Marketer of a company

Modestly apart, most organizations have started brandishing their quarterly financial staminate with "words of progress" with common use of words like exceptional, superlative, fantastic etc. I picked up an article (read: advertisement) this Friday by Indiabulls which was none short of self-aggrandize. On Sunday, PNB displayed it's annual statements in flying colors - Raising benchmarks, exceeding targets.

These may be great companies but more often than not, the primary reason behind such statements is the increasingly prevalent progression towards a short-term rise in shareholder wealth. As more organizations are looked after by professional management and with a more informed and demanding investor community - maintenance and increase in share prices become inevitable.

My request to all is -
- turn a blind eye to any such messages (by the organization or otherwise). As investors, we should invest by numbers rather than news
- be conservative. Always treat such messages with suspicion (whether they may be right or wrong). Any company worth it's salt (like HLL, ITC, Britannia) will never resort to such practices. The value will speak for itself.

GTL Limited

Global Telecommunications is as crazy a stock you can find.

The NCA of this scrip is 81 rupees per share with a CMP of 106 rupees. The cash in the company is a wonderful 72 rupees per share. In pure Grahamian terms, if the stock price were to go below rupees 72 and you had enough money - you should simply buy up the entire company, go to the bank and write a cheque in your name (typical GESCO takeover case). Since it's not the case, I would suggest a confident BUY on the stock just on the basis of the current intrinsic value of the scrip.

If you are wondering why the stock has not yet been raided by others, GTL was one of the K-10 (Ketan Parikh 10) companies.

The cost of learning

Investing is a never-ending learning curve. Ever since I started investing in the Indian equity market (April 30th, 2004), the market has willfully expressed a number of emotions. Various moments of reckoning like the drop on May 17th 2004 when the BP government was going down in the exit polls, or when equities went into a frenzy by jumping from 7000 to 8500 in a trance only to slip back from 8900 to 7900 in half a month. In the process, I've been 40,000 rupees down, 180,000 rupees up and again down by 110,000 rupees. This is tamely called tuition fees which each investor has to pay at some point in this fascinating world of equities.

Over the last 18 odd months, I am putting some of my learning –
a) Always back your way of investing. I follow value investing and had always been a great believer in the buy-and-hold strategy but used to sell precious stocks for as little as 100% profit. Today if I would adhered to that strategy, I would have been atleast five times as rich.
b) Always diversify. You can sleep better knowing that you donot lose much if one company conks than knowing that all what you have to gain is on the performance of one company.
c) Never go in for penny stocks. I have currently two stocks in my portfolio which are negative profits stocks. My earning on both have been –48% and –52% respectively.

In the next few days, we shall go through a number of recommendations on the basis of value investing on some very interesting stocks in the Indian market.