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Why am I my blogging?

TIP Guy 16 May 2009 admin 19 Comments

In one my earlier post, I discussed about questions that I receive and try to answer each one of them with sincere efforts. I have discussed questions related to my time management. In today’s post, I will discuss about questions related to “Why I am blogging?” I have attempted to group them as much as possible.

What’s your interest in sharing all these information? I am asking because I want to know whether you will also ask for subscription after sometime.

As the slogan of my blog goes; it is my journey to build and sustain an income portfolio. I am using online blog method to document my journey. In the process, I hope (a) to continue my learning process; (b) to continue to monitor my progress; (c) to make friends who are interested in learning about long term investing; (d) to share our winners; and (e) to share our losing strategies so that we do not make similar mistakes.

I am in no way an expert in investing. However, I do believe that I am patience, analytical, and capable of taking my own investing decisions. I am willing to accept my mistakes. I am willing to learn from others.

We see that you have closed your “my portfolio” section. It is now password protection. Does this mean you are planning for subscription based service?

I had temporarily closed. It is now open. I have modified it to reduce exposure to my personal details. I do not have plans for subscriptions. It is free for readers of this blog. Continue reading rest of this article…

Dividend Myth Busters

TIP Guy 15 May 2009 dividends, stocks 11 Comments

moneygrabberI am continuously talking about dividends and how I am building my income portfolio around that philosophy. Dividend investing is one of the investing strategies among many other different styles of investing and trading strategies. In addition, I am a believer in two sides of a coin, I am a believer of black, while, and gray, and I am a believer in negative and positives.


Keeping with this, I am not dumb to believe that dividend investing is an ultimate panacea of all investing strategies. Anything that we do in our lives has two sides and we manage it in our own ways. Similarly dividend investing also has its dark side and unfortunately, it is often the focus in many discussions. We need to remove some of the myths associated with it and understand how it can be managed. Following is my attempt to bust some these myths associated with dividends.

We view dividends as are very small. Very low dividend yield (of the order of 1% to 3% only) is cited as being the main reason. It is said that these low yields do not even match the savings accounts interest rate of 7%.

Dividend yield is “dividends paid per share” divided by “stock price”. Now, if the stock price is over valued, dividend yield is bound to be low. If the stock is priced in excess of 20 PE ratio, dividend is bound to be lower than 2%. That does not necessarily mean that dividends have low yield. Stock price is governed by the market sentiment; it does not have any fundamental basis. If you choose to only look at high flyer stocks of the day, then you are bound to feel yields are less. This is addressed by investing in stocks whose dividend yields are based on fair value and earnings of the company. And not based on stock price on any given day, given week, or given year.

In addition, dividend investing is not about present yield. It is about what future yield (or your Yield on Cost) you will end up with. Does this bust the myth? Continue reading rest of this article…

Corporate India Continues to Dole Out Dividend Cash

TIP Guy 14 May 2009 dividend-news 2 Comments

The season for declaring corporate earnings is at its peak. Corporate India continues to provide dividends to its common share holders. There are companies which increased their dividends and some companies which decreased compared to last year. Below are some dividend declarations that I came across in last week or so.

  • Lupin Ltd declared annual dividend of Rs. 12.5/share (25% increase from Rs. 10 in 2008)
  • J. K. Lakshmi Cement Ltd declared annual dividend of Rs. 4.00/share (60% increase from Rs. 2.5 in 2008)
  • Deepak Nitrate Ltd. declared annual dividends of Rs. 5.00/share (25% increase from Rs. 4.00 in 2008)
  • Hinduja Global Solutions declared annual dividends of Rs. 15/share (50% increase from Rs. 10.00 in 2008)
  • Blue Star Infotech Ltd. declared annual dividends of Rs. 5.00/share (100% increase from Rs. 2.50 in 2008)
  • Shriram Transports Ltd. declared annual dividends of Rs. 5.00/share (same as Rs. 5.00 in 2008)
  • Kotak Mahindra Bank declared annual dividends on Rs. 0.75/share (same as Rs. 0.75/share in 2008)
  • Geojit Financial Services Ltd. declared annual dividends of Rs. 0.50/share (28% decrease from Rs. 0.70 in 2008)
  • Balaji Telefilms Ltd. declared annual dividends of Rs. 0.30/share (92% decrease from Rs. 3.50 in 2008)

It is always good to see that corporate management gives you a raise in dividends. More importantly the raises are 25% or more. Who said there is recession? no doubt that some companies did lower their dividends, however, they at least shared the profits with common shareholders.

