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TradeGyani by Brijendra Singh - 3h ago

After an exciting finish to the first version of D-Street Challenge, we are back with D-Street Challenge 2.0. More prizes, bigger prizes, bigger excitement!!

D-Street Challenge 1.0: – Here’s a quick round up of D-Street Challenge.Over 14 weeks, highest cumulative gain was accomplished by Amit Shah with a whopping 178% gain, followed by Kusum Kataria with 121% cumulative gain.

Considering we have had the most volatile markets over last 14 weeks, for long only portfolios, it is more than impressive, it is incredible!

Over the last 14 weeks, we have given out over 140 Prizes, with over 70,000 in prize money.

Eligibility Criteria – 

  • All the contestants must be over 18 years of age.
  • Contestants must be permanent residents or citizens of India.
  • All the contestants must be registered TradeGyani users.
  • Contestants must build their portfolio from 3rd June 2019.
  • Contestants must fully complete their social (including original photo) and investment profiles on TradeGyani.

All contestants will be given Rs. 5 lakhs in virtual money to build their investment portfolios. During the “contest period”( 3rd  June, 2019 – 28th June 2019) – the contestants must outperform S&P BSE Sensex returns. Here are a few rules that the contestants need to keep in mind:

  • Trade is applicable only in Cash Segment.
  • Intra-day trade settlement is prohibited. Any contestant who does this will be disqualified.
  • Any contestant buying stocks with m-cap of less than 1000 crore will be disqualified
  • Transaction Limits – Participants can invest a maximum of 25% of their simulated portfolio value in any one stock

Awards Details & Criteria-

  •  Winners Selection 
  1. TradeGyani will identify winners based on the portfolio return percentage (%) calculated by using Modified Dietz methodology (described below) on tradegyani.com.

  2. The portfolio return% is tracked and displayed to all the participants on a real-time basis.

  3. Portfolio return% calculated by TradeGyani is final and binding.

  4. Portfolio Return Methodology – TradeGyani calculates portfolio returns using a Modified Dietz Method. Returns derived from the Modified Dietz method provide a reasonable idea of how the securities in your portfolio have performed adjusting for the amount invested which may vary over time. We use a Value Weighted method to calculate portfolio returns since value weighted returns are considered more accurate measures of the actual profit or loss of your investment, versus other methods such as Time Weighted returns.

Contestant whose portfolio outperforms the returns of S&P BSE Sensex and his/her portfolio returns is among the top 10 returns in the leaderboard.

  • Weekly Winners
    • 1st Winner – Rs 1000
    • 2nd Winner – Rs 750
    • 3rd Winner – Rs 500
    • Winners ranked 4th-5th – Rs 600

In case of a tie and if they have the same stock – the contestant with the highest number of comments on social feeds and followers will win.

  • Daily Winners
    • 1st Winner – Rs 100
    • 2nd Winner – Rs 100
    • 3rd Winner – Rs 100
D-Street Weekly Challenge
₹ 5000 to be won every week!! Zero Risk, Plenty of Learnings & ₹ 5000 to win every week!!
Put your thinking cap ON, Participate in the D-Street Challenge, who knows, we may sponsor your next real Trade! Signup for free here.
About Author
Abhinav Dube

Co-Founder @TradeGyani - A techie by heart . Before TradeGyani, Abhinav worked for various Investment banks - Morgan Stanley and Nomura International in U.K, before that Nomura and erstwhile Lehman Brothers in Mumbai, India. FIRE - Financially Independent and Retiring Early is his new mantra and he aims to not only achieve it for himself but everyone around him.

The post D-Street Challenge 2.0 appeared first on TradeGyani .

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Stamp duty is a certain amount of money levied on the value of shares transferred. In India, stamp duty or other regularity duty is levied by various states, and therefore the rate of stamp duty varies from state to state. In the Indian stock market, stamp duty is most commonly termed as Broker Note Stamp.

Stamp duty is charged on both sides of trading (buying & selling) and are charged on the total amount (turnover).

No. State EQ Intraday EQ Delivery Futures Options Currencies
1 Andhra Pradesh 0.005% – max Rs. 50/day 0.005% – max Rs. 50/day 0.005% – max Rs. 50/day 0.005% – max Rs. 50/day 0.005% – max Rs. 50/day
2 Arunachal Pradesh 0.003% 0.003% 0.003% 0.003% 0.003%
3 Assam 0.018% – max Rs. 49.5/day 0.018% – max Rs. 49.5/day 0.018% – max Rs. 49.5/day 0.018% – max Rs. 49.5/day 0.018% – max Rs. 49.5/day
4 Chhattisgarh 0.002% 0.01% 0.002% 0.002% 0.002%
5 Delhi 0.002% 0.01% 0.002% 0.002% 0.002%
6 Goa, Daman & Diu 0.005% 0.005% 0.005% 0.005% 0.005%
7 Gujarat 0.002% 0.01% 0.002% 0.002% 0.002%
8 Haryana 0.002% – max Rs. 500 0.01% – max Rs. 500 0.002% – max Rs. 200 0.002% – max Rs. 200 0.002% – max Rs. 200
9 Kerala 0.002% 0.01% 0.002% 0.002% 0.002%
10 Karnataka 0.003% 0.003% 0.003% 0.003% 0.003%
11 Madhya Pradesh 0.002% 0.01% 0.002% 0.002% 0.002%
12 Maharashtra 0.002% 0.01% 0.002% 0.002% 0.002%
13 Meghalaya 0.003% 0.003% 0.003% 0.003% 0.003%
14 Orissa 0.005% – max Rs. 50/day 0.005% – max Rs. 50/day 0.005% – max Rs. 50/day 0.005% – max Rs. 50/day 0.005% – max Rs. 50/day
15 Rajasthan 0.003% 0.012% 0.0012% 0.0024% 0.0012%
16 Tamil Nadu 0.006% 0.006% 0.006% 0.006% 0.006%
17 Telangana 0.01% – max Rs. 100/day 0.01% – max Rs. 100/day 0.01% – max Rs. 100/day 0.01% – max Rs. 100/day 0.01% – max Rs. 100/day
18 Uttar Pradesh 0.002% – max Rs. 1000/day 0.002% – max Rs. 1000/day 0.002% – max Rs. 1000/day 0.002% – max Rs. 1000/day 0.002% – max Rs. 1000/day
19 West Bengal 0.002% 0.01% 0.002% 0.002% 0.002%
20 Other State 0.002% 0.01% 0.002% 0.002% 0.002%
About Author
Abhinav Dube

