Monthly Archives

July 2012

Investing in Equity during Margin Of Safety (MOS) in the Stock Market

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Question: As advised by you on investing in Equity at one shot/ lump sum, we are strictly following the ‘Margin of Safety’ (MOS) concept given by world’s best equity investment thinker and Investment Writer, Mr. Benjamin Graham who is also the Investment Guru of Legendary Investor of the century Mr. Warren E Buffett. The Principle of MOS says that, in India to invest in equity at one shot/ lump sum, the major index (Sensex/Nifty) must be at least below 25% from the historic peak and also PE Ratio of the major index (Sensex/Nifty) must be below 20. Needless to say that, Equity Investment Time Horizon is at least 5 years and above.

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The Client’s investment objective is important, not the client’s fancy!

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Question: I need Rs. 60,000/- exactly after 3 years. So I would like to invest Rs. 1,700/- (Rs. 60,000/36 months = Rs. 1,667/- pm rounded off to next hundred). My assumption is that, even if my monthly investment of Rs. 1700/- did not even grow at all for the next 3 years, still I will be having Rs. 60,000/- intact.

So I also would like to have equity exposure to my investments. Hence, I would like to invest either in HDFC Prudence Fund or HDFC Balance Fund?

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Belief System

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Question: Your email tied in to a set of discussions I’ve been having recently on the importance of people in our business to have, what I call a “professional belief system”, a set of beliefs that define our professional conduct and our business decisions. In fact I’ve put together a small presentation which I call “Building a Belief System” (see attached). In these discussions, and in this presentation, one of the points I make is that the quality of beliefs depends upon the quality of what we read, hear and experience, and above all, the quality of our analysis of what we have read, heard and experienced.

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