If there are any errors, or if you believe there were any other announcements, please let me know by leaving our comments below.



Estimation of Stock’s Fair Value Price Range

TIP Guy 13 May 2009 process, tools 26 Comments

monthly-dividend-portfolio-reviewIn my stock analysis process, I attempt to estimate the fair value of a given stock. I estimate the fair value range (instead of a one fair value). This estimation should be interpreted as the price I am willing to pay based on my risk profile and my investing objective. My fair value estimation does not necessarily attempt to determine the fair value based on value investing principles.

My process of determining the fair value captures the essence of “what is being priced by the market” and “historically what has been priced by the market”.

(I) NPV price based on 15 year DCF: I have discussed DCF based net present value pricing.

(II)  Average high yield price calculated based on past 10 years

I am attempting to estimate what would be current stock’s price based on its historical dividend payment standards. I measure this using yield. It is calculated as follows. Continue reading rest of this article…

My Top Three Investing Mistakes

TIP Guy 10 May 2009 life 8 Comments

question1There are very few things in life that I consider myself an expert in, and investing is not one of them. If I was then I would have been a millionaire and would not be going to work every morning. I have not only earned PhD in my professional subject, but I also have PhD in investing mistakes.

The biggest challenge for me was to identify the top 3 (and not top 10 or top 5). This made me think hard to rate which would be top 3 investing mistakes.

At the end of the post, I will pass on the baton to my fellow bloggers to come up with their mistakes. The more we share and create awareness, we all will be a better investors.


(1) Not having a well defined strategy

The most important aspect of do-it-yourself investing is to have a well defined plan which includes style of investing, time line, diversification, asset allocation, and how you are going to manage it. In my early days of investing, I thought I had a plan. I thought making few quick trades, smaller incremental capital appreciation, etc was my so called well defined plan. I was new and hence, the allure of tipster’s and advisors tips was just too strong. Alas! that was not to be. It was a little bit of this, a little bit of that, and I end it became as little bit of everything. Not anymore. I fired my tipster a long way back.

Now I have more time to do other things and I can sleep peacefully every night without thinking what trade I have to make next day. Continue reading rest of this article…

When to Start Investing ?

TIP Guy 9 May 2009 life, strategy 10 Comments

moneymaze1Few days back, I received a very interesting email, snippet is as follows “…. I am developing a keen interest in your dividend investing philosophy. The more I read the more I get excited about. The earlier one starts, the better it is and I want to start now……. I am 24 years old and have a full time job for last two years. The earlier I start the better it will be for dividend investing. Can you advise 5 companies where I can invest and forget them…..”.

After exchanging few emails I observed his (I don’t know whether it was his or her, for the sake of this post I will use “his”) parents had taken a low six figure educational loan for him to complete this MBA education. After he started working, in his quest to quickly earn few bucks, he started investing in equity markets and is now under water. Now this reader wants to put his financial house in order.

On a personal note, I have gone through the student debt phase. I can very well understand what it means to be under student loan debt.

I am not a personal finance advisor. So I could not give him any specific advice per se. However, I shared my personal experience and discussed with him a very high level frame which I had followed. This discussion was not directly related to dividend investing. But I think it followed the essence of dividends investing (i.e. strong foundation and small building blocks). I thought of sharing this framework with readers of my blog. Continue reading rest of this article…

The Bull Running for Red Flag – Waiting to Get Hit?

TIP Guy 8 May 2009 commentary, markets 2 Comments

newsThe current rally has added 48% to the SENSEX relative to February 2009 low of 8160 points. Is this the start of next Bull Run? The market players and traders will make you believe it is in fact the start of next Bull Run. Any rational investor will ask himself one question, what has happened since February 2009 that justifies this rally. Has the global economy turned around? Has the Indian economy turned around? Has the earning of companies turned around? Or the general question can be has it even stabilized to say it is turned around? Some may argue that equity markets are leading indicators and hence things have changed for better.

The real economy across different countries and India has showed continued sign of slowing down. The US economy contracted by approximately 6% last quarter, European economy shows no sign of stopping the slide, and Japan has been in 18 year downward spiral. In addition, the export oriented economy of emerging markets continues to slow down. Russia is in tatters, Brazil is hit by reduce material demand, and Indian companies are looking ways to maintain profitability. China is attempting to spend its way out of this slow down.

In addition, I looked into the latest quarterly earnings of the 30 Indian corporations that are included in the SENSEX. Continue reading rest of this article…

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