Co-Founder @TradeGyani - A techie by heart . Before TradeGyani, Abhinav worked for various Investment banks - Morgan Stanley and Nomura International in U.K, before that Nomura and erstwhile Lehman Brothers in Mumbai, India. FIRE - Financially Independent and Retiring Early is his new mantra and he aims to not only achieve it for himself but everyone around him.

The post State wise Stamp Duty Charges In Trading appeared first on TradeGyani .

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Chart Patterns - Cup & Handle With Nooresh Merani - YouTube

A cup and handle price pattern on bar charts is a technical indicator that resembles a cup and handle where the cup is in the shape of a “U” and the handle has a slight downward drift. The right-hand side of the pattern typically has low trading volume, and may be as short as seven weeks or as long as 65 weeks.

90% of the people in the stock market, professionals and amateurs alike, simply haven’t done enough homework.
William J. O’Neil
"Trade Gyani"
Key Takeaways
  • A cup and handle price pattern on bar charts resembles a cup and handle where the cup is in the shape of a “U” and the handle has a slight downward drift.
  • A cup and handle is considered a bullish continuation pattern and is used to identify buying opportunities.
  • Traders should place a stop buy order slightly above the upper trend line of the handle.
Webinar Presentation
WILL BE POSTED AFTER THE SESSION
Webinar Q&A Transcript
WILL BE POSTED AFTER THE SESSION

The post Cup and Handle: #AskGyani with Nooresh Merani appeared first on TradeGyani .

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E.V.Viswanath is an independent SEBI Registered Research Analyst. Earlier, Viswanath worked in I.T for over 10 years.

In 2019, I believe Equity is likely to outperform over other asset classes. It is going to be best year as we have had a good correction in 2018.
E.V. Viswanath
"Trade Gyani"

Abhinav:

Thanks for doing this interview Viswanath! Please tell us a little about your background and journey and how you got into becoming a Research Analyst?

Viswanath:

My educational background is Master of Computer Applications (M.C.A). I started my career as a software engineer & worked for 10yr in I.T field with companies like Oracle, L&T Infotech & TechM until 2016.

Due to my interest in financial markets, though my education background is of Maths & Statistics, I like to read & understand financial concepts.

Both, lack of interest to continue in IT Field & my passion towards financial market have led me to became a Research Analyst.

Abhinav:

What led you to start investment advisory business and the inspiration behind it? 

Viswanath:

In continuation to the above, since 2016 I have been active on twitter & was following a Technical Analyst named @ankurstech. ‏One day I posted a set of charts to him though I had never interacted with him before. To my surprise, he liked my analysis & encouraged me to post analysis snapshots on twitter. It inspired me to know more about Technical Analysis. Later, My friends too encouraged me to appear for Certification Exams. Finally, I cleared both Investment advisor & Research Analyst Exams. However, Due to technical issues, I preferred Research Analyst over Investment Advisor.

I think of Risk as the potential for permanent impairment of capital & which can affect our financial goals.
E.V. Viswanath​
"Trade Gyani"

Abhinav:

Which is one widely held notion that Investors believe in, which you believe is wrong or does not work anymore? 

Viswanath:

Technical Analysis may not work for Long term Investment. This is not true. However, I strongly believe that by using Technical Analysis along with Fundamental Analysis, investors may stay invested in a stock for Long-term as it compliments Fundamental Analysis. Also, it helps to do pyramiding (Additional buy) of existing investment.

Abhinav:

Can you tell us in detail how you invest and trade? Let’s start with investing ?

Viswanath:

 Either I choose Topdown or Bottom Up Investing. 

TopDown Approach starts with evaluating favourite set of sectors, & eventually digging deeper to choose  1 or 2 Stocks in each sector for possible investment consideration.

Bottom Up Investing Approach starts with evaluation of favourite stocks, compare it with peers &  find an interesting Sector(s) for possible investment consideration.

In both these Approaches mentioned above, I thoroughly verify financial ratios of past 10yrs or so. Parameters like Sales %, OPM %, NPM %, FCF, D2E, Credit Agency ratings, etc will be observed. Here, comparing a stock with its peers of the same industry helps to take a final decision on investment. 

