Ethical Investment

Refresh your Investment methods with new technology:" VIP"

2011-10-01T11:41:00.000-07:00

“SIP” vis-a-vis “VIP”

Dear Friends, here I am presenting you a new and superb kind of investment technology called VIP, which means “Value averaging Investment Plan”. We have been doing SIPs in the past which definitely is better form of investment method for quite some time now. While SIPs has been explained in details in my earlier blog, here I will dwell upon VIP:

VIP is slightly different form of investment which means we put higher amount of money when the markets are low and lower amount of money when markets are high. It suffices the basic tenet of investment in stock market which is “Buy low and sell high”. It takes care of the upsides and downsides by adjusting the risk percentage itself. VIP gives you better returns in comparison to SIP and the returns can be outnumbered by huge margins in times of higher volatilities which we are witnessing these days.

Methodology of Investment in VIP: Here we take a fixed amount for investment every month akin to SIP but simultaneously we add the loss value to the portfolio in case of falling market which has happened after a fixed time say a month, or decrease the amount of investment in case of rising market. To quote an example we take an investment of Rs.5000 on 1^st day of every month, in SIP we will keep on investing this Rs.5000/- every month but in VIP we will increase the investment by calculating the loss that has occurred due to falling market , lets take the value of our loss in next month is Rs.1500/-then our investment will be Rs. 6500/- (ie 5000 actual+1500 loss figure), similarly if the market goes up following month and if our investment becomes Rs. 6500/- then we will invest only Rs. 3500/- thereby decreasing our investment.

Here the ideology of value averaging comes into play and your investment gives best returns in comparison to the benchmarks like Nifty or Sensex. You shelve the fear and see how your investment grows over a period of time. I have explained in detail by quoting a example in the following table:

Investment Analysis on SIP vis-à-vis VIP

Day	NAV	SIP Amount	SIP Units	Amout diff for VIP	VIP amount	VIP Units

01-Jan	15	5000	333.33	0.00	5000	333.33
01-Feb	12	5000	416.67	-1000.00	6000.00	500.00
01-Mar	10	5000	500.00	-1666.67	6666.67	666.67
01-Apr	9	5000	555.56	-2000.00	7000.00	777.78
01-May	7	5000	714.29	-2666.67	7666.67	1,095.24
01-Jun	9	5000	555.56	-2000.00	7000.00	777.78
01-Jul	11	5000	454.55	-1333.33	6333.33	575.76
01-Aug	12	5000	416.67	-1000.00	6000.00	500.00
01-Sep	15	5000	333.33	0.00	5000.00	333.33
01-Oct	17	5000	294.12	666.67	4333.33	254.90
01-Nov	19	5000	263.16	1333.33	3666.67	192.98
01-Dec	22	5000	227.27	2333.33	2666.67	121.21

Total		60000	5064.49		67333.3333	6,128.98

Avg Cost			11.85			10.99

CMV			111418.79			1,34,837.58

% Return			185.70			200.25

Here you can yourself see the difference in returns in both the methods. The principle of VIP is far superior than the principle of SIP. So friends don’t loose time on inaction and call your Investment Advisor to make use of this Investment Technology to your advantage.

Efforts to continue to bring new ideas and methods for your advantage.............

Thanks

Nitin Kumar

Ethical Investment Solutions Pvt. Ltd.

Investment case in current Stock Market scenario

2011-09-02T08:04:00.000-07:00

Investment as the word discloses, is myriad of confusions and dissimilarities across times. What we are witnessing is complete chaos created by these politicians just to save their face and onslaught of public outcry. The downgrading of US has cast aspersions on debt papers too. Now biggest question which comes to mind is where to Invest ? Stocks are tumbling, properties are stagnant or receding, gambling is also fraught with peril. When I ask people of their views on stock market, they speak in petrified emotions and are reluctant to put single farthing in it. They fear erosion of their wealth. I witnessed same emotions in them in year 2006 and 2008 market crash.

