 and Laxapana Batteries up by 14.6% to close at Rs. 5.50. Notable losers for the day were Amana Takaful down by 6.3% to close at Rs. 1.50, Swarnamahal Financial Services down by 5.6% to close at Rs. 3.40 and Asian Alliance Insurance down by 4.8% to close at Rs. 80.00.

Cash map for today was 61.04%. Foreign participation was 17.07% of total market turnover whilst net foreign buying was Rs. 43.74Mn.

Tuesday, 16 April 2013

Quote for the day

“Good investing is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake.“ - Michael Steinhardt

LSL Market Review 16th Apr 2013

Retail participation was up and running soon after the festivities which is promising for all stakeholders. Block trades on banking counters helped to prop up turnover levels with PABC seeing a 15% stake being split amongst 6 trades. Banking counters were also seen regaining momentum whilst Lion Brewery touched an all-time high price of Rs. 340.00.

ASI gained 12.80 points (0.22%) to close at 5,852.68 and the S&P SL20 index gained 18.03 points (0.54%) to close at 3,351.57. Turnover was Rs. 1,580.0Mn.

Top contributors to turnover were Pan Asia Bank with Rs. 948.7Mn, Hatton National Bank with Rs. 325.6Mn and Commercial bank with Rs. 72.5Mn. Most active counters for the day were Pan Asia Bank, Swarnamahal Financial Services and Nation Lanka Finance.

Notable gainers for the day were Nation Lanka Finance warrant 21 up by 15.4% to close at Rs. 1.50, SMB Leasing up by 11.1% to close at Rs. 1.00 and Ceylon Tea Brokers up by 9.6% to close at Rs. 5.70. Notable losers for the day were Kalamazoo down by 14.1% to close at Rs. 1,850.00, Pan Asia Bank down by 5.6% to close at Rs. 20.30 and Renuka Agri down by 4.7% to close at Rs. 4.10.

Cash map for today was 60.10%. Foreign participation was 64% of total market turnover whilst net foreign buying was Rs. 638Mn.

Monday, 15 April 2013

Quote for the day

"Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well." - Warren Buffett 

Sunday, 14 April 2013

Here Are The Ground Rules For Successful Investing

Not long ago investing was easy. There were few places you could invest and if you had money you wanted to invest, you left it to the professional stock brokers. However, deregulation of the financial markets has changed all this. In the past 20 years new investment products have been launched, changes have been made to the tax systems and retirement plans which have altered the attractiveness of many investment products.

Up to about 20 years ago, share investing was purely in the domain of the wealthy. For most people it was difficult to trade in overseas stock exchanges, there were no such thing as cash management trusts, installment warrants, exchange traded options, dividend imputation, reset preference shares and endowment warrants - to name a few. Now about 50% of investors are "mums and dads" investors who either own shares directly or in managed funds. Unfortunately, in recent years many investors have been "burnt" because they did not understand the risks of investing in financial markets.

Governments around the world have made it clear that it is important for people to take control of their own financial futures. The sustainability of government funded pensions is under pressure. If you do not save and invest, you will suffer a significant decline in your retirement living standard. The average life expectancy is about 80 years, so if you retire at 60 years of age, the savings you have accumulated in the 40 years of your working life will need to fund your retirement of 20 years or more.

Deregulation of financial markets, interest rates and currencies means that the market determines the value of investments and not government decree. This provides opportunities for educated investors to build wealth and for unwary investors to lose wealth. You must understand the opportunities and risks.

The ground rule is that if you want to be a successful investor in financial markets, you must educate yourself about investing. Even if you put your faith in a licensed investment advisor, not all are competent. It is essential that you understand how the financial markets work so that you do not put your hard earned money in the hands of an incompetent advisor who is only interested in the commissions available. How can you tell whether a particular investment is right for you? The only sure way is to become familiar with the language used in the financial industry and to have a sound investment strategy. Does this mean that you should keep you money safe by putting it under the bed or keeping it in the bank? No - but you do need to understand the risks involved and set ground rules for successful investing.

There are a number of ground rules in investing that haves stood the test of time. With time, patience and effort you can become a successful investor in all the areas that are open to you. This will not come overnight and you will have to be prepared for that fact there will be times you lose money. However,perseverance is a virtue above all others. The road is not always easy, but nothing worthwhile is.

Here are the ground rules for successful investing:

1. Be your own investment manager. No advisor or stockbroker should do it for you. Only you know what your real needs are, what your temperament is - and only you are motivated by your own best interests, not sales commissions. It is also more fun to do it yourself.

2. Confront risk and then reduce it through spreading your investments.

3. Take a contrarians view to investment markets. That is, look for opportunities and do the opposite of what everyone else is doing.

If your investing facts are out-of-date, how will that affect your actions and decisions? Make certain you don't let important investing information slip by you.

4. Do not be put off by investment jargon. Master it instead.

5. NOW is the best time to start investing. Do not wait for the markets to improve. If the share market is filled with gloom, that is the time to buy.

