Ben Graham & Buffett

As, I am investing very profitably, received a report from one of the respected

 brokerage house on Indian equities especially on Sensex and Nifty.

Few days back I received everybody is in profit today. The profit is same but the investment is different. As I have a profit from stock and all market has a same profit. But right now I am investing in my knowledge, reading Intelligent Investor by Benjamin Graham. It’s exactly true for today’s market situation.

Few sentences from report

–         Low exposure to equity could be injurious to your wealth.

–         The sensex moved from 100 to 21500 in 30 years. 

Sensex

Year

1978 (Base Year)

100

From 1978 to 1988

100 to 600

From 1988 to 1998

600 to 3600

From 1998 to 2008

3600 to 21400

From 2008 to 2018

??????

–         Superior returns against all odds 

 –         Corporate profits.

–         The big question the level for 2018????

–         The sensex is 75000 to 100000

The report is too big to write here. Everyday different kinds of reports are distributing everywhere.   

But are you investing based on this report.

Let’s look at Graham

“The higher they go, the harder they fall”

 Graham suggest to intelligent investor to ask some simple question

–         Why should the future returns of stocks always be the same as their past returns?

–         When every investor comes to believe that stocks are guaranteed to make money in the long run, won’t the market end up being wildly overpriced?

–         Once that happens, how can future returns possibly be high?

The questions are logical and rational, Graham answers, the value of any investment is, and always must be, a function of the price you pay for it.

Optimism:

The limit of optimism is high, people and investor are here to make quick money, if the above report of broker house is true and expected to be true in future as achieving sensex target. But the big question is

–         Are your holding period matches with the sensex performance?

–         If you invested this level what will be your return?

Benjamin Graham, the father of value investing and teacher of great investor Warren Buffet answers the entire question, let’s see.

Remember the stock market performance depends upon three factors.

–         Real growth (the rise of companies’ earnings and dividends)

–         Inflationary growth (the general rise of prices throughout the economy)

–         Speculative growth—or decline (any increase or decrease in the investing public’s appetite for stocks)

The company’s earnings growth and inflationary growth we can assume, it is already factored in valuation, and there is no guarantee on future earnings of companies.

The speculative growth is very high at this point of time, everybody is speculating.

And if you are investing this level remember the margin of safety, which is core at Value Investing.

The great investment you can make right now, is you can read Intelligent Investor. I assured your future investing life will be free of worries and with higher profits.

To Your Investing Success! 

Sign Final Harish

 

 

 

Harish S Kawalkar

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