Flag this message INVESTMENT STRATEGIES OF SWISS WEALTHY

Switzerland is famous for its wealth. Much of this is attributed to the clever burghers who run its many banks - the so-called Gnomes of Zurich. The investment strategies of the Swiss wealthy are now available to all, thanks to the work of Max Heinrich, who has studied their principles of making money. He has called these principles the Zurich Axioms and most of them make a lot of sense.

Here they are:

On Risk
- Worry is not a sickness but a sign of health - if you are not worried, you are not risking enough.
- Always play for meaningful stakes - if an amount is so small that its loss won't make any significant difference, then it isn't likely to bring any significant gains either.
- Resist the allure of diversification.

On Greed
- Always take your profit too soon.
- Decide in advance what gain you want from a venture, and when you get it, get out.
On Hope
- When the ship starts sinking, don't pray. Jump.
- Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.

On Forecasts
- Human behaviour cannot be predicted. Distrust anyone who claims to know the future, however dimly.

On Patterns
- Chaos is not dangerous until it starts to look orderly.
- Beware the historian's trap - it is based on the age-old but entirely unwarranted belief that the orderly repetition of history allows for accurate forecasting in certain situations.
- Beware the chartist's illusion - it is characteristic of human minds to perceive links of cause and effect where none exist.
- Beware the gambler's fallacy - there's no such thing as "Today's my lucky day" or "I'm hot tonight".

On Mobility
- Avoid putting down roots. They impede motion.
- Do not become trapped in a souring venture because of sentiments like loyalty and nostalgia.
- Never hesitate to abandon a venture if something more attractive comes into view.

On Intuition
- A hunch can be trusted if it can be explained.
- Never confuse a hunch with a hope.

On the Occult
- If astrology worked, all astrologers would be rich.
- A superstition need not be exorcised. It can be enjoyed, provided it is kept in its place.

On Optimism & Pessimism
- Optimism means expecting the best, but confidence mean knowing how you will handle the worst. Never make a move if you are merely optimistic.

On Consensus
- Disregard the majority opinion. It is probably wrong.
- Never follow speculative fads. Often, the best time to buy something is when nobody else wants it.

On Stubbornness
- If it doesn't pay off the first time, forget it.
- Never try to save a bad investment by "averaging down".

On Planning
- Long-range plans engender the dangerous belief that the future is under control. It is important never to take your own long-range plans or other people's seriously.


In essence these axioms point to the benefit of having an investment strategy and sticking to it, regardless of what other investors say or do. If you don't have an investment strategy, you could do worse than adopt these principles. However, don't be afraid to add or subtract ones according to what works for you.

Sarve Jana Sukhino Bhavanthu !
May all be happy, May none suffer !

Flag this message INVESTMENT STRATEGIES OF SWISS WEALTHY

Switzerland is famous for its wealth. Much of this is attributed to the clever burghers who run its many banks - the so-called Gnomes of Zurich. The investment strategies of the Swiss wealthy are now available to all, thanks to the work of Max Heinrich, who has studied their principles of making money. He has called these principles the Zurich Axioms and most of them make a lot of sense.

Here they are:

On Risk
- Worry is not a sickness but a sign of health - if you are not worried, you are not risking enough.
- Always play for meaningful stakes - if an amount is so small that its loss won't make any significant difference, then it isn't likely to bring any significant gains either.
- Resist the allure of diversification.

On Greed
- Always take your profit too soon.
- Decide in advance what gain you want from a venture, and when you get it, get out.
On Hope
- When the ship starts sinking, don't pray. Jump.
- Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.

On Forecasts
- Human behaviour cannot be predicted. Distrust anyone who claims to know the future, however dimly.

On Patterns
- Chaos is not dangerous until it starts to look orderly.
- Beware the historian's trap - it is based on the age-old but entirely unwarranted belief that the orderly repetition of history allows for accurate forecasting in certain situations.
- Beware the chartist's illusion - it is characteristic of human minds to perceive links of cause and effect where none exist.
- Beware the gambler's fallacy - there's no such thing as "Today's my lucky day" or "I'm hot tonight".

On Mobility
- Avoid putting down roots. They impede motion.
- Do not become trapped in a souring venture because of sentiments like loyalty and nostalgia.
- Never hesitate to abandon a venture if something more attractive comes into view.

On Intuition
- A hunch can be trusted if it can be explained.
- Never confuse a hunch with a hope.