I use Technical analysis, which helps gauge short, midterm trend of a stock. Also, going to help to take appropriate entry & pyramiding, Stop-loss & exit of an investment.

Abhinav:

And your trading strategies? 

Viswanath:

My Trading Strategies are completely based on Technical Analysis.

Based on Time Frame, Trend, Momentum, Volume of a stock, Trade decision will be taken with precise stop loss.

Usually, A trading strategy is a set of tested rules and principles which have to make sense to you and which have to match your personality. A trader’s personality directly impacts choosing the appropriate parameters of a trading strategy and what to be aware of when it comes to trader strategy. 

Abhinav:

Were you always a “techno-funda” investor or did you try other trading strategies before closing in on the current form? What has been your Eureka moment in trading? 

Viswanath:

No. Earlier, only Technical Analysis is my cup of Coffee though I read financial concepts as part of academic interest. 

Later, I started using Technical analysis with Fundamental Analysis as both of them are complementary to each other. 

In other words, as i am comfortable in both T.A & F.A, I decided to use them together for the best interest of Investment Journey. 

Abhinav:

How do you identify which stocks to trade?

Viswanath:

The objective to buy trading stocks is to make some quick money. Thus, I usually check the cues (trend or momentum with volume) available in charts of stocks. For identifying Trend, one may use naked price chart with Moving Averages, M.A Crossover, Indicators like ADX, for momentum in the trend, RSI, CCI etc. Volume may also be used as an additional confirmation parameter in decision making.

In Addition to that, The criteria to identify investment stocks & trading stocks is completely different. Usually, Trading stocks are bought from short-term investment perspective or day trading. Also, trading stocks should not be considered for investment purpose or vice versa. In case of trading stocks, you must know when to enter & when to exit.

In case of Retail Trader, put a check on maximum number of Open Positions, Focus on position-sizing, Money management, controlling emotions as market fluctuates.
E.V. Viswanath​​
"Trade Gyani"

Abhinav:

 How do you decide your exits?

Viswanath:

Basically exit may depends on whether it is trading or investment stock. 

Regarding trading, I prefer to Exit a stock based on techniques of Technical Analysis & DOW Theory principles. Only Exception is market selloff, extreme bearish market conditions/sentiments etc.

In case of investment, my exit depends on either Timeframe selected or Risk willing to take or at a critical price level based on T.A, etc.

Abhinav:

Which is your favourite trade so far? 

Viswanath:

There are many such trades. However, the one which comes to my mind immediately is GUJFLUORO. It is taken with a short term trading prospective. It has been achieved its target with in short span of 2 weeks.

Abhinav:

When you look back at your investment mistakes, were there any common elements or themes? A real-life example would be helpful? 

Viswanath:

My common investment mistakes so far are

1. Averaging of a Loss making investment.

In case of Investment of Sudar industries, multiple times averaging has been done though it had been falling continuously. Because of the lesson learnt in this regard, I started referring financial statements & try to apply concepts of Fundamental Analysis.

2. Casual attitude of not placing Stop-loss for a stock in trading terminal.

Abhinav:

How do you think about risk? How do you employ that in your investing?  

Viswanath:

I think of risk as the potential for permanent impairment of capital & which can affect our financial goals. 

Especially, Investing in equity stocks is risky and subject to the volatility of the markets. As per Modern Portfolio Theory, risk must be measured in terms of all of one’s investments, not a single investment made out of context.

Consistently monitoring of the risk at both the individual stock & portfolio level is very much required.  Factors which may affect risk such as debt levels, Credit Rating Agencies remarks & rating and sell side sentiment, etc are should be monitored carefully.

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#AskGyani - How to analyse management quality - YouTube

In this session, Avinash Gorakshkar highlights the key steps/tools that investors should use to find out a good management and avoid bad management. 

An investor should listen to him carefully and inculcate the ideas in her stock analysis process so that they may avoid falling into the trap of unscrupulous managements that try to benefit at the cost of minority shareholders.  

"If management is about running the business, governance is about seeing that it is run properly"
Bob Tricker
Corporate Governance Expert
Webinar Presentation
Webinar Q&A Transcript

Question:

MGL is up by 8% in a month , do you think , it has more upside ?

Answer:

This question seems to be co-relating to the short term profile of the investor. I would like to mention that MGL is one of those companies which has monopoly for pipeline business for the gas in the state of Maharashtra. And, typically caters is to both the industrial as well as retail customers. They have a B2C model as well as B2B model. 

They make CNG as well as obviously make PNG for residential purpose as well as for other industrial customers like hotels, malls. So, I would Believe in that if your horizon is going to be longer so this can be a company where possibly earning are going to grow and significantly good pace. 


They have a very strong balance sheet virtually more date on the balance sheet as very large cash component on the balance sheet and extremely very good capital site. So, my suggestion is that if you are looking for a very big upside then you can buy the stock and remain invested. Typically I would believe that give a 2 years of horizon because gas is the eatput which is the more and more support from government considering that it’s a clean resource. And, sense is that hold it for next 2 years, you could make a lot of money rather than looking at short term kind.

Question:

Can i buy HDFCBANK for 6 month , how much upside is expected ?

Answer:

I would like to mention very clearly, HDFCBANK is well establish blue chip. We all know the kind of wealth creation HDFCBANK has generated in last period of 15 years. In fact there are many market names which actually bought this bank at Rs. 40-50 and today we have seen the kind of upside which are coming. So,  my suggestion is that whenever you are investing in such companies madam, please do not take a short term goal. 

