When someone says that "Nothing can be more complicated than Love"
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Throw CA text books on their face...:P :D
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Throw CA text books on their face...:P :D
Wednesday, 31 October 2012
#7
WARREN BUFFET RULES :
We all admire and envy Warren Buffett and his billions of dollars. We will any day be happy to achieve what he has accomplished. However, despite being fully aware of his methods and techniques, we have failed miserably to garner even a tiny fraction of his success. Why? Following is a brief account of what he advocates and where we have failed.
1. "I try to look out ten or twenty years when making an acquisition."
Most of us, however, don't see beyond ten to twenty 'days' (or, in the best case scenario, ten to twenty 'months'). Clearly, we lack the discipline and patience to make money from the stock market. We treat it as a make-money-overnight casino. Therefore, I guess the stock market too treats us ‘gamblers’- and we invariably end up on the losing side. Instead, had we considered it as a tool for long-term wealth creation then the market too would have regarded us as ‘investors’ and we too would have become mini-Warren Buffetts.
2. "Most of the investments like money-market funds, bonds, bank deposits are thought as "safe". In truth they are among the most dangerous of assets. Their beta may be zero, but their risk is huge. Over the past century these have destroyed the purchasing power of investors in many countries even as the investors continued to receive timely payments of interest and principal."
We simply do not appreciate the corrosive power of inflation. Inflation (together with the tax on interest income) guarantees that our money growth in such ‘guaranteed-return’ products will NEVER match the rise in prices. In short, we will become poorer day by day. As I observed the other day, I am paying more school fees for my child 'every year' than what my father spent in the entire '16 years' from 1st std. to my engineering degree. I dread how I would have educated my child had I opted to play ‘safe’.
3. "The second major category of investments involves assets that will never produce anything, but that are purchased in the buyer's hope that someone else- who also knows that the assets will be forever unproductive- will pay more for them in the future. The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets. Gold, however, has two significant shortcomings, being neither of much use nor procreative."
Those who admire the returns given by gold in last few years may kindly look more deeply into history. During the last 35-36 years (from 1975-2011) gold delivered a mere 6.53% p.a. yield (and that too after the recent run-up in gold prices). In fact, in between for about 25 years, from 1981 to 2005, the returns were practically zero. As such gold may be seen as an insurance during bad times (like the recent economic crisis) and not as a wealth creator.
4. "My own preference — and you knew this was coming — is our investment in productive assets whether businesses, farms or real-estate. I believe that over any extended period of time this category of investing will prove to be the runaway winner. More important, it will be by far the safest."
Historical evidence over the last 30-40 years shows that these “productive” assets have delivered inflation-beating and wealth-creating returns of around 15-20% p.a. Many have become millionaires and crorepatis by investing in real estate. But stock markets have failed to do so. This is not because of any problem with equities, but because of our flawed strategy of investing in equities (as elucidated in the 1st point). Given that Indians don’t know how to invest in equities, I guess they should stick to property.
5. "A few years back, I spent about $x billion buying several bond issues of XYZ Holdings. That was a mistake — a big mistake. I totally miscalculated the gain/loss probabilities when I purchased the bonds. In tennis parlance, this was a major unforced error by your chairman."
How many of us have the courage to accept our mistakes and learn from it? Very few, I suppose. It will hurt our ego very badly. Therefore, typically the tendency is to blame the market, the economy, the politicians or whatever suits the moment.
We all admire and envy Warren Buffett and his billions of dollars. We will any day be happy to achieve what he has accomplished. However, despite being fully aware of his methods and techniques, we have failed miserably to garner even a tiny fraction of his success. Why? Following is a brief account of what he advocates and where we have failed.
1. "I try to look out ten or twenty years when making an acquisition."
Most of us, however, don't see beyond ten to twenty 'days' (or, in the best case scenario, ten to twenty 'months'). Clearly, we lack the discipline and patience to make money from the stock market. We treat it as a make-money-overnight casino. Therefore, I guess the stock market too treats us ‘gamblers’- and we invariably end up on the losing side. Instead, had we considered it as a tool for long-term wealth creation then the market too would have regarded us as ‘investors’ and we too would have become mini-Warren Buffetts.
2. "Most of the investments like money-market funds, bonds, bank deposits are thought as "safe". In truth they are among the most dangerous of assets. Their beta may be zero, but their risk is huge. Over the past century these have destroyed the purchasing power of investors in many countries even as the investors continued to receive timely payments of interest and principal."