On the Occult
- If astrology worked, all astrologers would be rich.
- A superstition need not be exorcised. It can be enjoyed, provided it is kept in its place.

On Optimism & Pessimism
- Optimism means expecting the best, but confidence mean knowing how you will handle the worst. Never make a move if you are merely optimistic.

On Consensus
- Disregard the majority opinion. It is probably wrong.
- Never follow speculative fads. Often, the best time to buy something is when nobody else wants it.

On Stubbornness
- If it doesn't pay off the first time, forget it.
- Never try to save a bad investment by "averaging down".

On Planning
- Long-range plans engender the dangerous belief that the future is under control. It is important never to take your own long-range plans or other people's seriously.


In essence these axioms point to the benefit of having an investment strategy and sticking to it, regardless of what other investors say or do. If you don't have an investment strategy, you could do worse than adopt these principles. However, don't be afraid to add or subtract ones according to what works for you.

Sarve Jana Sukhino Bhavanthu !
May all be happy, May none suffer !

GEODESIC LTD -JUST BUY

Equity Share Capital: - 18.44CR
Book Value: - 46Rs
FACE VALUE: - 2Rs
INTERIAM DIV: - 40%

LAST CONSO LIDATED E.P.S:- 16.25 Rs (148.63Cr) ----on 2F.v

9 MONTHS CONSOLIDATED E.P.S:- 23.97 Rs (217.31Cr) ---- on 2F.v

Expecting 85Cr in Q4. FOR FULL YEAR 290-310Cr (33.50e.p.s)AND 100 %DIV OR 1.1BONUS

Currently it is trading at 78Rs. EXPECTING 125 Rs IN 20DAYS.

ABOUT:-Geodesic operates in the high-growth areas of instant messaging and VoIP. The
company has a large roster of well-established clients. Geodesic derives most of its revenues from
developing instant messaging platforms/services and licensing them to enterprises as well as retail
users (directly or indirectly) under the ‘Mundu’ brand. The company’s products (Mundu ICE
stack) cater to clients ranging from portals and publishers to telecom operators, mobile handset
manufacturers, system integrators and even retail consumers. Geodesic also licenses its instant
messaging platform to mobile handset manufacturers and telecom operators, thus providing it with
sustainable revenue streams, with scope for expanding margins.
Geodesic won a deal from Idea Cellular in India, for Internet radio services on a revenue sharing
basis. This makes for better risk-sharing as downloads or logins to access Internet radio on the
mobile would be clearly measurable.
The company has also launched its messaging services in Nokia and Sony Ericsson Smartphone
handsets and has an agreement with players such as BenQ. Mio Digi-walker, a key player in the
mobile GPS navigation space, is another client. The company also recently joined the Blackberry
ISV alliance to offer its services on smart phones. This should provide further revenue
opportunities.
The client base for Geodesic also includes portals such as Naukri, bigadda.com, Edelweiss Capital
Ltd, First Global Stock Broking, Business Standard and Dialog Telekom. As players constantly
upgrade their Web sites and offer more cutting edge-services, this client base offers long-term
revenue visibility for Geodesic.

The company has launched an instant messaging platform for the iPhone and may be well-placed to
capture a share as and when Apple allows third-party software platforms on its phones.
The company has also developed voice over Internet protocol (VoIP) products to work mobile
phones and desktops, for PC-to-PC calls. VoIP is also an ever expanding market providing for
cheap communications. It already averages 60,000 minutes a day.
Agreement with ITI Ltd to promote Geodesic’s products (such as its Amada 10k Simputer) to cater
to various State Government E-Governance projects in India and with Glodyne Technoserve as
part of Glodyne’s solution for Public Distribution System for various States in India have also been
recently signed. The Simputer has an integrated Smartcard reader/writer which can be used for
identification, sharing and security.
The company has also forayed into publishing by acquiring the Chandamama children’s magazine
brand. The subscriptions have doubled in the last two years after the acquisition.
With its Telugu, Hindi and Tamil versions available online, this may help capture regional audience
as well. An increased subscription may lead to increased ad revenues. Plans are also afoot to launch
a full length animation film.
Key risks to this recommendation are technological obsolescence and competition from entrenched
platforms such as IBM’s Lotus Same time.
The Board has approved the proposal of buy back Company's USD denominated Zero Coupon
Convertible Bonds.
Chandamama has signed MOU with Techno park based Toonz Animation Indi Pvt. Ltd. for
producing a 70 minute, full-length animated feature film
Geodesic has announced a buyback of up to 25 per cent of the paid-up equity share capital
(maximum of Rs 109.8 cr) from the open market, at a maximum price of Rs 75.

