Pick details

This pick was posted on: Friday by MoneyVidya.com member ‘Vicky’. The price of the scrip when this was posted was Rs. 44.5 and the latest price is 49.10 - indicating a gain of over 10%. The timeframe of this pick is 2 years. Vicky has indicated a target price of Rs. 80 and a stop loss of Rs. 20.

Analysis (Verbatim):

I think that as terrorism rises, people are going to become more insecure and paranoid. With the most recent (and ongoing) terror attacks in Mumbai - possibly the worst that India has ever seen - and the relatively poor handling of the same by government agencies / national security forces, people are going to increasingly take security and safety into their own hands.

The other thing that is quite different about these attacks is that they have struck the hearts and minds of the more affluent classes of Mumbai and indeed the rest of India. As a result, I think that Zicom’s ability to sell its security systems, not only to Corporate offices Read the rest of this entry »

Analysts blame the high interest rate environment on the poor results. Some 70% of car sales are financed, and high interest rates make it more expensive to take out loans to pay for their car purchases. The small car segment is thought to be more sensitive to interest rate fluctuations, as the middle class families that buy from this segment cannot afford to make outright purchases.

I largely agree with the rationale presented above. However, the high interest rate environment should have had an equally damaging effect on Hyundai’s sales as well. Even if you take into account that Hyundai’s August 2007 base of 16,000 cars was lower than Maruti’s base of 60,000 cars – you cannot explain away such a dramatic a dramatic difference in results.

The reason for Maruti’s poor performance goes beyond the interest rate environment. Since the Swift Maruti hasn’t had any new launches of note. Moreover, its marketing has been limited and unfocussed. Its strategy of driving sales through schemes in the rural and semi-urban segment – although intuitively appealing (tap into less served segments) – failed to provide results. The likely reason is that households in these regions, who have fewer financing options, are even more interest rate Read the rest of this entry »

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I believe that retail investors – that is those of us that invest in the stock market – have the odds stacked pretty heavily against us. The biggest one really being that we’re pitted against large institutions – people who have had far greater resources in terms of research and analysis, and indeed training in high finance.

Even if we did have all the resources, and the knowledge, we just wouldn’t have the time. The guys working for large investment banks, literally do this for a living, and many retail investors – well, don’t. We have day jobs – and most of us cannot watch the trading screen and read research papers all day.

Despite being aware of these facts, we continue to choose to invest directly. Why? Because of the allure of high returns, the thrill of picking the right stock, and the excitement of watching our stock move in the right direction. Moreover, we like being in control of our own finances.

One keeps hearing all sorts of anecdotal statistics from various studies – one revealed that over a decade, only 20% of asset managers managed to beat the S&P 500. One can react to this statistic in two ways: either the retail investor thinks to himself that if sophisticated financial analysts have such a poor record, they don’t stand a chance.

Alternatively, they might think to themselves that the belief that ‘investing is best left to professionals’ is false. I tend to agree more with this view. If anything, statistics such as these should only serve to further encourage retail investors to participate more actively in the market. If professionals have such a poor success rate, we might as well give it a shot ourselves Read the rest of this entry »