What we generally see is aftermath of certain assumptions of big guys like FIIs or other Institutional Investors which they comprehend much before its actual arrival. So in effect markets can remain in bearish mode for quite long time. The bearishness seeps in everybody's mind and those who don't have longer outlook tend to cut their losses and repeat the same thing time and again. Human's memory is too short and those who are smart take benefit of this emotional trait. No body can time the market, barring exceptions, to make killing of sort in this market.

Making money in stocks is basically taming your emotions and overcoming your inherent fear which always holds your mind to act wisely.

Dear friends if you really want to grow rich and enjoy the fruits of market then you have to be patient and alert as well. Go for investment in this kind of bearish market and believe me you can make a killing after certain years. The basic approach here should be Systematic Investment wherein you can buy stocks of equal value after certain time say after 30 days or 15 days. This method definitely earns handsome returns over a period of time and your lesser attention is required. Not taking decisions or delaying it will not yield you anything except frustration and lost opportunities. You commitment and time investment will earn you returns which may outnumber any other form of investment in coming years. India is a population of around 120 crore people, the story of consumption which has been in media for quite a few years still holds good and its a boon for our growing economy as well.

Don't hesitate if you want to make money !!! Your action alone can bring fortune to you. Happy Investing!!!

Thanks

Nitin Kumar

2011-05-12T04:01:00.000-07:00

Investment technology by Ethical Investment

Investment Philosophy of Our organization

2011-05-08T09:04:00.000-07:00

Dear friends here we present our method of creating wealth in stock market for our esteemed clients and would like to share with you some of them :

1) SIP: Investment in Stock Market has always baffled many Investors. We present you the most simple, lucid and hassle free way of creating wealth in stock market.

“SIP” means Systematic Investment Plan which says that you go on investing a fixed amount of money into the market over a longer period of time on month to month basis. Historically it has been proved that you get a handsome return of around 15-20 % average over the period of investment which may sometimes increase too. The principle of averaging helps in achieving this goal on a time scale.

The crux of this investment lies in picking stocks for your portfolio and here our experience and expertise helps you in doing so. You can decide the pace of return depending upon your age. “Drops makes ocean” is the perfect adage which fits this kind of investment mantra. You go on saving and extracting return out of it, is left to the time that you have invested in this philosophy. Start early to retire early and wealthy to enjoy this beautiful life. You decide and we will execute it for you.

2) Interest Earning: In this investment philosophy we practice the art of patience and perseverance to yield a decent return on your portfolio. We mix and match trading strategies which yields you a decent return of 2-5% per month depending upon the market situation. This entails identifying quality stocks and hedging it with some product available in the market. Here we advise our clients to commit certain money in their account and we design the strategies month to month which is totally free for them. We have mastered this art by doing it ourselves and we can confidently say that you will love this form of investment over a period of time.

3) Fundamental Investment: Herein we provide you a platform where you can decide where to put your hard earned money. We dig out for you hidden gems in the market by way of our deep study and experience and try to build a decent portfolio according to your taste which can make you wealthy. Stocks are picked on the basis of actual performance of the companies and not on the prices of the companies. We believe in the theory that prices of stocks are the function of various factors which may include sentiment and outlook too. We extract the reason of its movement and then decide whether to invest it in or not. There are lot of criteria which helps in the decision making process, where we come in handy.

We strive to create and add value to your life by following certain laid down principles of our organization. We keep on analyzing the market movement and try to give best possible advice to our clients so that they can easily achieve their goal. Happy Investing folks !!!!