A 6 month view on HDFCBank may be a trading bounce. But, are you going to be happy with 5% upside or 10% upside. So, it all depends on risk appetite and risk reward which you are expectations which you have. So clearly it’s not HDFC Bank will not do well but keep a timeline for at least 18-24 months. This bank is going to grow in future also but looking at the time horizon which you have mentioned I would be surprised if you will be possibly get a very big upside because the base value has also gone up significantly.

Question:

What do you think, which is better options or direct equity?

Answer:

I think this gentleman seems to be a trader or an investor so my suggestion is that in options for future you play on underline and in equity you actually buy share of a company. So, it’s yours call just like a doctor can not recommend same medicine to everybody. Obviously recommend different medicine for everybody. You have to see your risk appetite, risk return expectations and then take a call. 

My suggestion is that is you possibly have split between investment and trading that could be an ideal combination because the fact of matter is that trading in the volatile business. You obviously do not know when you can make a profit or take a loss but investing is more safer option to follow proper investing strategies so, my suggestion is to stick to equity may be to smaller extent but don’t ignore equity come first.

Question:

What should i do on SBILIFE , holding this stock from IPO

Answer:

As far as insurance market is concerned, both life and general insurance side, insurance business has now started looking up quite rapidly in fact, talk about SBILife, new premium growth has exceeded almost 35-40%. And, our sense is that the kind of network it enjoys along with State Bank of India, it’s gone to be definitely be poised every strong player for over next 3 years. 

So, please do not look at SBILife or any insurance company for a 6 months view. These businesses are long term and typically you will not be able to get significant return if your timeline is less than 2-3 years. So, keep holding on and I would believe that for next 2-3 years we are definitely going to see not only the market growth exploding, more and more customers getting sort to API is the highly under penetrated market. My suggestion is please hold on for next 2-3 years, you should definitely be rewarded.

Question:

Please let me know about IDEA?

Answer:

My sense is that within the telecom market, if you look at the structure of the market and the competition intensity now, it is very clear that almost all the telecom firms are going to face further turbulent time considering that Reliance jio has now created a very pears competitive scenario in the market. In fact are to you weaken in the market. further more importantly once the fibre to home network actually starts commissioning, that is something going to eat into market share of all the other telecom pairs. 

No, Idea may not be a great idea in fact, now it’s called Vodafone India and recently the company announced the dividend making an around of 25000 crores. Now, one major aspect which an investor should know as  have been mentioning in my checklist, this value destruction use case. 

Now, when a company announce an equity concern were around 25000 crores. What is the first thing which comes to yours mind? it’s basically fact that your equity is going to increase and your earnings are not going to increase and what is the money going to be user for? It is going to be used for basically pushing your product in the market possibly ensuring that you fight further with Reliance Jio. So, clearly in next 2 years I would believe that Vodafone india will unlikely to give you major positive surprise despite the fact that now it has come down to bottom level of 20-25. So, please do not go on the price. 

Price may remain Rs. 20-25 for a long time but incremental value will come only when company’s operating cash flow, company’s operating profitability improve and that’s would take a long time. It could be a traders wave rate but typically from fundamental stand point of view I think it’s better to stay away.

Question:

Yesterday DCW was 20% up on upper circuit , whats your view on this stock for long term ?

Answer:

Clearly, i have been a follower that I don’t like commodity businesses and clearly DCW is it to as soda and caustic soda. For a stock which is low price stock which is low price stock of 20% circuit filter is not a big deal. And, you have been seen in company like soodloan which have mood up by 25% but one more to ask you what has been the base price. It’s almost not more than 10-12%. So, clearly these kind of percentages are not broad indicator to decide whether to buy a stock. I would suggest that you please invest in businesses which are scalable and which are big in size and as far as possible please stay away from commodities.

Question:

FRETAIL is down 18% in last 3 month shall i exit from this stock now.

Answer:

I would like to ask Manoj Is it a short term investment or long term investment?. Now, if you not able to write volatility in the market clearly, 18-20% drop down are something that an investor should be worried about because clearly we have seen that mid caps coming down almost 40-50% so some of the front line also coming down. So I think the basic story to cut it short is that this company has great opportunity ahead. 

The Indian retail market is yet a very large opportunity  and despite the fact that it’s volume driven market which I would believe that if you have 2-3 years vision then only invest in this company. And, only then the risk reward will be very favourable otherwise, in the near term I would be surprise that stock may be range bound for certain time and actually it tests for yours patience. So, keep a long term horizon and obviously if you really want to make a significant upside then you should really remain invested.

Question:

What could be drop down that an investor should be ok with that?

Answer:

Ideally, I think drop down should be about 30-40% and frankly just looking at drop down is not a main character. You have to see how the incremental earnings catch up going to happen. Is it the business where top level has improved, whether top line has improved and clearly what is the capital allocation in the business. In many companies there is very distorted capital allocation so, putting all these factors into the mind the final thing what you have to see is what price are you buying the business. Once those quality factors are improved then you go and see the price at what price are you buying. So, these are the broad parameters which an investor should thought.

