In last one year or so, how many times have you heard and read that “Buy and hold investing is dead”. I bet it is numerous times. I am willing to bet even more on the fact that almost 95% of 30 year old or below will make you believe buy and hold is dead and it does not work. And the examples cited are turmoil in 2008. In addition, the business media and brokerage houses will add fuel to this fire. Well, if they do not encourage you to trade, how will they survive? how will they get their commissions?
To me all these 95% of folks are “creating their own missed opportunity”. Twenty years down the line when these same folks look back on “today”, they will realize they missed an opportunity. They missed this opportunity because of their quest to make that quick buck in trade, the lack of real knowledge, lack of awareness, and lack of foresight, and not able to think what is important in investing.
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In an earlier post, I mentioned that I use XIRR as one of the metrics for measuring the individual stocks performance in my portfolio. In simple terms, XIRR is the interest rate you would need to make the same money from any interest bearing account (with same investments). While XIRR can be extended at portfolio level, in today’s post, I am only discussing how I use XIRR at individual stock level.
I have pulled out one excel sheet [copy is in my toolbox at TIP-Stock-Tracker] as a representative example for this discussion. The primary notion behind this excel sheet is to keep records and track the performance. It is not intended “to model an automated tracker” or “to perform any automated calculation across the board”. Except XIRR, I have used only few basic math formulas like addition, subtraction, divisions, multiplication, and percentages. In order to understand the formula, I suggest to use formula auditing tool bar (which will show arrows to linked cells) to understand the formulas. This excel is segregated into different regions.
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Blogosphere is an interesting place where you find various bloggers expressing their viewpoints. I am listing some of the articles that I enjoyed reading.
These are some diverse set of articles from fellow bloggers and business magazines. I hope you enjoy reading all or some of these interesting posts.
I received a very good comment and few questions in response to my dissusion post about number of stocks in a long term portfolio. I already provided my views in the comment section which, most likely, will get buried in archives. Other readers may not be able to read it. So I enhanced my response and posting it here. The comment that I received is reproduced below in italics.
Pl. do not limit by numbers for a successful portfolio. In our this website itself, it is recommended 5 long term stocks like NTPC, ONGC etc. I am surprised SBI and Reliance are not there. These two gaints figure in top 10 in the world itself. As and when you find a growth story of companies like Bharti airtel, (they grow vertical and horizontal also gradually). It should find a place in our portfolio. Then do not forget to profit from stock markets ups and downs. This is apart from long term portfolio. To get regular monthly income for people like retirees, Options and futures, Commodities also do not ignore. With a little study, there is money to make. Share your ideas and reactions, please. [Please note: I removed the name for privacy]
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Blogosphere is an interesting place where you find various bloggers expressing their viewpoints. I am listing some of the articles that I enjoyed reading.
These are some diverse set of articles from fellow bloggers and business magazines. I hope you enjoy reading all or some of these interesting posts.
In last few months, quite a few Indian business houses embarked upon fund raising for one reason or the other. Some businesses raised funds for debt financing needs, some needed operation cash, some needed working capital, some need for growth needs, and many needed it little bit for everything. Furthermore, the method adopted by business houses have been varied such as qualified institutional placements (QIPs), american depository shares (ADS), global depository shares (GDS), non-convertible debentures (NCDs), asset sales, stake sales, and public offering (IPOs). In general the response has been tremendous and quite a bit of capital was/is being committed by all the participants, including retail investors like you and me.
In April/June 2009 timeframe, it is estimated that a total of $24 billion was raised by Indian companies, while it is estimated that $30+ billion was raised in first six months of 2009. Now this is just the amount raised and does not include the amount committed. The table below shows the some the companies that have gone to capital markets for raising funds. It is not comprehensive but shows the level of capital raised in foreign markets, and in Indian markets.
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Measuring Progress – XIRR as Personal Rate of Return
In this context, I use few different monitoring and/or performance metric. Earlier, I have talked about yield on cost as one metric to determine cash flow (or dividends) received from my original investments. YOC is a very good metric to measure the growth of your dividend based cash flow over a period of time. However, it has a drawback. It does not take into account the variability of capital invested. The price of the stock does not remain static. It keeps changing over a period of time.
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