Warren Buffett's Stock Portfolio

2011-04-20T23:37:00.000-07:00

Warren Buffett's Stock Portfolio

Rank	Stock	# of Shares (millions)	% Weighting of Portfolio (as of 6/30/09)
1	Coca-Cola (KO)	200.0	21.60%
2	Wells Fargo (WFC*)	320.0	19.56%
3	American Express (AXP)	151.6	12.28%
4	Procter & Gamble (PG*)	79.1	9.83%
5	Kraft Foods Inc. (KFT)	106.7	6.34%
6	Wesco Financial Corp. (WSC)	5.7	4.32%
7	Wal-Mart (WMT)	39.0	4.26%
8	US Bancorp (USB)	69.0	3.51%
9	ConocoPhillips (COP)	34.2	3.43%
10	Johnson & Johnson (JNJ)	23.9	3.06%
11	Moody's Corp. (MCO)	30.8	1.80%
12	Washington Post Co. (WPO)	1.7	1.51%
13	Nike Inc. (NKE)	7.6	1.10%
14	M&T Bank Corp. (MTB)	5.6	0.87%
15	Republic Services Inc. (RSG) Added to Position!	10.8	0.62%
16	USG Corp. (USG)	17.1	0.58%
17	Costco (COST)	4.3	0.51%
18	Nalco Holding Co. (NLC)	9.0	0.43%
19	Comcast (CMCSK)	12.0	0.42%
20	Iron Mountain Inc. (IRM) Added to Position!	7.8	0.42%
21	Ingersoll-Rand (IR)	5.6	0.39%
22	CarMax Inc. (KMX)	7.7	0.38%
23	Nestle S.A. (NSRGY.PK)	3.4	0.34%
24	Lowe's (LOW)	6.5	0.31%
25	Torchmark Corp. (TMK)	2.8	0.30%
26	Sanofi-Aventis (SNY)	3.9	0.29%
27	General Electric (GE)	7.8	0.28%
28	Becton Dickinson & Co. (BDX)Added to Position!	1.7	0.27%
29	NRG Energy, Inc. (NRG)	6.0	0.25%
30	United Parcel Service, Inc. (UPS*)	1.4	0.18%
31	Bank of America (BAC*)	5.0	0.18%
32	Home Depot (HD*)	2.8	0.18%
33	GlaxoSmithKline (GSK)	1.5	0.11%
34	Gannett Co., Inc. (GCI)	1.7	0.06%
35	Exxon Mobil (XOM)	0.4	0.06%
36	Comdisco Holding Co. Inc.(CDCO.OB)	1.5	0.03%
Acq	Burlington Northern Santa Fe(BNI)**	0.0	0.00%
Sold This Quarter:
xx	SunTrust Banks Inc. (STI) Sold this position!	0.0	0.00%
xx	Travelers Insurance (TRV) Sold this position!	0.0	0.00%
xx	Unitedhealth Group, Inc. (UNH) Sold this position!	0.0	0.00%
xx	WellPoint Inc. (WLP)	0.0	0.00%
Sold Last Quarter:
xx	Norfolk Southern Corp. (NSC) Sold this position!	0.0	0.00%
xx	Union Pacific Corp. (UNP) Sold this position!	0.0	0.00%
xx	WABCO Holdings Inc. (WBC) Sold this position!	0.0	0.00%
xx	Eaton Corp. (ETN) Sold this position!	0.0	0.00%
**Note that, since this 09-30-2009 filing, that Warren Buffett has moved to acquire all Burlington Northern outstanding shares to make it a fully-owned entity of Berkshire Hathaway.			100.0%

Please post your comments if you find this information helpful.. your comments are most valuable..

Behavioral mistakes to be overcome while Investing !!!!

2011-04-01T04:31:00.000-07:00

Behavioral mistakes to be overcome while Investing !!!!

by Eis Investm on Friday, April 1, 2011 at 4:57pm

Most people think investing is a numbers game, but it has much to do with people as it does with figures. In response to this fact, behavioral finance has emerged to analyze just how much people influence the malleable numbers that make up the market. Their discoveries have been quite enlightening. One common observation that behavioral finance has proved is that investors, even though they act with the best intentions, are often their own worst enemies. This article will look at some of the psychological mistakes that cost investors in the long run.

Behavioral Finance

Meet Behavioral Finance

If the market is efficient, why do bubbles happen? Why do mechanical investment strategies suddenly fail? Why do strategies like value averaging work in an efficient market? These are some of the questions that interest behavioral finance people. They have put forth a number of explanations that boil down to:

a) Although the market is usually efficient as it can be, investors' inability to see the future means it suffers periods of confusion, and

b) the human element of the market precludes a perfectly efficient market and exacerbates any surprises. How? Read on.