In many quality mid caps have down by 30-40%. Now, blindly going to buy something which is 52 weeks low or has been 80% down. Understand one thing in mid caps that going forword also, only quality mid-caps whether is a reasonable amount of liquidity or reasonable amount of good quality investors as well, only those companies will do it. Because clearly we may not find the same scenario what happened in 2017 and 2019. So, we need to be careful and I think as I was mentioning to you  mid-cap bubble is very dangerous, once the fall happens the liquidity will not allow you to exit. So, you need to get into quality business. 

Again look at it from business point, look at parameters like what is ROE, what is return on capital employeed, whether earning are going to grow typically from core operations consistently, may be 15-20% lkind of earning growth from angular basis can be a fair amount indicator that a good amount of visibility and good at valuable kind of potential which is left to be available, that’s the value on the table after the drop.

18% loss is not big loss but if you are investing in this company for around 2 years then it is good stock.

Question:

View on RBLBANK ?

Answer:

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Dividend investing; also commonly known as Income investing, is an investment strategy that focuses on investing in stocks that pay high dividends or have rapidly growing dividends.

This blog post is fifth in a series of posts called – “All You Need To Know About Different Investing Strategies“.

The obvious advantage of using this strategy is – it creates another stream of income for you while portfolio grows with asset appreciating in value.

Many people invest in dividend-paying stocks to take advantage of the steady payments and the opportunity to reinvest the dividends to purchase additional shares of stock. Since many dividend-paying stocks represent companies that are considered financially stable and mature, the stock prices of these companies may steadily increase over time while shareholders enjoy periodic dividend payments.

"Successful investing is about owning businesses and reaping the huge rewards provided by the dividends and earnings growth of our nation's - and for that matter, the world's - corporations."
Jack Bogle
"Trade Gyani"
What is a Dividend?

 A dividend is payment made by a corporation to its shareholders in the form of cash or stock. Anyone who is a shareholder, he can think of a dividend as his share of the company’s profits. Most stable companies offer dividends to shareholders. Dividends are paid in cash or as additional shares of stock. While small companies may just have one or a few owners, very large companies raise money through selling shares and distributing the ownership over thousands of owners.

After paying its creditors, a company can use part or whole of the residual profits to reward its shareholders as dividends. However, when firms face cash shortage or when it needs cash for reinvestments, it can also skip paying dividends. When a company announces dividend, it also fixes a record date and all shareholders who are registered as of that date become eligible to get dividend payout in proportion to their shareholding. The amount is usually credited to investors account in a few weeks time. 

Types of Dividends

Dividends as said earlier are a your share of the profits that you get. Now a company can reward you with dividends by various means. Here’s some listed:

Cash Dividends

This is the most common form of dividend per share an investor will receive.  Cash dividends represent ownership to a firm’s distributed profits to shareholders and provide an incentive to investors to own the shares of large companies, even if they are not growth-oriented. Companies that pay cash dividends typically generate strong cash flows for subsequent quarters.

Property Dividends

A property dividend is an alternative to cash or stock dividends. A property dividend can either include shares of a subsidiary company or any physical assets owned by the company such as inventories, equipment or real estate. The dividend is recorded at the market value of the asset provided, although the shareholder may hold onto the asset for the possibility of further long-term capital gains. 

Stock Dividends

Stock dividend is a form of dividend payment where the companies return a profit to their investors by giving them additional shares of the company instead of a cash dividend. This makes them own a higher number of shares in that company. The decision of issuing this stock dividend is done by the board of directors of that company.

Scrip Dividends

The company promises payment to shareholders at a later date. Scrip dividends are essentially a promissory note to pay shareholders at a future date. When a corporation issues a scrip dividend, they’re allowing shareholders to increase the size of their holdings without incurring any fees.

Liquidating Dividends

The company liquidates all its assets and pays the sum to shareholders as a dividend. Liquidating dividends are usually issued when the company is about to shut down payments are based on how many shares a shareholder has in the company.

Should You Invest in Dividend Stocks?

A company that pays consistent, rising dividends is likely a financially healthy firm that generates consistent cash flow – this cash is where the dividends come from, after all. 

These companies are often stable and their stock prices tend to be less volatile than the market in general. As such, they may be lower risk than companies that don’t pay dividends and that have more volatile price movements. 

Because many dividend-paying stocks are lower risk, they make an appealing investment for both younger people looking for a way to generate wealth over the long haul and older adults who want to build a steady income flow during retirement.

How to Invest in Dividend Stocks?

Buying dividend stocks is the same as buying any other kind of stock. First, investor has to open a brokerage account with an online broker and fund the account. Second, he needs to research the kinds of companies that pay a dividend and are considered reliable in their payments, proven long-term record of stability, growth, and profitability. Many online stockbrokers offer tools like screeners that will help investor easily find stocks that pay a high dividend. Once having developed plan and investing strategy, there are numerous ways to invest in it.

The basic principles are:

  • Invest in lots of dividend-paying companies at the same time. Before investing in any company, check whether earnings and revenues are growing and ensure it’s not overly burdened with debt. All of these factors have an impact on payouts.
  • Invest in companies with steady long-term dividend growth. When a company issues a profit warning it usually sets off alarm bells that its dividend could be in danger. Also, if a firm’s dividend is out of sync with its competitors’ payouts that too could be a sign that all is not well.
  • Most companies allow their shareholders the ability to setup a dividend reinvestment plan or Drip. These plans make it easy on the investor as all dividend payments are invested directly back into more stock. 
  • Tax rules can change and the benefits and drawbacks of any particular tax treatment will vary with individual circumstances. For the legal or tax implications of any investment, seek independent professional advice.