Shift in balance?

Vishal Chhabria & Jitendra Kumar Gupta

While the markets have rallied substantially in the recent past, macroeconomic indicators and corporate earnings need to improve further for the rally to sustain.

After a forgettable 2008, a year which saw markets falling a whopping 52.4 per cent—it fell by another 15.4 per cent between January 1, 2009 and March 9, the day when the BSE Sensex reported its lowest close of 2009– the recent rally has brought some cheer. The BSE Sensex is up 38.83 per cent since the low on March 9 till date, reporting gains for seven weeks in a row. While the rally in Indian markets is led by various factors including robust inflow of foreign (FII) money and surge in global markets, there are a few key questions that need to be answered.

It is all the more important given that fundamental indicators have not improved meaningfully and there are visible risks ahead. The Street, too, looks divided on the future course of the market as well as earnings outlook for India. Among other key questions are whether the current rally signifies a beginning of a new bull phase or it is just a part of the bear-market, is the worst over and what investing strategies one should adopt. The answers are all the more tricky. The Smart Investor spoke to a host of experts, both domestic and foreign, on what they read into the current rally and the way ahead. To know more, read on.

On high octane
The rally has been substantial and swift. The 30-share BSE Sensex has risen by 33.5 per cent in just six weeks (from March 9 till April 21) and another 2.84 per cent over the next week, taking total gains to nearly 39 per cent over seven weeks. This performance is the second best among key global markets (Click for table How markets compare). Interestingly, all the 15 popular global markets have reported gains, with eight of them up between 20 and 30 per cent during the six weeks. Thus by far, the domestic market rally is driven by and reflects improved global sentiments.

In other words, it also suggests that even as India is economically dependent (by about 85 per cent) on domestic consumption in terms of GDP growth, its financial markets to a large extent are influenced by global sentiments. Additional proof: FIIs have invested $1.08 billion (since April 1) or $1.4 billion (since March 9) till April 21—domestic institutions have pumped in about Rs 750 crore – as compared to $1.65 billion of sales between January 1, 2009 and March 9. The case is not significantly different for others markets.

This change in global sentiment is led by positive news flow in the recent past including the new Geithner plan (in US), the G-20 meet (committing a $1 trillion boost), US President Barack Obama talking about things getting better, the stimulus packages and monetary measures undertaken earlier by various governments and central banks.

Additionally, says Raamdeo Agrawal, MD, Motilal Oswal Securities, “With Q1 results of Citibank and some others in the US somewhat better, there is a hope that the worst is over in the US itself. The combination of these events and the purchase by FIIs is what has changed sentiment. Lack of fresh negatives and some positive developments led to the US rally, which world markets tagged on to. Because, in synchronised market place, relative valuations do come into play.”

Nilesh Shah, CIO, ICICI Prudential Mutual Fund says, “The Indian markets were beaten the most and today, we are seeing that we are recovering fast as well.” In India, too, figures from sectors like auto, cement and steel have shown some improvement in recent months. And, at lower levels, the valuation of the Indian market was also compelling with the BSE Sensex as well as many companies trading in single-digit PEs.

However, some believe that there are technical and others factors that have led to this rally. Says Andrew Holland, CEO-equities, Ambit Capital, “Initially, I think it was short-covering; globally as well. The risk appetite has increased a bit, but it is like if people see markets go up they need to get performance so they put money to work as quickly as possible. I don’t see the retail investors rushing back to buy.” He adds, “There are funds sitting on cash, and some of this is flowing into the market.”

Bulls, bears or in-between?
Even as this rally has brought some cheer, there is a difference of opinion regarding its sustainability and future course. While a few term the current rally as the beginning of a new bull market, others are sceptical and believe that markets may decline and test their lows made earlier. Some others feel that markets are in consolidation phase.(Click for Expert Views)

Says Anthony Bolton, president-Investments, Fidelity International, “I believe that a new bull market has started and will last several years, although the exact trajectory is very difficult to predict. There is lots of cash on the sidelines. Once people feel left out and deploy it, we could see a big up move.” On the economic recovery, although some of the forward economic indicators are improving as compared to last year, he does not expect a fast recovery.