Numbers-Only Investing

Markets become volatile when investors pour in money based purely on a few figures from the financials and the analysts’ predictions without knowing about the companies those numbers represent. This is called anchoring and it refers to focusing on one detail at the expense of all the others. Imagine betting on a boxing match and choosing the fighter purely by who has thrown the most punches in their last five fights. You may come out all right by picking the statistically busier fighter, but the fighter with the least punches may have won five by first-round knockouts. Clearly, any metric can become meaningless when it is taken out of context.

If you believe that it is all in the numbers, then you have to react quickly to any change in the numbers to protect your profits. Numbers-only investors are the most prone to panic selling. They tend to hedge their buys with stop-loss orders that other traders will try to trigger in order to profit from shorting a stock. This strategy, called gathering in the stops, can increase market volatility for a short period of time and give the traders who short the stock a profit. What this doesn’t change is the actual company beneath the stock. Short-term volatility in the stock market shouldn’t affect a corporation’s business operations. For example, RELIANCE doesn’t stop producing oil or its other business when its stock dips.

Believing the Past Equals the Future

When investors start believing that the past equals the future, they are acting as if there is no uncertainty in the market. Unfortunately, uncertainty never vanishes.

There will always be ups and downs, overheated stocks, bubbles, mini-bubbles, industry wide losses, panic selling in Asia and other unexpected events in the market. Believing that the past predicts the future is a sign of overconfidence. When enough investors are overconfident, we have the conditions of Greenspan’s famous, “irrational exuberance,” where investor overconfidence pumps the market up to the point where a huge correction is inevitable. The investors who get hit the hardest, the ones who are still all in just before the correction, are the overconfident ones who are sure that the bull run will last forever. Trusting that a bull won’t turn on you is a sure way to get yourself burried.

Self-Serving Bias

Along the same vein as overconfidence is the self-serving bias. This is when investors are quick to take credit for portfolio gains, but just as quick to blame losses on outside factors like market forces. Much like an athlete blaming the referee for a loss, self-serving bias helps investors avoid accountability. Although you might feel better by following this bias, you will be cheating yourself out of a valuable opportunity to improve your investing intelligence. If you’ve never made a mistake in the market, you’ll have no reason to develop better investing skills and your returns will reflect it.

Pseudo-Certainty Effect

This 50-cent phrase is an observation about investors' perceptions of risk. Investors will limit their risk exposure if they think their portfolio/investing returns will be positive – essentially protecting the lead – but they will seek more and more risk if it looks like they are heading for a loss. Basically, investors avoid risk when their portfolios are performing well and could bear more, and they seek risk when their portfolios are floundering and don't need more exposure to possible losses. This is largely due to the mentality of winning it all back. Investors are willing to raise the stakes to “reclaim” capital, but not to create more capital. How long would a race car driver survive if he only used his brakes when he had the lead?

The Bottom Line

This is only small sample of a whole list that includes overreaction, under-reaction, conformation bias, gambler’s fallacy, clustering illusion, positive outcome bias, and on and on. Although academics study these phenomena for their own sake, investors should also pay attention to behavioral finance. That way you can look in the mirror and ask yourself, “Am I doing that?”

Ebrochureprivy at4

2011-03-23T09:04:00.001-07:00

Check out this SlideShare Presentation:

Ebrochureprivy at4

View more presentations from Nitin Kumar.

Use Debt as Crop not as a Trap

2011-03-09T07:10:00.000-08:00

by Eis Investm on Wednesday, March 9, 2011 at 7:39pm

Borrowing has become indispensable these days. People borrow either to create assets that would result into bumper crop or to spend on impulsive purchasing that would lend them into a trap. Every planned borrowing, to create some appreciating asset, is welcome and improves health of wealth. On the other hand, every borrowing to satisfy our passions and temptations leads to deteriorating health of wealth. It means depending upon utilization the same debt may prove fruitful or harmful.