6. Make good quality shares the core of your investment strategy. Then you can rest easy when you invest in more speculative areas.

7. Always consider tax implications of making investments but never let tax minimization be the main objective. The fundamental rule is to think in terms of after-tax returns.

8. Keep up to date through reading the financial papers and searching independent investment research websites.

9. Discussing investments is stimulating. Condition your mind to talk to others about investing, especially people who are more experienced and knowledgeable than you are.

10. Do not be greedy. Discipline yourself to cut your losses with bad investments and cash in when you have made a reasonable profit.

11. Be patient. Rome was not built in a day. Similarly, you may not become wealthy overnight, but you will over time.

12. Never invest in anything you do not understand. If a particular investment sounds too good to be true, it usually is.

13. Pay yourself first. Most people invest money they have left over after paying the bills. Allocate yourself the first 10% of your monthly income to build up your investment capital. By doing this you will force yourself to become an investor and the long term benefits will be enormous.

If you master these 13 ground rules, you will be a successful investor. You will rival so-called professionals and will sleep easily at night knowing that money is the least of your worries.

Have a good trade.

Source: www.fool.co.uk

Saturday, 13 April 2013

Quote for the day


"Stock market corrections, although painful at the time, are actually a very healthy part of the whole mechanism, because there are always speculative excesses that develop, particularly during the long bull market." - Ron Chernow

LSL Weekly Market Focus 12th Apr 2013

By Lanka Securities Research

On Monday, Union Bank gathered further steam led retail investors. The bullish trend on Union Bank seemed to have rubbed off on other mid-capped counters such as Colombo Land and Vallibel One. Meanwhile Kegalle Plantations saw a private deal taking place on the normal board. Normally, a sluggish period is seen with minimal activity in the past during the upcoming festivities. But there seems to be a clear reversal this year. 

ASI gained 11.44 points (0.2%) to close at 5,777.38 and the S&P SL20 index gained 9.28 points (0.28%) to close at 3,321.81. Turnover was Rs. 398.0Mn.Top contributors to turnover were Union Bank with Rs. 63.6Mn, Kegalle Plantations with Rs. 44.2Mn and Carson Cumberbatch with Rs. 35.6Mn. Most active counters for the day were Union Bank, Vallibel One and Colombo Land & Development.Foreign participation was 8.5% of total market turnover with net foreign inflow of Rs. 34.87Mn.

Profit taking was quite evident on Tuesday as retail investors cashed in before the weekend. Activity on blue-chips remained relatively low which was reflected by a lower turnover. Weligama Properties, a subsidiary of East West Properties announced a private placement with the latter rising by almost 10%. 

ASI dipped 9.78 points (-0.17%) to close at 5,767.60 and the S&P SL20 index dipped 5.06 points (0.15%) to close at 3,316.75. the turnover was Rs. 399.2Mn.Top contributors to turnover were John Keells Holdings 79.3Mn, Hatton National Bank with Rs. 32.7Mn and Carson Cumberbatch with Rs. 32.2Mn. Most active counters for the day were Union Bank, Vallibel One and Colombo Land & Development. Foreign participation was 26% of total market turnover whilst net foreign buying was Rs. 112.2Mn.

On Wednesday, gains on Sri Lanka Telecom and Nestle helped boost indices whilst retail sentiment also picked up. Turnover levels low with institutional activity on the sidelines. With treasuries holding steady, it will bring a sense of relief to equity investors. 

ASI gained 26.70 points (0.46%) to close at 5,794.30 and the S&P SL20 index gained 5.74 points (0.17%) to close at 3,322.49. turnover was Rs. 309.4Mn.Top contributors to turnover were Commercial Bank with Rs. 27.4Mn, National Development Bank with Rs. 25.5Mn and Central Finance with Rs. 23.7Mn. Most active counters for the day were East West Properties, Union Bank and Nation Lanka Finance.Foreign participation was 10.41% of total market turnover with net foreign buying of Rs. 11.4Mn. 

Retail investor driven activity picked on Thursday whilst institutional activity was seen on mainly banking and financials. Sound investor participation ahead of the festive season is a promising indication of improving sentiment in the CSE. Foreign interest was seen on Hatton National Bank. Foreign interest on blue-chips during the past few months could be held as the main reason for the current revival in the condition of the market. However, retail participation continues at discrete levels. 

ASI gained 19.07 points (0.33%) to close at 5,813.37 and the S&P SL20 index gained 6.93 points (0.21%) to close at 3,329.42. Turnover was Rs. 940.5Mn.Top contributors to turnover were Hatton National Bank with Rs. 462.9Mn, Commercial Bank with Rs. 103.7Mn and Cargills with Rs. 56.1Mn. Most active counters for the day were Union Bank, Free Lanka Capital Holdings and Nation Lanka Finance. Foreign participation was 39% of total market turnover whilst net foreign buying was Rs. 480Mn.

Leadership and Trading


By: Nazy Massoud

I was participating in a meeting the other day and the speaker was talking about leadership. 

