"Your goal as an investor should simply be to purchase, at a rational price, a part-interest in an easily understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now... If you aren't willing to own a stock for ten years, don't even think about it for ten minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also, will the portfolio's market value."- Warren Buffett
Thursday, 16 May 2013
LSL Market Review 16 May 2013
The stock market rose on Thursday, lifted by stronger-than-expected earnings and low interest rates, hit an 18 month high with a 1.1% percent (65.88 points) increase to 6,287.00. S&P index increased by 0.9% (33.03 points) to 3,531.37.
Market turnover reached Rs.1.9bn, out of which 62% was accounted by crossings.
7.2mn shares of Aitken Spence changed hands among foreign investors at Rs.132.60 per share in two crossings. Moreover, 9.8mn shares of Piramal Glass at Rs.6.90, 5mn shares of Dialog Axiata Rs.9.50 and 0.9mn shares of Commercial Bank at Rs.115.50 changed hands in off-the-floor deals.
Top contributors to the turnover were Aitken Spence (Rs.1.0bn), Commercial Bank (Rs.153mn) and Piramal Glass (Rs.76mn). Retail activity was seen in counters such as Janashakthi Insurance, Regnis Lanka and Overseas Realty. Janashakthi Insurance (Rs.14.10,+12.8%) and Overseas Realty (Rs.17.00,+6%) reached 52 week high on better-than-expected earnings. JINS quarter profits increased by almost 7 times compared to the same quarter last year.
Cash map for today was 55%.
Foreigners were net buyers with an inflow of Rs.85mn. Foreign participation accounted for 66% of the turnover. Net inflow was seen counter such as Piramal Glass, Dialog and John Keells while outflows were recorded in Commerical Bank and Environmental Resources.
Wednesday, 15 May 2013
Quote for the day
"The turn of the cycle has created some tough choices. Warren Buffett has said, ‘You don't know who is swimming naked until the tide goes out.’ " - David Einhorn
LSL Market Review 15th May 2013
Market ended with mixed results today. Most of the banking sector counters excluding Hatton National Bank and Seylan Bank witnessed drop in prices such as Commercial Bank by LKR 1.10, Sampath Bank by LKR 2.00, and National Development Bank by LKR 4.10. Investor interest were gathered around Motor sector stocks such as motor sector counters such as Colonial Motors (up by LKR 9.90), United Motors (up by LKR 5.40) and Diesel & Motor Engineering (up by LKR 4.60).
ASI advanced by 14.53 index points to close at 6,221.12 while S&P SL 20 Index dropped by 2.16 points to close at 3,498.34.
Total market turnover was LKR 1.7bn. Top contributors to the turnover were John Keells Holdings by LKR 443.4mn, National Development Bank by LKR 379.4mn and United Motors by LKR 123.8mn. In terms of sectors Bank Finance Insurance, Diversified Holdings and Motors sectors emerged as notable contributors to the daily turnover. Several crossings were made by top three contributors to the turnover aw well by Cargills Ceylon and Sampath Bank. Aggregated value of the crossings accounted for 54% of the market turnover.
Further, apart from the motor sector stocks Regnis Lanka, PC House and Piramal Glass were among the mostly traded stocks during the day. Foreign participation accounted for 39% of the total market activity. At the end of the day foreign investors were net buyers with a net foreign inflow of LKR 859.9mn. Cash map closed at 54.7%.
