Insurance – Life or General is largely about answering some questions like “What if….goes wrong”? The fundamental objective of insurance is to provide a means to offset the burden of financial loss. Think of insurance as a premium paid for “transfer of risk” premium. An alternative method of dealing with risk. You are paying an […]
The Housing Market… Why the Price-to-Rent Ratio is Signaling More Pain Ahead Whether you’re investing in real estate, stocks, bonds, or gold coins, you are rewarded primarily for your exposure to one thing – risk. After all, markets are only risk transferring mechanism. In the summer of 2007, I warned friends that if they were […]
I hate writing about politics. Till it affects our daily lives. When in 1941 FDR, the then President of USA said freedom means freedom of speech, freedom of worship, freedom from want and freedom from fear, I thought it was a good workable definition. Today when I was reading Obama’s book and he quoted FDR, […]
Many things in life are better achieved slowly if you want the gain to be permanent! Does this remind you of another boring task – the process of losing weight? If so, welcome! Investing and money management is a lot like eating. So is losing debt like dieting? maybe…maybe not. Is getting out of debt […]
Financial analysts try to determine the value of a stock by calculating a company’s discounted “free cash flow”. This is based on a series of computer models with assumptions about future sales, earnings and growth rates. These models are only as good as the programmers and analysts that build them. What you end up with […]
When it comes to analysing corporate performance, individual investors are surely at a disadvantage. You will find it difficult to know how many cars Tata Motors will make in 2009, how many hotel rooms Indian Hotels will be able to sell in Europe, etc. However the “international” fund manager has access to all this and […]
Understanding mean, median, mode, standard deviation, regression, reversion to the mean – is a pre-requisite to understand financial markets. Let us see some simple examples: It rained 90mm in Mumbai on 22nd July. If it rains like this for 6 months continuously, Mumbai will be drowned. It was 43* C in Lucknow on 23rd May. […]