Sri Lankan rupee falls to near 7-mth low; depreciation pressure persists

COLOMBO, June 24 (Reuters) - Sri Lanka's rupee hit a near seven-month low on Monday, before a state-controlled bank intervened to stabilise the currency, dealers said, amid continuous depreciation pressure due to dollar demand from importers and foreign investors who are exiting in the wake of rising U.S. treasury yields.

The lowest trade was at 129.00 per dollar, dealers said, before the currency closed at 128.90/129.00, edging down slightly from Friday's close of 128.90/95.

Two dealers said one of the two state-run banks, through which the central bank usually directs the market, sold dollars to ease depreciation pressure.

Dealers said some foreign investors also booked forwards to hedge their exposure, tracking foreign outflows in other Asian peers.

'The rupee is going to remain under pressure until the U.S. treasuries settle. Until such time we are going to see a highly volatile rupee,' a currency dealer said on condition of anonymity.

The rupee fell 0.33 percent last week, after losing 1.6 percent in the week previous to that, which currency dealers attributed to foreign investors selling debt as part of a broader selloff in emerging markets.

Foreign investors have been shifting to treasury bills while selling longer tenure T-bonds, the latest central bank data showed on Friday, as a rise in U.S. treasury yields has prompted many offshore investors to rush to the exits.

The local currency has weakened 1.1 percent so far this year, following a 10.7 percent depreciation in 2012 as the central bank opted for a flexible exchange rate regime in February 2012.

The central bank on Monday shrugged off the likelihood of fresh pressure on the rupee, despite the widening of the trade deficit in April.

Sri Lanka's main stock index edged down to a seven-week low with turnover slumping to a six-month low with some retail investors taking profits.

The bourse ended 0.1 percent, or 5.89 points, weaker at 6,149.38, its lowest since May 6 on concerns of a possible pullout by more foreign funds.

The market witnessed net foreign inflows of 47 million rupees ($364,800) on Monday in low foreign activity, extending net foreign buying in shares to 16.25 billion rupees so far this year.

The day's turnover was at 201 million rupees, its lowest since Dec. 24, a fifth of this year's daily average of 1.02 billion rupees.

($1 = 128.8500 Sri Lanka rupees)http://www.xe.com/news/2013/06/24/3409941.htm

Quote for the day

“The market, like the Lord, helps those who help themselves. But like the Lord, the market does not forgive those who know not what they are doing.” - Warren Buffett

24-Jun-2013 CSE Trade Summary

 

24/06/2013Top 10 Contributors to Change ASPI

Following Stocks Reached New Low on 24/06/2013

Quote for the day

“A guru or analyst might have to stick to his opinion, but a trader should not have an opinion at all. The stronger your opinion is, the more problems one has when it’s time to close a losing position.”- Paul Rotter

Investment wisdom and intelligent investor

There is no doubt that some people simply are better at playing the role of a stock market investor than others. When talking about somebody who has successfully worked his way through investing in the stock market, it is never a matter of luck but rather certain personal characteristics that decide how successful they are. While the best investors seem born with all the right characteristics, it is possible to discover and implement them yourself. Believe it or not, much of what you need to know is just stock market investing basics.

These timeless bits of investment wisdom are as true today as they were 100 or 1000 years ago and we think they will still be true 100 years from now. People who follow these simple common sense ideas will be far ahead of those who do not. Most people who get into trouble financially have broken one or more of these rules. It is amazing how often smart people continue to make the same financial mistakes.

* Don’t buy anything you don’t understand. Keep it simple. Be wary of expensive, illiquid, non-transparent and complicated investments. Complex investments are almost certainly designed in favour of the seller, not the investor

A big part of the success of your investment depends on you knowing exactly what you’re investing in. It sounds obvious, but many people make the mistake of investing in something they don’t understand

* Minimize your investment costs and taxes.

* You should never invest in a company without knowing where it’s coming from, where it’s going, how their products stack up against competitors. It is also important to know how that particular market is doing in general. Ultimately, you are putting your faith in a company that will make you money over some period of time, but it does not have to be based on complete blind faith. Do your research and make an informed investment.