On the flip side viz. a few believe that we are still in a bear phase. Says Andrew Holland, “We are by no means in a bull market.” The reason for believing so is that the demand scenario may remain weak and the recovery is likely to be prolonged. He says, “The consumer savings rate in the US is now going up to 4 per cent from negative 2 per cent. Almost 70 per cent of the US GDP is consumer spending. If they started to save, then the recovery is going to prolong. I am expecting data and earnings to get worse and therefore we go back to where we were, which is in a deep recession.” Little wonder that Holland expects the markets to come down again.

Naval Bir, CIO, IDFC Mutual Fund, believes that we are in between. “At this point in time we are in the consolidation phase where the markets are expected to be range bound and hence, we will witness corrections and recoveries from the low levels for some time.”

What next?
While experts share divergent views, the opinion is not majorly different on the fact that the pain has lessened as compared to 4-6 months back. Many also believe that there are signs of the some stability in economic indicators. Says Hemendra Aran, CEO, Aranca, “Confidence levels in economic rebound that can put markets on a growth path seem to be returning slowly. Like in March 2009, the growth in jobless claims slowed to 14,800 after surging to 59,800 in the previous month. Even the consumer expectation index in US rose to 53.5 in March from 50.5 in February, clearly indicating that consumers' outlook on the nation’s economy has improved in March.”

And, this is what the markets have reacted to – anticipating an economic recovery in advance. But, if markets have to recover in any meaningful manner, globally as well as in India, economic growth and corporate earnings have to improve visibly. While India Inc earnings were in bad shape in Q3 FY09 (net profit of Sensex companies fell by 5 per cent), Q4 expectations are even worse with earnings expected to fall by 9-15 per cent year-on-year. Positively, some believe that the trend of decline in earnings should reverse or at least show signs of stabilising post-Q1 FY10. While Raamdeo Agrawal believes that the phase, wherein downgrades for FY10 were continuously happening, seems to be over, Bala Subramanian, CIO, Birla Sun Life Mutual Fund, believes that earnings are stabilising.

In March 2008, analysts were projecting the BSE Sensex earnings for FY10 at about Rs 1,200, which was later downgraded to Rs 800-850 due to the economic conditions deteriorating. Most analysts believe that earnings could now range a bit higher at Rs 850-870. Should this prove true, it will provide a cushion to markets on the downside, making valuations further attractive at lower levels.There is a flip side here too. Andrew Holland believes that earnings will have to be downgraded, and expects Sensex FY10 EPS to be Rs 750.

While the good news is that monsoons are expected to be near normal, the biggest near-term risk is the outcome of national elections. Foreign investors, too, will be closely watching this event given its implications for reforms and policies. Thus, the belief that before and a month after the elections, the markets will be volatile.

What should investors do?
Amid the expectations of volatility and range bound markets, experts believe that this is the right time to build a good long-term portfolio. The ultimate advice to nail into one’s head is whether you make money. Explains Marc Faber, “Whether it is a bear market rally or bull market, it is an academic question. Assuming the Sensex rallies to 16,000 and then falls to 7,500 levels, this would have been a bear market rally, but one that produces a 100 per cent gain. What counts is to make money.” On how global markets are likely to move, Faber says that following a rally until April we would have a correction. This would be followed by renewed strength until July and then weakness again, but the March 6 lows on the S&P 500 at 666 may hold. He believes that for the next few months India should continue to trade up, but interrupted by corrections.

So, if the markets are to go up, then there is a lot to be made. Notably, the Indian market is the second best in terms of growth, next only to China, which provides comfort given that 11 of the 15 markets (mentioned in the table) are expected to report a decline in their GDP growth in CY2009.

On the flip side, an unfavourable outcome in domestic elections may prevent the markets from rising, if not fall, should global markets look up. In the context of the current situation, taking a call on investing may look all the more tricky. What is compelling now, says Gul Teckchandani, investment consultant, “You are getting the price advantage. But, buy with at least a one-year perspective.” He adds, “Apart from the basic checks (management, track record, earnings growth), one can buy stocks with PE with 3-4 in the B-group and 7-8 PE in A-group. Avoid businesses that you don’t understand and ones from export-oriented sectors (excluding IT) where there is a slowdown.”

Among the most common advice by experts, for investors who are already invested and aim to make use of the expected near-term volatility, is to book profits on sharp rallies and hold some cash in the portfolio to take the advantage of the expected volatility. Using the cash to invest on dips (particularly during elections) in a phased manner is also advised. Investors can look at the companies, which are relatively stable and are leaders in their respective segments. Stick to domestic-consumption led stories.