From individual’s point of view housing loan is the only productive loan. In similar way, life saving loans for critical illness or accidental hospitalization is necessity. Any other loan which does not increase earning potential is a serious problem and may severely harm health of existing or futuristic wealth.

We must avoid accumulating debt at any cost. Wayward spending habit leads into a debt trap and it is very difficult to come out of debt trap. It takes a lot of time to repay debts and during this period one may miss big opportunities. Prevention is always better than cure. One must avoid falling into a debt trap. Any default on re-payment results into dent in credit worthiness. As a professional, one must respect and protect his credit worthiness at all cost. Some of the tips are reproduced herein for the benefit of one and all:-

CLEAR OFF THE DUES ON OR BEFORE THE DUE DATE

One of the modern way to fall into debt trap is to accumulate credit via credit cards. Initially, people fail to understand a credit card statement. Minimum amount due is usually misinterpreted and people think that they have to pay just 5% of the due amount and they do not realize that the company charges very high interest on the remaining amount. Not only interest they charge in more than one ways. One should care-fully clear off the dues before the due date that also in a way that payment reaches the card provider before due date. Lure of multiple credit cards is very dangerous and surest way to fall into debt trap.

CHANGE THE MIND SET

Gone are the days when loan taking was social taboo. Modern mantra is: ‘consume first and pay later’. While following this theory, one must take care of unplanned expenditure in foreseeable future, such as illness, accident, loss of job, no increment, family expansion, casualty in family, social expenditure in the form of marriage, etc. Take care. There is need to change the mindset. The mantra needs to be re-written: ‘Consume first but not very fast’ or ‘Consume only surplus in-come not full future income’ or ‘Consume first and pay faster’. While taking the loans, one should be very careful of the jargons such as flat or last payment first or foreclosure pen-alty and so on.

LIMITED EMIs

Periodicity of loan should be restricted to minimum possible. Multiple consumer loans shall be avoided at all costs. Long term loans or multiple loans are not very wise decision. Recession in the econ-omy or physical / mental incapacitation can result into a salary cut which may upset repayment capabilities. Interest on interest shall be treated as dragon. Ideally EMIs shall be restricted to 70% of the surplus income and rest 30% of the surplus income shall be left for un-planned expenditure.

SHORT TERM PLANS

One must have short term financial plans also along with long term plans. Long term plans like plans for daughter’s marriage, old age pension, retire-ment planning are incomplete unless aligned with short term planning like further studies, dream vacations, housing and vehicle needs. Saving shall be properly invested. Systematic investment plans are must for each one of us.

AVOID IMPULSIVE PURCHASES

Most expert’s feel that one should not borrow at all. One should wait a little longer to fund the purchase rather then to opt for a loan. Though it is very hard to wait for own funds but it is a very wise decision to buy anything by own funds. Impulsive purchases are often identified as the main reason behind debt traps.

FINANCIAL ANALYSIS

Before opting for another loan one must analyze financial aspects. There are two ratios which show the financial strength of a person. First - EMI to Income ratio; and Second - asset to liability ratio. Both the ratios are inversely related to each other. More EMI means more liability and less EMI means less liability. One must focus on increasing income on one side and assets on another side. Depreciating assets to appreciating assets ratio is another important tool for analyzing financial strength of any individual.

Take care, don’t fall into debt trap. Take care of unplanned expenditure that also through your income not through fresh debt. Take debt but only to add on appreciating assets not for depreciating assets. Invest your saving wisely. Rather suggest your friends also to invest wisely.

Happy Investing !!!!

Investment Cause

2011-03-02T05:53:00.000-08:00

Dear Members,

Wish you all Happy Mahashivratri.

Yesterday was the day which saw 200 points rally on Nifty and around 600 points rally on Sensex marking it second biggest run in last two years. The trigger for such a run on the bourses was huge short covering by FIIs and DIIs due to good budget. As there was no bad news in the budget, operators were forced to cover their shorts which they created prior to budget expecting deep cut in the market after budget.