Tuesday, 14 May 2013
The Magic of Dollar Cost Averaging
Dollar Cost Averaging
It’s always been the same; it never changes. We can remember back in the 1970’s talking to brokers who would buy a stock for a client, and the stock would fall out of bed. If it still made sense to own the stock, the broker would tell the client to average down. So let’s take a hypothetical example. Your broker buys you a thousand shares of AT & T at $ 50 per share. The stock then goes to $ 20 per share. He tells you to buy another thousand shares at $ 20. Your average cost basis is now $ 35 per share. $ 35 is still one hell of a ways from the current price of $20. It looks like this:
Simple Averaging
1000 shares ATT @ $50 per share = $ 50,000
1000 shares ATT @ $20 per share = $ 20,000
Total Cost $ 70,000
Average Cost ($70,000/2000 shares) $ 35 per share
After 30 years we can tell you that this is not the way to average your cost. The mistake that brokers make is that they have you buy the same number of shares at each price level. The magic of dollar costaveraging is that you put in the same number of dollars as your original investment at lower price levels. In the example above instead of buying a thousand shares at $20 per share, you would be buying $ 50,000 worth of ATT at $ 20 per share. $50,000 worth of ATT at $ 20 per share is equal to 2500 shares. Let’s take the example above.
Dollar Cost Averaging
1000 shares ATT @ $50 per share = $ 50,000
2500 shares ATT @ $20 per share = $ 50,000
Total Cost $ 100,000
Average Cost ($100,000/3500 shares) $ 28 per share
Instead of generating a cost basis of $ 35 per share, you now have a cost basis of $ 28 per share. This is a very important concept we are pointing out to you. If you want to see this concept work big time, then let’s look at Lucent Technologies. The stock is down from $ 84 per share. Let’s say you bought 1000 shares at $ 80 per share. Your cost for the 1000 shares would be $80,000 The stock then went to $ 5 per share. Using dollar cost averaging, you would buy $ 80,000 worth of Lucent at $ 5 per share. That’s 16,000 shares folks. Look at the example below to see your new average cost.
Using Simple Averaging
1000 shares Lucent @ $80 per share = $ 80,000
1000 shares Lucent @ $5 per share = $ 5,000
Total Cost $ 85,000
Average Cost ($85,000/2000 shares) $ 42.50 per share
Using Dollar Cost Averaging
1000 shares Lucent @ $80 per share = $ 80,000
16000 shares Lucent @ $5 per share = $ 80,000
Total Cost $ 160,000
Average Cost ($160,000/17,000 shares) $ 9 per share
As you can see, if you used simple averaging which is what 99 percent of the brokers in Americarecommend, then your average cost is $ 42.50 per share. On the other hand if you employ Dollar CostAveraging, you bring your Average cost down to $ 9 per share which is very close to the actual low of $ 5 per share.
There are a couple of things you have to think about before you utilize this concept in your investment thinking. They are:
You better be sure that this stock is coming back, or you will get your clock cleaned.
You have to be absolutely comfortable with your knowledge base concerning the stock in question, or you will be scared out at the bottom. This means you will be selling, instead of buying the stock.
You have to have the cash to play in this arena. This is why you never ever go on MARGIN. Margin kills
As part of point (3) above, always keep some dollars in reserve.
Here’s to your success, now and in the future. And remember to use Dollar Cost Averaging.
Source:http://www.stocksatbottom.com/dollarcost.html
It’s always been the same; it never changes. We can remember back in the 1970’s talking to brokers who would buy a stock for a client, and the stock would fall out of bed. If it still made sense to own the stock, the broker would tell the client to average down. So let’s take a hypothetical example. Your broker buys you a thousand shares of AT & T at $ 50 per share. The stock then goes to $ 20 per share. He tells you to buy another thousand shares at $ 20. Your average cost basis is now $ 35 per share. $ 35 is still one hell of a ways from the current price of $20. It looks like this:
Simple Averaging
1000 shares ATT @ $50 per share = $ 50,000
1000 shares ATT @ $20 per share = $ 20,000
Total Cost $ 70,000
Average Cost ($70,000/2000 shares) $ 35 per share
After 30 years we can tell you that this is not the way to average your cost. The mistake that brokers make is that they have you buy the same number of shares at each price level. The magic of dollar costaveraging is that you put in the same number of dollars as your original investment at lower price levels. In the example above instead of buying a thousand shares at $20 per share, you would be buying $ 50,000 worth of ATT at $ 20 per share. $50,000 worth of ATT at $ 20 per share is equal to 2500 shares. Let’s take the example above.