How to calculate Dividend per Share?
DPS

In this formula for Dividends per Share, the most important part is the “number of shares”. Simply take the record of the beginning shares and the ending shares, and calculate the simple average of outstanding shares. Or else, go for weighted average. 

Where can you find the Dependent Variables?

You can usually find everything you need (periodic outstanding shares and dividend paid ) by going to the company’s website and clicking on Financial Statements.

Maths Equations

Dividend per Share!

$$DPS = { \left(Annual Dividend \over Number of Shares \right) }$$

Famous Investors Associated with Growth Investing

Anne Scheiber, who was born in 1893, studied at secretarial school before working as a bookkeeper. She later graduated from George Washington University with a degree in law. She accumulated stocks in brand name companies and then reinvested dividends for decades. 

She is one that speaks to the power of dividend reinvestment plans. Grace Groner held her shares over 70 years, and through the power of capital gains, share splits, and reinvestment of the dividends she amassed a fortune. At the time of her death at age 100 on January 19th, 2010, Grace owned more than 100,000 shares of Abbott Laboratories which were valued at approximately $7 million.

Ronald Read, who left an $8 million fortune behind when he passed away in 2015. The portfolio was generating close to $20,000 in monthly dividend income on average. This portfolio was a result of frugality, hard work, and ability to buy stocks to hold for decades, while patiently reinvesting dividends.

In any investing strategy, its difficult to leave Mr. Buffet out. He is like Sachin Tendulkar, if there is a worthwhile stat, he will feature. 

Primarily known as a value investor, he is also a big fan of dividends as well. Warren Buffett’s Berkshire Hathaway’s dividend income from top six companies alone in a year is estimated at roughly about $2,860 million ($2.86 billion). Warren Buffett has a total of 47 companies in his portfolio, majority of which are actually dividend paying.

Final Thoughts

It is the simple stock pick held over a long time that works out the best. Getting started with dividend investing can be a little intimidating at first when anyone considers all of the moving parts at hand. For beginners, it’s important to take the time to understand basic concepts, like all of those outlined in this article, before moving onto more involved strategies.

The post Dividend Investing: Pays The Best Interest appeared first on TradeGyani .

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Dividend investing; also commonly known as Income investing, is an investment strategy that focuses on investing in stocks that pay high dividends or have rapidly growing dividends.

This blog post is fifth in a series of posts called – “All You Need To Know About Different Investing Strategies“.

The obvious advantage of using this strategy is – it creates another stream of income for you while portfolio grows with asset appreciating in value.

Many people invest in dividend-paying stocks to take advantage of the steady payments and the opportunity to reinvest the dividends to purchase additional shares of stock. Since many dividend-paying stocks represent companies that are considered financially stable and mature, the stock prices of these companies may steadily increase over time while shareholders enjoy periodic dividend payments.

"Successful investing is about owning businesses and reaping the huge rewards provided by the dividends and earnings growth of our nation's - and for that matter, the world's - corporations."
Jack Bogle
"Trade Gyani"
What is a Dividend?

 A dividend is payment made by a corporation to its shareholders in the form of cash or stock. Anyone who is a shareholder, he can think of a dividend as his share of the company’s profits. Most stable companies offer dividends to shareholders. Dividends are paid in cash or as additional shares of stock. While small companies may just have one or a few owners, very large companies raise money through selling shares and distributing the ownership over thousands of owners.

After paying its creditors, a company can use part or whole of the residual profits to reward its shareholders as dividends. However, when firms face cash shortage or when it needs cash for reinvestments, it can also skip paying dividends. When a company announces dividend, it also fixes a record date and all shareholders who are registered as of that date become eligible to get dividend payout in proportion to their shareholding. The amount is usually credited to investors account in a few weeks time. 

Types of Dividends

Dividends as said earlier are a your share of the profits that you get. Now a company can reward you with dividends by various means. Here’s some listed:

Cash Dividends

This is the most common form of dividend per share an investor will receive.  Cash dividends represent ownership to a firm’s distributed profits to shareholders and provide an incentive to investors to own the shares of large companies, even if they are not growth-oriented. Companies that pay cash dividends typically generate strong cash flows for subsequent quarters.

Property Dividends

A property dividend is an alternative to cash or stock dividends. A property dividend can either include shares of a subsidiary company or any physical assets owned by the company such as inventories, equipment or real estate. The dividend is recorded at the market value of the asset provided, although the shareholder may hold onto the asset for the possibility of further long-term capital gains. 

Stock Dividends

Stock dividend is a form of dividend payment where the companies return a profit to their investors by giving them additional shares of the company instead of a cash dividend. This makes them own a higher number of shares in that company. The decision of issuing this stock dividend is done by the board of directors of that company.

Scrip Dividends

The company promises payment to shareholders at a later date. Scrip dividends are essentially a promissory note to pay shareholders at a future date. When a corporation issues a scrip dividend, they’re allowing shareholders to increase the size of their holdings without incurring any fees.

Liquidating Dividends

The company liquidates all its assets and pays the sum to shareholders as a dividend. Liquidating dividends are usually issued when the company is about to shut down payments are based on how many shares a shareholder has in the company.

Should You Invest in Dividend Stocks?

