Who are smart investors?
There is always some degree of uncertainty that investors face continuously while dabbling in stocks and shares. But the key factor that sets apart smart investors from the rest is their ability to consistently make superior decisions amid those uncertain conditions. One needs to first define, recognize and understand the various dimensions of uncertainty to be able to cope with it. Global management consultant firm McKinsey & Company has come up with an interesting four-level format to identify such dimensions.
Identifying uncertainty:
Initially, the uncertainty variable in relation to investments bearing yields is relatively low. The future is relatively clear and it is enough if one can effectively deal with a single uncertain variable. The next stage requires the ability to cope with different views of the future but the choices are limited, separate and quite easily defined.
The third stage is where the uncertainty levels are more as a significant number of key interrelated variables are involved. The final stage is a perfectly confusing environment wherein one has to constantly learn and show great alertness, because of the fact that it is almost impossible for the human mind to anticipate enough of the future in advance.
A McKinsey & Co. report maintains that while dealing with the first stage-like situations, an investor must assess accurately how much he can actually foresee. Once he comes to terms with the limits of what he knows, the best move would be to assess a range for the unknown outcome and ascertain his level of confidence with the given range. In the second stage, one should have multiple views of the future by acknowledging the uncertainties involved instead of searching for a single 'most certain' outcome.
The last two stages are tough to tackle because of the high level of complexity involved. Careful planning and a disciplined approach that would assist in foreseeing the various possible outcomes is an analytical technique that is widely used.
Source:- IIFL
Retail or small investors are individuals who buy and sell shares for their personal use and not for another company or organization. They also buy stocks in much smaller quantities compared to institutional investors. Some investment vehicles such as securities and derivatives require minimum investments for dissuading retail investors from dabbling in them. However, it remains a matter of debate that most retail investors are averse to taking risks and poorly informed compared to other investors.
What are the categories of Retail Investors?
Retail investors can be divided under two categories of share ownership.
A beneficial shareholder
A beneficial shareholder is a retail investor who places shares of their securities in a bank's account or in the account of a stockbroker. The broker holds the securities on behalf of the underlying shareholder.
A registered shareholder
A Registered Shareholder is a small investor who holds shares directly through the issuer or its transfer agent. Many such shareholders possess copies of their stock certificates.
Furthermore, retail investors can also avail of the advices offered by financial services firms to a large extent while making their investment decisions.
Odd-lot theory
Retail investors who deal in fewer than 100 shares at a time are termed as odd-lotters in technical analysis. Such investors are thought to be both badly informed and averse to taking risks. It is hence believed that a significant investor could profit if he did just the opposite of what the odd-lotters were doing. For instance, if a technical analyst observes that a huge number of odd-lotters were selling a particular security, he could take this as a cue to buy more of that security.
The theory was quite prominent in the 1960s and 1970s, but fell out of favor due to lack of evidence that the investments of odd-lotters underperformed in the market in general. The growth in popularity of mutual funds among retail investors during the 1990s made the odd-lot theory redundant.
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Tata Consultancy Services (TCS) today reported a net profit of Rs. 26.23bn, up 10.7% over the preceding quarter under the Indian GAAP.
The Q4 FY11 revenues stood at Rs. 101.57bn, up 5.1% as against the previous quarter.
The Profit Before Tax (PBT) was at Rs. 28.77bn, up 6.3% Q-o-Q. PBT Margin stood at 28.3%, up 31 basis points QoQ.
The Q4 FY11 saw a volume growth 2.9% Q-o-Q.
The net profit margin were at 25.8%, up 130 bps QoQ.
The net employee addition in the fourth quarter was 11,700 while the gross employee addition was at 19,324.
The EPS for the fourth quarter was Rs. 13.41 as against Rs. 12.08 last quarter.
The Company has posted a net profit of Rs. 90.68bn for the year ended March 31, 2011 compared to Rs. 70bn for the year ended March 31, 2010.
Revenues for the year 2010-11 rose by 24.3% to Rs. 373.25bn.