Dollar Cost Averaging
1000 shares ATT @ $50 per share = $ 50,000
2500 shares ATT @ $20 per share = $ 50,000
Total Cost $ 100,000
Average Cost ($100,000/3500 shares) $ 28 per share
Instead of generating a cost basis of $ 35 per share, you now have a cost basis of $ 28 per share. This is a very important concept we are pointing out to you. If you want to see this concept work big time, then let’s look at Lucent Technologies. The stock is down from $ 84 per share. Let’s say you bought 1000 shares at $ 80 per share. Your cost for the 1000 shares would be $80,000 The stock then went to $ 5 per share. Using dollar cost averaging, you would buy $ 80,000 worth of Lucent at $ 5 per share. That’s 16,000 shares folks. Look at the example below to see your new average cost.
Using Simple Averaging
1000 shares Lucent @ $80 per share = $ 80,000
1000 shares Lucent @ $5 per share = $ 5,000
Total Cost $ 85,000
Average Cost ($85,000/2000 shares) $ 42.50 per share
Using Dollar Cost Averaging
1000 shares Lucent @ $80 per share = $ 80,000
16000 shares Lucent @ $5 per share = $ 80,000
Total Cost $ 160,000
Average Cost ($160,000/17,000 shares) $ 9 per share
As you can see, if you used simple averaging which is what 99 percent of the brokers in Americarecommend, then your average cost is $ 42.50 per share. On the other hand if you employ Dollar CostAveraging, you bring your Average cost down to $ 9 per share which is very close to the actual low of $ 5 per share.
There are a couple of things you have to think about before you utilize this concept in your investment thinking. They are:
You better be sure that this stock is coming back, or you will get your clock cleaned.
You have to be absolutely comfortable with your knowledge base concerning the stock in question, or you will be scared out at the bottom. This means you will be selling, instead of buying the stock.
You have to have the cash to play in this arena. This is why you never ever go on MARGIN. Margin kills
As part of point (3) above, always keep some dollars in reserve.
Here’s to your success, now and in the future. And remember to use Dollar Cost Averaging.
Source:http://www.stocksatbottom.com/dollarcost.html
Monday, 13 May 2013
Quote for the day
“As long as you enjoy investing, you’ll be willing to do the homework and stay in the game” – Jim Cramer
LSL Market Review 13th May 2013
Colombo Bourse snapped the impressive seven-day winning streak and closed lower today on profit-taking. ASI closed at 6,239.03 down by 10.97 points (-0.2%) while S&P SL 20 index closed at 3,518.85 down by 12.05 points (-0.3%). The turnover for the day was Rs.535mn.
John Keells Holdings became the top contributor to the turnover (Rs.124mn) followed by Softlogic Holdings (Rs.28mn) and Vallibel One (Rs.21mn). JL Morisons was the star performer today as acquisition rumors pushed the share up by 21% to Rs.295.00. Morisons non-voting share closed at Rs.198.00 with a gain of 40%.
Furthermore, investor interest was seen in counters such as Softlogic Holdings (Rs.12.30,+2.5%), Union Bank (Rs.20.80,+6.7%) and Vallibel One (Rs.20.40,-1.0%).
Cash map for today was 52%.
The net foreign inflow was Rs.153mn. Foreign participation accounted for 19% of the market activity.
John Keells Holdings became the top contributor to the turnover (Rs.124mn) followed by Softlogic Holdings (Rs.28mn) and Vallibel One (Rs.21mn). JL Morisons was the star performer today as acquisition rumors pushed the share up by 21% to Rs.295.00. Morisons non-voting share closed at Rs.198.00 with a gain of 40%.
Furthermore, investor interest was seen in counters such as Softlogic Holdings (Rs.12.30,+2.5%), Union Bank (Rs.20.80,+6.7%) and Vallibel One (Rs.20.40,-1.0%).
Cash map for today was 52%.
The net foreign inflow was Rs.153mn. Foreign participation accounted for 19% of the market activity.
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