A company that pays consistent, rising dividends is likely a financially healthy firm that generates consistent cash flow – this cash is where the dividends come from, after all. 

These companies are often stable and their stock prices tend to be less volatile than the market in general. As such, they may be lower risk than companies that don’t pay dividends and that have more volatile price movements. 

Because many dividend-paying stocks are lower risk, they make an appealing investment for both younger people looking for a way to generate wealth over the long haul and older adults who want to build a steady income flow during retirement.

How to Invest in Dividend Stocks?

Buying dividend stocks is the same as buying any other kind of stock. First, investor has to open a brokerage account with an online broker and fund the account. Second, he needs to research the kinds of companies that pay a dividend and are considered reliable in their payments, proven long-term record of stability, growth, and profitability. Many online stockbrokers offer tools like screeners that will help investor easily find stocks that pay a high dividend. Once having developed plan and investing strategy, there are numerous ways to invest in it.

The basic principles are:

  • Invest in lots of dividend-paying companies at the same time. Before investing in any company, check whether earnings and revenues are growing and ensure it’s not overly burdened with debt. All of these factors have an impact on payouts.
  • Invest in companies with steady long-term dividend growth. When a company issues a profit warning it usually sets off alarm bells that its dividend could be in danger. Also, if a firm’s dividend is out of sync with its competitors’ payouts that too could be a sign that all is not well.
  • Most companies allow their shareholders the ability to setup a dividend reinvestment plan or Drip. These plans make it easy on the investor as all dividend payments are invested directly back into more stock. 
  • Tax rules can change and the benefits and drawbacks of any particular tax treatment will vary with individual circumstances. For the legal or tax implications of any investment, seek independent professional advice.

How to calculate Dividend per Share?
DPS

In this formula for Dividends per Share, the most important part is the “number of shares”. Simply take the record of the beginning shares and the ending shares, and calculate the simple average of outstanding shares. Or else, go for weighted average. 

Where can you find the Dependent Variables?

You can usually find everything you need (periodic outstanding shares and dividend paid ) by going to the company’s website and clicking on Financial Statements.

Maths Equations

Dividend per Share!

$$DPS = { \left(Annual Dividend \over Number of Shares \right) }$$

Famous Investors Associated with Growth Investing

Anne Scheiber, who was born in 1893, studied at secretarial school before working as a bookkeeper. She later graduated from George Washington University with a degree in law. She accumulated stocks in brand name companies and then reinvested dividends for decades. 

She is one that speaks to the power of dividend reinvestment plans. Grace Groner held her shares over 70 years, and through the power of capital gains, share splits, and reinvestment of the dividends she amassed a fortune. At the time of her death at age 100 on January 19th, 2010, Grace owned more than 100,000 shares of Abbott Laboratories which were valued at approximately $7 million.

Ronald Read, who left an $8 million fortune behind when he passed away in 2015. The portfolio was generating close to $20,000 in monthly dividend income on average. This portfolio was a result of frugality, hard work, and ability to buy stocks to hold for decades, while patiently reinvesting dividends.

In any investing strategy, its difficult to leave Mr. Buffet out. He is like Sachin Tendulkar, if there is a worthwhile stat, he will feature. 

Primarily known as a value investor, he is also a big fan of dividends as well. Warren Buffett’s Berkshire Hathaway’s dividend income from top six companies alone in a year is estimated at roughly about $2,860 million ($2.86 billion). Warren Buffett has a total of 47 companies in his portfolio, majority of which are actually dividend paying.

Final Thoughts

It is the simple stock pick held over a long time that works out the best. Getting started with dividend investing can be a little intimidating at first when anyone considers all of the moving parts at hand. For beginners, it’s important to take the time to understand basic concepts, like all of those outlined in this article, before moving onto more involved strategies.

The post Dividend Investing: Pays The Best Interest appeared first on TradeGyani .

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AVWAP or Anchored Volume Weighted Average Price indicator was first developed by Brian Shannon at Alphatrends.net

AVWAP’s primary usage is to determine important support and resistance levels.

Anchored VWAP is applied to a specific bar, and from that point calculates the cumulative value and volume to determine the weighted average price. 

"Alphatrends' Anchored VWAP is the perfect combination of Price, Volume and Time, I would feel like I am trading blind without it."
Brian Shannon
"Trade Gyani"
How to attend?
Simple steps to attend and learn:
 
  1. Log on to TradeGyani:  Sunday 10th March, 11:00 AM 
 That’s all there is to it, just one step to it. No payment, no fee. 
 
 PS: #AskGyani is a periodic live interactive webinar session we conduct for free!

More on it following the webinar.

In the meanwhile feel free to watch previous #AskGyani sessions on YouTube:

Deepak Thakran's - Q&A Session - YouTube
Play Video

The post AVWAP: #AskGyani with Deepak Thakran appeared first on TradeGyani .

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Index investing is a way of gaining exposure to an investment market. It requires less research because it is an investment in all of the securities in an index. Even for those with little investment experience; index investing is easy to understand. It doesn’t require insider knowledge, or a degree in finance, or anything other than a few minutes of time.

This blog post is sixth in a series of posts called – “All You Need To Know About Different Investing Strategies“.

The basic principle is that by buying a product that tracks particular index – either via an index tracker fund or an Exchange Traded Fund (ETF) – investors automatically create a portfolio of investments that are as diverse as the companies that make up the index.