The PBT for the year as a whole was at Rs. 104.17bn, up 29.9% YoY. PBT Margin stood at 27.9%, up 122 bps YoY.
FY11 saw a volume growth 29.7% YoY.
The net profit margin were at 24.3%, up 98 bps YoY.
The net employee addition in the year 2010-11 was 38,185 while the gross employee addition was at 69,685.
The EPS for FY11 was Rs. 46.27.
Meanwhile, the shares of TCS ended at Rs 1,191.65, down Rs. 27 or 2.2% over the previous close.
Reliance Industries reports a net profit of Rs. 53.76bn for Q4 FY11 versus Rs. 47.10bn in the same period last year.
Net sales for the reporting quarter stood at Rs. 726.74bn versus Rs. 575.70bn in the same quarter last year.
The Gross Refining Margins (GRM) for the quarter stood at US$9.2 per barrel as against US$9 per barrel in the previous quarter.
Q4 EBIDTA Margins stood at 13.54% as against 15.86% in the corresponding quarter last year.
Q4 Earnings Per Share (EPS) stood at Rs. 16.40.
Reliance Industries has posted a net profit of Rs. 202.86bn for the fiscal year ended March 31, 2011 compared to Rs. 162.36bn in the previous fiscal year.
Reliance Industries FY11 net sales stood at Rs. 248,170 crores versus Rs. 192,461 crores in FY10.
GRMs for FY11 stood at US$8.4 per barrel.
Earnings Per Share (EPS) for FY11 stood at Re 62.
Yes Bank has reported a net profit of Rs 2.03bn for the quarter ended March 31, 2011 as against Rs 1.4bn in the same quarter a year ago.
Net Interest Income stood at Rs 3.49bn in the reporting quarter as against Rs 2.44bn in the corresponding period a year earlier.
Source:- IIFL
Silver prices continued to surge ahead, touching a new record high for a third successive day due to a combination of safe haven buying and industrial demand. The white metal touched a 31-year high in the overseas market.
At the same time, gold prices rose to all-time high for the second consecutive day amid lingering geopolitical risks in the MENA region, eurozone sovereign debt problems, rising inflation, weaker dollar and spurt in oil prices.
In the domestic market, spot silver increased by Rs 900 to an all-time high of Rs 58,400 per kg. Weekly-based delivery rose by Rs 715 to Rs 57,815 a kg.
Similarly, gold of 99.9% and 99.5% purity jumped by Rs 150 to Rs 21,300 per 10 grams and Rs 21,180 per 10 grams, respectively.
In the international bullion market, spot gold rose by as much as US$3.35, or 0.2%, to an all-time high of US$1,459.07 an ounce. It was nearly flat at US$1,455.82 an ounce by 10:09 a.m. in London.
Gold for June delivery in New York rose 0.3% to US$1,456.50 an ounce after reaching a record US$1,460.20 earlier today.
The dollar declined as much as 0.6% against the euro, touching its lowest level in more-than 14 months ahead of Thursday's ECB policy meeting. The eurozone central bank is likely to increase its main interest rate by 25 basis points to 1.25%.
The sovereign-debt crisis in Europe deepened after Moody's Investors Service cut Portugal's credit rating. Moody's downgraded Portugal's long-term government bond ratings by one level to Baa1 from A3, and said it was considering another reduction.
China raised its key lending and deposit rates yesterday for the fourth time since mid-October to rein in spiraling consumer prices.
Federal Reserve Chairman Ben S. Bernanke said on Monday that inflation must be watched closely and FOMC last month debated when to exit from the current stimulus.
Spot silver was little changed at US$39.3075 an ounce after earlier today climbing to US$39.5013, the highest level since February 1980.
Gold held in exchange-traded products rose 1.51 metric tons to 2,030.27 tons, according to media reports. Holdings reached a record 2,114.6 tons in December.
Silver ETP assets were unchanged at 15,395.52 tons.
Mahindra & Mahindra (M&M) said on Friday that total sales in the automotive segment in March 2011 stood at 37,522 units vs 31,698 units sold in the same month last year.