Regarding the sectors and themes that could reap good returns are FMCG, telecom and pharma besides, interest rates sensitive like banking and auto. Selectively investing in infrastructure-related companies (less leveraged and well-diversified) is seen as a good strategy, as irrespective of which party forms the government, infrastructure development will remain a focus area. But, avoid cyclicals and real estate.

source :business-standard

SEAMEC LTD. (RS. 88/-)

SEAMEC LTD. (RS. 88/-)

Seamec is 78.2% subsidiary of Technip-France and is leading sub-sea contractor providing support services to offshore oil fields in India and abroad. Seamec has 4 vessels and is debt-free. Technip is very optimistic about India and Seamec is an important part of Technip's global scheme of things. In last 2 years, its performance was erratic due to various difficulties. However, now company is on a solid footing and hence the recommendation.

Financial Performance: Rs. in Crs.

.	Q1	YEAR ENDED	Q4
.	CY 09	DEC. '08	CY 08
Net Income	100.12	269.00	104.41
PBIT	62.71	53.47	55.17
Interest	0.15	0.35	0.80
Net Profit	62.56	47.12	54.57
Equity	33.90	33.90	33.90
EPS Rs.	18.45	13.90	16.10

For Year Ended Dec. '08, Company had reported EPS of Rs. 13.90. However, profits would have been much higher but for some unexpected difficulties:

a) Last year, company had acquired a new vessel which was sent to Singapore for retrofitting/refurbishing. This process took longer time. As a result, flow of revenues from this new acquisition was delayed. Moreover, Seamec spent Rs. 28.57 crs. on refurbishing this vessel (otherwise profit would have been higher by 28.57 crs.).

b) Its other vessel Seamec-II suffered an accident. Company is likely to receive claim of more than Rs. 20 crs. on this account.

c) Company had incurred 33.44 crs. as Dry Dock expenditure during the year which was unusually high and Dry Dock expenses in current year are likely to be very very low.

d) Twice Prematured termination of contract.

For the first time, all 4 vessels were fully deployed in Q4 and company earned PAT of 54.47 crs. in Q4 alone. Q4 EPS is Rs. 16.10 which is more than EPS of entire CY08.

Future Prospects: Rs. in Crs.

.	YEAR ENDED
.	31/12/2009
Net Income	370.00
Net Profit	170.00
Equity	33.90
EPS Rs.	50.15
P. E. Ratio	1.75

Seamec has already reported bumper profits for Q1 with EPS of 18.45. CY09 performance is expected to be very good as all 4 vessels will remain deployed fully (barring intermittent idling before redeployment). It has already entered into an agreement with M/s. Dulam of Dubai for deployment of 1 vessel from 16th May for 2 months which will fetch nearly Rs. 22 cr. revenues. It has also chartered another vessel with Condux, Mexico for a period of 6 months from Feb 3, 2009 which will fetch it revenue of around Rs. 55 crs. Seamec has also signed an agreement to charter its other vessel Seamec-II from June 2009 for 1 year which will give revenues of Rs. 81 crs. Seamec is slated to report all time high performance in current year.

Valuations:

Stock is trading at just 1.75 x CY09E EPS. Even in bear market, such valuation will be considered unreasonably low. An MNC which is debt-free and is proxy to high profile oil drilling industry deserves much higher valuations. Its current market cap is just Rs. 300 crs. which is 30% of replacement value of its fleet of USD 210 mn. Seamec is going extremely cheap. Company is bound to get much higher valuations. Our price target:

a) Rs. 125/- in less than 8 weeks.
b) Rs. 225/- in 12 months.

Investors can buy big quantity.

By - Hemant K. Gupta

Major concern about market now-Select good Stock-A.K.Prabhakar

Dear all,

It is pleasure writing to everyone after a long time on few issues which is of major concern about market now. Now Pyramid Saimira forgery case is hitting headline and we would not go in detail of the case; our concern is safety of the investor.

Jim Rogers famously said; Get inside information from the president and you will probably lose half your money. If you get it from the chairman of the board, you will lose all of your money.

Many times I have advised not to take investment decision based Rumors or Tips as many call it, as many time vested interest is always there. Many branches wanted to know about some operated stock where I have normally warned them not to follow or at least not to ask me. Many say I have inside information that market is going to fall or rise Indian market is like an ocean and can’t be controlled by few big people and we have seen this over many years as many have failed.