When I was thinking of leadership, it occurred to me that as traders, we own our business and we set its direction. We are leaders and how we run our business is very essential to our success. 

As you might know, 90% of traders lose money. The challenge is how can we lead and run our business so we do not become part of these statistics? 

One way is to understand the leadership principles and see how you are applying them to your own trading business. 

What are these principles? 

1. Knowing why you are in the trading business 
You can start by asking yourself:
  • Why are you in the trading business?
  • What was your initial attraction to trading?
  • Are you thinking about it as a business or a hobby?
  • Are you passionate about your trading?
  • Does trading feel like a lot of work?
  • What are your trading goals?
  • Are you enjoying the journey or just focusing on the end result?
  • What do you want to get out of trading? 
    • Money
    • Excitement
    • Challenge
    • Power
    • Other things
  • Imagine you got all of the things you wanted to get out of your trading business:
    • What do they mean to you?
    • How do you feel about them?
    • How do you feel about yourself?

When we know why we want something, it helps us to overcome challenges that we go through. 

When you think of Tiger Woods, what comes to mind? For me, he is one of the most successful golfers. I believe he wants to be the best that he can be. This is so strong for him that he has a merciless routine. Rain and shine, he practices and tries to learn something new.  

Because the reason he has is so strong for him, he is disciplined, he produces consistent results and has fun doing it. 

Is the reason you are in the trading business strong enough for you to give your business your full commitment? 

2. Managing your energy 
When we get up in the morning, we have a certain amount of energy. It is up to us to decide how we will use our energy and where we will focus it. So how do you manage your energy during the day? 

What activities energize you and what drains your energy?
  • How do you sequence your activities?
  • Do you try to do everything yourself, or do you focus on your strengths and delegate the rest?
  • How do you deal with stress?
  • How do you motivate yourself?
  • Who do you surround yourself with?
  • How do you manage your energy?
  • How do you deal with the bad news or naysayers?
  • How do you deal with emails, phone calls, IMs and other things that can distract you?
  • Are you being productive or running out of time each day?

If you try to be everything to everyone, you get burned out. 

You might have heard of the 80/20 rule – 20% of our efforts get 80% of our results. You can focus your energy on the efforts that get you the results, or let yourself get distracted. 

When you get distracted, you are very busy, however you do not produce the result that you want in the time frame that you want. The choice is yours.

3. Your perception
As we all know, we face challenges and speed bumps throughout our trading business. The important question is how do you deal with them? What meaning do you give them? 
  • When you lose:
    • How do you view it?
    • What meaning do you give it?
    • How do you feel about yourself?
    • Are you looking at the lessons?
  • Do you let the bumps on the road stop you?
  • Do you move forward despite challenges?

The way we look at things determines how we feel about it and how we can handle it. 

For instance, if you look at your losses as being the end of the world or feel that everything is going against you or that you are stupid, then guess what? It will be harder for you to be successful at your business. 

However, if you consider your losses as being the cost of doing business and an overhead for your business, then it is easier to accept and you can move on. 

It is important to realize that it is about your perception and how you view it. You might have heard, “There is no reality only your perception”… 

It is OK to have fear as long as it does not completely stop us. Take small steps. 

4. People you surround yourself with
You might have heard, “You’re the Average of the 5 People You Hang Out with Most.” Friends have a way of influencing us. 

I remember meeting a very nice couple during one of our vacations. We started talking and the husband was interested in trading. However, after over a year of studying, he had not pulled the trigger yet. He wanted to create some extra income, however he was afraid of losing. On top of that, his wife was saying, “We cannot afford to lose even one penny.” As a result, he had not pulled the trigger.

Who do you surround yourself with? Are they: 
  • Encouraging you in your trading business?
  • Believing in you?
  • Opening doors for you?
  • Successful?
  • Someone you would do the same for?

It is important to choose who surrounds us and whose advice we take. Often, we surround ourselves with the people we like, rather than the people whose point of view we respect. 

Do not allow others’ fear to become the boundaries of your dreams… 

5. Taking ownership of your trading business
Ask yourself, do you:
  • Trust yourself?
  • Have a point of view when you are trading?
  • Take calculated risk?
  • Take responsibility for your trading results?
  • Take the opportunities that present themselves?
  • Adapt to the changes in the market?
  • Build flexibility in your trading business?


Many of us put a lot more value in others’ opinions than our own. We tend to want to be safe than sorry. If we follow others, we do not have to take responsibility for our results. 

We can blame the advice, the markets or anything else. 

One of the signs of great leaders is not that they do not make mistakes. It is that they handle the consequences and move on. 

Plato says, “To risk nothing, is to risk everything.” 


To summarize, the 5 principles of leadership are: 
Knowing why you are in the trading business
Managing your energy
Your perception
People you surround yourself with
Taking ownership of your trading business

Remember, the most important thing is not only to make decisions, but also to live with the consequences and be gentle with yourself. That is how we grow, learn and build trust in ourselves.

The trading business is a marathon and not a sprint.

Source: http://www.mentaledgetrading.com