* If it sounds too good to be true, it probably isn’t true.

* Invest for the long-term, and keep your portfolio turnover low. Those who get greedy and try to “get rich quick” usually “get poor quick.” Investing isn’t supposed to be exciting. The stock market is not a place to get rich quickly. Sometimes, it’s a “three steps forward, two steps back” kind of environment.

In the long-term, the best value investments show the most promising returns. Essentially, Warren Buffet-style deep-value investing does very well over the course of years and perhaps decades. However, in the short-term, the market is highly emotional and psychological. The price of a share of stock is just as influenced by how popular the stock is among traders, margin calls and the like.

You don’t want to be too overleveraged and find yourself whipped out because the market becomes irrational for a week. This all goes back to managing risk. You have to remember that the price of a given stock on any given day can be influenced by just about anything, so you don’t want to hurt yourself due to the short-term irrationality of others.

* The key is to always have a plan when you invest. Before you do anything, you need to know when you will purchase stock and when you want to sell. Equally important is knowing what you will do should things go wrong. And most importantly, you always need to know what your ultimate goals are and be sure that all your investment roads lead to that end.

* Pay as much attention to risk as you do to potential return. Be sure you can handle the risk of your portfolio in a downturn.

A major part of investing is managing risk. In general, more risk equals more return, but more risk also means more variance. Understanding how much risk you are taking when you invest and understanding your own personal risk tolerance are very important. First, you need to understand how much risk you are taking. If you are buying stocks on margin, you need to understand that you are significantly taking on considerable risk. This may or may not be for you, depending on your risk profile. In general, the younger you are, the more risk tolerant you should be.

* If you don’t know what the market is doing right now, you have no business investing in it. Everybody pretty much has the same information, but everybody interprets that information a little different, which is where some investors succeed where others fail. The key is to find information that is as unbiased as possible and milk it for everything it is worth.

* Save more, spend less. Save at least 10%-15% of your income each year. Live below your means. Build a financial safety cushion.

* Own a diversified portfolio with many different asset classes and investments.

Diversification is often touted as the only “free lunch” in stock investing. This is because you can mitigate sector risks by investing in a variety of companies. You don’t have to worry about a collapse of one sector because your portfolio is diversified among a few sectors.

Proper diversification is important for most individual investors. But there is such a thing as becoming too diversified. There is no need to invest in all 20 Business Sectors for example.

* Invest with people you know and trust. Look for independent, objective, experienced advice.

* Avoid the most popular investments, as they are likely fully priced. Past performance is not a guarantee of future investment returns. Don’t simply buy the investments that have done the best recently. Invest where no one else is waiting in line to buy.

* Don’t invest money you will need in 3-5 years or less in volatile investments.

* Don’t let your emotions affect your portfolio. With investing your worst enemy is likely to be you and your emotions. Studies have shown that the average investor earns about half the returns of the overall market over time due to poorly timed trading. Have an investment strategy and plan and stick to it.

* Don’t try to “time the market.” It’s “time in the market” that counts.

* Rebalance your portfolio by buying low and selling high. This is easy to say, but very difficult for most people to do in real life. Most investors actually do the opposite.

* Avoid debt and leverage.

* Using unbiased information is useless unless you are going to be equally unbiased. Do not allow past exploits and failures get you down or hold you back. And, you cannot allow success to sway you either. Just because you made a decent bank on a particular investment from ten years ago, is no reason to continue putting up your money for them. It is also no reason to be getting headstrong and overly confident about your investment practices.

* You must also be realistic. No investor is going to strike it rich right away and no investor is going to have a perfectly flawless track record. Understand that sooner or later, you’re going to lose a little money. But if you follow the first four steps of this guide, combined with a little common sense, you can minimize how much that loss is and go on to reap greater rewards.

A good investor
* A good investor takes (and is able to take) advantage of the hidden opportunities for portfolio growth uniquely available in a difficult/down/risk-off market.