Once they select the indices they wish to track, it is usually simple to set up regular contributions via their stockbroker and because the constituents of the index change over time there should be little need to rebalance their portfolio as it is effectively done for them. Then, they can sit back and relax –but they’re in for the long haul and their aim is to match as closely as possible to the market (index) return while minimizing transaction costs incurred.

"Don't look for the needle in the haystack. Just buy the haystack!"
Jack Bogle
"Trade Gyani"
Should You Invest in Index Funds?

The popularity of index funds has exploded over the past 20 years, creating a rich subject for scholars and commentators. They are considered passive because try to match a predetermined set of stocks rather than beat the market. 

Risk-averse investors should lean toward index funds. In fact, a randomly chosen index fund performs better than a randomly chosen active fund after accounting for risk. It’s easy to assume that investing, like cooking, requires skill to get the right mix of ingredients. But that’s not the case with index funds. 

Effort goes into building them, but these ready-made investments need minimal intervention. Yet the outcomes are appetizing indeed.

Once they select the indices they wish to track, it is usually simple to set up regular contributions via their stockbroker and because the constituents of the index change over time there should be little need to rebalance their portfolio as it is effectively done for them. Then, they can sit back and relax –but they’re in for the long haul and their aim is to match as closely as possible to the market (index) return while minimizing transaction costs incurred.

Means of Indexing Insvetments

Indexing being passive in nature, there are only two options via which you can invest.

Exchange Traded Funds

Exchange Traded Funds, or ETFs, are essentially Index Funds that are listed and traded on exchanges like stocks. Exchange Traded Funds (ETFs) are one of the fastest growing investment products in the world. ETFs are bought and sold on stock exchanges like regular shares. By investing in ETFs can include stocks, bonds and cash.

Enhanced Index Funds

Enhanced index funds combine the best of both passive and actively managed funds. They offer low operating costs, low turnover, and diversification. Moreover, they implement a variety of enhancement strategies to try and beat the return of the tracking index. Enhanced index funds can be more profitable than regular index funds.

How to select an Index Fund?

Index funds can be very beneficial, especially for those investors, who do not have much knowledge about investing in stocks nor have the time to research and find good, actively managed funds. Before investments, investors are first going to need a brokerage account. If they already have one, feel free to jump to the next step!

Indexing being passive in nature, doesn't require much effort. However keeping below in mind helps increase the returns further.

  • Keep in mind that index funds don’t really vary from firm to firm. So look for a provider with a good reputation for offering low-cost, no-load funds (that doesn’t charge commission for each sale). It’s because index funds may lose higher value during a market downturn. It’s always advisable to have a mix of actively-managed funds and index funds in their portfolio.
  • Before investing in an index fund, they need to shortlist a fund which has the minimum tracking error. The lower the number of errors, the better is going to be performance of the fund.
  • The real differentiating factor between two index funds will be their expense ratio. The fund having a lower expense ratio will give marginally higher returns.
  • Those who choose index funds must be patient enough to stick around for at least that long. Then only, as an investor can realize the fund’s full potential.
  • When they redeem units of index funds, they earn capital gains. These capital gains are taxable in their hands. The rate of taxation depends on how long they stayed invested in index funds i.e. the holding period.
Calculating the return of Index Funds
To calculate the returns follow these steps:

  • Find the price level of the chosen index on the first and last trading days of the period investor are evaluating. Be sure to use the opening price on the first day and the closing price on the last in order to make sure their calculation is as accurate as possible.
  • Next, subtract the starting price from the ending price to determine the index’s change during the time period.
  • Finally, divide the index’s change by the starting price, and multiply by 100 to express the index’s return as a percentage.
Famous Investors Associated with Growth Investing

(May 8, 1929 – January 16, 2019) He was an American investor, business magnate, and philanthropist. He was the founder and chief executive of The Vanguard Group, and is credited with creating the first index fund.

He is an American investment consultant. In 1972, Ellis founded Greenwich Associates, an international strategy consulting firm focused on financial institutions. Ellis is known for his philosophy of passive investing through index funds, as detailed in his book “Winning the Loser’s Game”.

He has been an industry leader in index investments for more than 25 years. Charles R. Schwab launched the Schwab 1000 Index in 1991. His goal was to give investors a simple, low-cost way to participate in the growth of the country’s largest companies. 

In any investing strategy, its difficult to leave Mr. Buffet out. He is like Sachin Tendulkar, if there is a worthwhile stat, he will feature. This however is an exception, he didn’t invest in an index fund, rather bet on one. Read further and you will start appreciating the power of Indexing.

In 2007, legendary investor Warren Buffett made a $1 million bet against Protégé Partners those hedge funds wouldn’t outperform an S&P index fund, and he won. “The trick is not to pick the right company,” Buffett says. “The trick is to essentially buy all the big companies through the S&P 500 and to do it consistently.”

Final Thoughts

Some people make investing their hobby, and derive serious enjoyment from researching and trading stocks. But that’s not for everyone. Others are happy to pay financial advisors for the convenience of not having to think about their investing. And if they can afford it, more power to them. But if anyone who wants a low-maintenance, low-cost way to invest his money, for retirement, for a home purchase or for any other financial goal, it can be a good idea to look into index funds. He’ll have the satisfaction of knowing that more of his money is growing and less is going to pay fees. 

The post Index Investing: The Best Choice For Passive Investors appeared first on TradeGyani .

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