We simply do not appreciate the corrosive power of inflation. Inflation (together with the tax on interest income) guarantees that our money growth in such ‘guaranteed-return’ products will NEVER match the rise in prices. In short, we will become poorer day by day. As I observed the other day, I am paying more school fees for my child 'every year' than what my father spent in the entire '16 years' from 1st std. to my engineering degree. I dread how I would have educated my child had I opted to play ‘safe’.
3. "The second major category of investments involves assets that will never produce anything, but that are purchased in the buyer's hope that someone else- who also knows that the assets will be forever unproductive- will pay more for them in the future. The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets. Gold, however, has two significant shortcomings, being neither of much use nor procreative."
Those who admire the returns given by gold in last few years may kindly look more deeply into history. During the last 35-36 years (from 1975-2011) gold delivered a mere 6.53% p.a. yield (and that too after the recent run-up in gold prices). In fact, in between for about 25 years, from 1981 to 2005, the returns were practically zero. As such gold may be seen as an insurance during bad times (like the recent economic crisis) and not as a wealth creator.
4. "My own preference — and you knew this was coming — is our investment in productive assets whether businesses, farms or real-estate. I believe that over any extended period of time this category of investing will prove to be the runaway winner. More important, it will be by far the safest."
Historical evidence over the last 30-40 years shows that these “productive” assets have delivered inflation-beating and wealth-creating returns of around 15-20% p.a. Many have become millionaires and crorepatis by investing in real estate. But stock markets have failed to do so. This is not because of any problem with equities, but because of our flawed strategy of investing in equities (as elucidated in the 1st point). Given that Indians don’t know how to invest in equities, I guess they should stick to property.
5. "A few years back, I spent about $x billion buying several bond issues of XYZ Holdings. That was a mistake — a big mistake. I totally miscalculated the gain/loss probabilities when I purchased the bonds. In tennis parlance, this was a major unforced error by your chairman."
How many of us have the courage to accept our mistakes and learn from it? Very few, I suppose. It will hurt our ego very badly. Therefore, typically the tendency is to blame the market, the economy, the politicians or whatever suits the moment.
#6
The Removal of Jaipal Reddy from the Petroleum Ministry shows the state of Indian Politics. According to an article in the Hindu, Jaipal Reddy is removed mainly to please Mr. Mukesh Ambani. As a petroleum minister, Jaipal reddy did not agree to the terms laid down by the Reliance industry in there Oil exploration business, and rejected there claim to the tune of 1.20million as they are not appropriate. And even Jaipal reddy was questioning the production loss shown by Reliance Industries and wanted to fine Reliance for the same.This made Mukesh to make sure that Jaipal is moved out of the Petroleum ministry. When an Indian business can go to this extents, I feel US decides almost all the decisions taken by Indian Parliament.
#5
which of the following are the methods of parliamentary control over public finance in india? 1.placing annual financial statements before the parliament. 2.withdrawal of moneys from consolidated fund of india only after passing the appropriation bill. 3.provisions of supplementary grants and vote-on-account 4.a periodic or atleast a mid year review of programme of the govt agnst macro economic forecasts&expenditure by a parlientary budget office. 5.introducing finance bill in the parliament.
#3
TEACHER-name any co-incidence
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STUDENT-my mom n dad get married on same day.....:P =D
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STUDENT-my mom n dad get married on same day.....:P =D
Tuesday, 30 October 2012
#2
Boy- heyy! i just installed windows 8 in ma PC....
Girl- kaunsi duniya me ho ji...i have windows 98 in ma computer!
lols......
Girl- kaunsi duniya me ho ji...i have windows 98 in ma computer!
lols......
Monday, 29 October 2012
blog#1
life is unpredictable!
Wen u have standards people call it an attitude!
Wen u are simple People try to Cheat U.
&
When you need someone its the best tym for dem to play wid you.
gud eve.....
Wen u have standards people call it an attitude!
Wen u are simple People try to Cheat U.
&
When you need someone its the best tym for dem to play wid you.
gud eve.....
introduction
hey guys....
my 1st blog....hope u stay connected wid me....
u will get updates here on:-
1)Accounting n taxation realted matters
2)jokes
3)technology
4)cars,bikes n mobile
5)thoughts n much more......
my 1st blog....hope u stay connected wid me....
u will get updates here on:-
1)Accounting n taxation realted matters
2)jokes
3)technology
4)cars,bikes n mobile
5)thoughts n much more......
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