* A good investor makes investment decisions that are aligned with the methodical, objective and long-term strategic plan designed specifically for the investor’s unique goals and expectations — regardless of any intermittent or unexpected external forces introduced into the market equation.

* A good investor takes the time to identify financial objectives, risk tolerance and time horizon factors in order to devise a comprehensive investment plan. This information, along with academically validated principles and diversified asset class weightings, is integrated into a well-designed, thoughtfully engineered long-term portfolio strategy.

* A good investor is able to maintain investment discipline in the face of difficult times and worrisome short-term performance returns. The good investor does not allow emotion to override reason as that could prompt reactions that are counter-intuitive to long-term investment success.

* A good investor understands and accepts that realizing measurable return over time requires investing in the stock market. And that part and parcel with the stock market come volatility and risk. The good investor is also cognizant of the fact that, while stock market performance will wax and wane periodically, its overall historical performance has continued to progress ever upward.

* A good investor reaches established long-term financial goals through a solid understanding of how the market works, the role that calculated risk plays in incremental return, the reasons for maintaining a long-term buy-and-hold investment strategy and the life-long importance of ‘planning the work and then working the plan.

(Sources: Securities and Exchange Commission of SriLanka, http://EzineArticles.com; http://www.finweb.com; http://blog.merceradvisors.com; http://www.the-stock-investor.com)
http://dailymirror.lk/business/features/19493-investment-wisdom-and-intelligent-investor.html

Country Stock Market Performance

FRIDAY, JUNE 21, 2013 AT 01:32PM
Below is an updated look at the year-to-date performance of 77 country stock markets around the world. After the pullback we've seen over the past few weeks, the average country is now up just 3.55% in 2013. A total of 49 countries remain in the green for the year, while 28 are in the red. As shown, Dubai and Abu Dhabi lead the way with gains of 45.49% and 38.07%, respectively.

Japan is still up the most of the G7 countries at 27.27%, but keep in mind that this doesn't take into account the fall in the Yen. In dollar terms, Japan is up 13%. The US is up the second most of the G7 countries with a gain of 11%, and then there is a big drop-off. The UK is up the 3rd most at 3.7%, followed by Germany (+2.32%) and France (0.47%). Canada and Italy are now down on the year.

Obviously some of the emerging markets have been getting crushed lately, especially the BRICs. As shown, Russia is now down 18%, while Brazil is down 22%. Let's see if they finally get a bounce next week.
http://www.bespokeinvest.com/

13 Things I Learned About Humans and the Financial Markets

01. Predictions do not work as tomorrow is uncertain. We will only boast about things we have predicted right and talk nothing about the other half we got wrong.

02. Skills can bring us moderate success. However, luck is needed to be a big success. (credit to Jon)

03. We tend to credit our successes to good skills and blame our failures on poor luck.

04. Some of us rely on luck (most unknowingly) by investing for high returns (and losses). A few of us will make big money but most of us will end up much poorer.

05. Some of us deliberately limit the luck factor by choosing investment products with capital guarantee and guaranteed returns. None of us will make big money but none of us will be very much poorer.

06. We need to know how much we can afford to lose (financially and emotionally) before deciding to be No. 4 or No. 5, or somewhere in between.

07. We have many biases. The degree of success in investing or trading depends on how much we can keep our biases in check. No, we cannot remove our biases totally.

08. Confirmation bias – we see what we want to see. We seek out evidence to validate our investment decision and ignore those that suggest otherwise.

09. Availability bias – we are influenced by the things we observe. If people we knew made a lot of money through property investment, we will think that properties are the best investments in the world and develop a preference for it.

10. Loss aversion bias – we want to be compensated for high returns before we decide to take the risk to invest. We often wait for markets move and show high returns before we want to invest. We are not interested if markets are not moving.

11. Hindsight bias – we tend to say “I knew it” after an event has happened.

12. Survivor-ship bias – we only get to hear stories of successes but many stories of failures were untold. See No 2 and No 3.

13. Most us do not know what we want in life. We think we will be happier with more money.
By Alvin
http://www.bigfatpurse.com/