FIIs and DIIs have always created panic on the street and I have been advising you all to Invest in the market systematically for last two to three months. The "investment returns" which if made on declines tend to give you decent returns over a longer period of time. So keep on investing in this market which is called Smart Investment. Contrarion approach to investment is sometimes risky but will always give you higher returns in comparision to other form of investment in Stock Market. Risk is always rewarding in stock market if it is taken in calculated way. People usually can't control their greed which always translate into losses in the market.

Keep investing and start early in your life if you want to become wealthy, age of investment always plays a important role in your Investment goal. Always bear in mind drops only make ocean. So keep investing...

to continue...

Market Mantra

2011-02-15T19:44:00.000-08:00

Investment in stock market has always been a challenge be it for FIIs, DIIs Mutual Funds or Retails Investors. It has a behavioural pattern which is always deceitful and dodges most of us leaving us bemused and head scratching.

With our constant endeavour and guided approach you can make money even in this market.

I am suggesting you dark horse sector for 2011-2013 which is Infrastructure and Real estate.
Most of you will be thinking that this sector has given negative return in last one year then I must admit that it is true !!!. Guess what you will be astonished to know that out of total spend of govt budget, around 46-50 % has been allocated to Infrastructure development. Government cant keep a blind eye on this cog of economy. This sector has huge potential for employment generation and attracts eyes of all big Institutional investor be it direct or indirect investment in this. Infra and realty demand will remain robust for coming 2-3 years and this is the time you can add these stocks to your portfolio when Interest Rate is almost on the peak. The negatives emanating out Interest rate and slack investment in these times present a wonderful time for accumulating these stocks which is trading at 5-10 forward multiples.

Going by the adage of "Buy when there is panic and sell when there is euphoria", I have a view that this space for Investment is highly advisable for long term wealth creation.

2011-02-06T06:05:00.000-08:00

Dear Members,

Market has taken a decent correction of 3000 points on Sensex. The concern of Inflation, tight fiscal policy thereby rising interest rate in economy and to top it all the Egypt crisis, is taking its toll on Indian bourses. Market men expect some more selling by FIIs on the street and therefore you can brace for further fall in the market.

But, one thing is sure market has come to a level where one can start accumulating good stocks like RIL, L&T, BHEL, ITC, HUL and some players from infrastructure space like IVRCL and Lanco Infra, in ones long term portfolio.

The best way for Investment in this kind of market is SIP meaning thereby Invest systematically every month a fixed amount so that you enjoy the benefit of averaging. Its been proven time and again that its always best to invest in the market systematically rather than putting your money at one go. The power if SIP is such that you can earn decent return in long term even if the market remain same on point to point basis say after three years or any period.

More to follow..

Nitin Kumar
Ethical Investment

Markets making new high

2010-10-01T04:04:00.000-07:00

Dear Members,

Market is making new yearly highs and with the speed its moving up it seems quite obvious it may break all time high.

Today was the day for Real Estate and Metals which was roaring and seems right in their move. After consolidating for a long time these stocks have started moving up and may be in coming weeks they can appreciate more. With the outlook of real estate stable and notching upwards I feel that they should do well in coming weeks.

Happy Investing !

Nitin

2010-09-26T08:21:00.000-07:00

Dear Members,

With the FIIs pouring in money and Stock Indices rising to earlier highs, the greed is nearing the levels where the further greed will increase which may percolate to lower levels and retail money may start trickling in. The rally being mainly driven by frontliners and the sectoral rally pointing to the fact that big guys believe in established companies and their stories.

One should be careful in picking stocks at this moment of market where the risk reward ration may be tilted towards risk. Be rational in investing, think thrice before taking any call, talk to your Investment Consultants before investing.

Still lot of good stocks are trading at valuations where investment can be made. I believe that one sector which is still lurking in woods in the recent rally is Infrastructure and Realty. This sector looks quite promising in coming two to three years, you can expect decent returns in this sector. The outlook being bolstered by the fact that Government is slated to put in decent investment in this sector for overall growth of this Country.

Will keep updating posts...

Happy Investing....