There are few stock with low floating stock or small market cap where it can be operated, that is where we have cautioned many times. I never believed in Multi bagger as I have no brilliance in finding one, and I never wished to waste hard earned money in experimenting as 1 out of 100 or 1000 stock have become multi bagger.

Playing market volatility in a simple, tried and tested way reasonable returns has been earned and till now in 2years and 6month, 6list was introduced VALUE-24, CONTRAINAN-24, QUICK15+6, ARG30, COMPACT-15 and FANTASTIC-15 and only ARG-30 didn’t perform well. Where we have used simple method of buying good stocks in bad time as correction has been part and parcel of market, most of the time we were in top 200 stocks for 80% of our investment.

Our objective has been simple as worldwide interest rate is again near zero and any returns above 20% P.A would be reasonable, never try to double you money in short time, as saying goes only by folding the currency only it can be possible. Equity as an investment avenue has been always better if risk is understood and if informed decision has been taken.

The "Bigger Fool" Theory (This has been send before just a reminder now).

Small investors fall prey to day trading practices in a manifestation of the "bigger fool" theory: This is the financial market version of "jumping on the bandwagon" -- without examining the actual worth of the stock or the company, traders blindly buy whichever stocks other traders are buying, building the illusion of a "hot" stock through rumor and day trader behavior.

While large investors tend to have experience and a better appreciation for the fundamentals of the businesses in which they trade, poorly based decisions can affect the stocks of entire industries when large numbers of small investors get together to form a "medium-sized shark. Because of the "Bigger Fool" theory, this can work until the market runs out of bigger fools, at which point an overvalued stock will come crashing down.

There is a widely held theory in economics called the Bigger Fool Theory, which states: Buy a stock and you'll make money as long as some other fool is willing to buy the stock from you at a higher price in order to sell it to an even bigger fool at an even higher price. (Crash, p. 15) Day traders and others who ignore the business behind a stock, focusing instead upon rumors, hunches and trends, make their money because of this principle. It doesn't matter how overvalued a stock is as long as there are enough people who think they can still make a profit off of it. Networks of day traders who follow the same strategies and listen to the same rumors often provide each other with the bigger fools necessary to make their profits.

But what will happen when reality catches up?

Investor and trader lose their hard earned money and stocks which they had thought would help them in future financial planning would erode the plan.

What would be best investment advice?

Always divide risk have more than 15-20 stock as minimum, we are not Warren Buffet to part own a company and impose our rules. Invest in best management practiced companies.

Never try to catch a top or bottom (Bottom is always dirty) invest specified amount on regular basis on good growth companies. If you are an investor never hedge your position (Option are ice-cream it always melt). In case of fear increase your cash position so that you can average in case of correction.

Important point I noticed is many withdrew money from market around 8000-10000 Point in Sensex fearing market would come to 6000-5000, and we never said this is bottom you buy, recollect buy 50% now if market goes down to 5000 we will buy another 50%. Time spent in the market is more important than timing the market, so always try to manage your cash position as per trend but always be invested minimum 20% at any given point of time.

Indian stock market has made many transformation, and now handling of SATYAM & Investigation of PYRAMID SAIMIRA point to better handling of crisis, still we have long way to go.

To conclude investor should understand “Buyer Beware” is always better than to repent latter, there are so much information available today, use that to maximum before any investment decision is made.

This is a great check list of 10 habits, impulses and tendencies you steer clear of in order to keep your investments healthy.

1. Don't be arrogant

The market teaches humility and that is how you must approach it. As soon as you believe you know why the market acts the way it does, you will be proven wrong. Arrogance can kill a portfolio. You must be able to admit defeat and preserve enough capital to fight again.

Following point and figure charts, which depict the battle between supply and demand, helps keep you out of the 'I know why' attitude of investing.

2. Don't wait until you feel comfortable to buy when a sector reverses up

Falling into the waiting trap is a great way to ensure that you buy the stock at a higher price. When sectors reverse up from oversold levels, it is often when the news is the most dire.

Conventional wisdom would suggest this is the last place in the world you would want to invest. Buying at this time is gut wrenching, but to be successful you must act with complete confidence.

As the sector moves higher, the comfort level increases. If you use comfort level as your guidance, however, you will for sure leave a lot of money on the table, or worse, buy as the sector peaks.

3. Don't be afraid to buy strong stocks

Don't avoid stocks just because they have gone up. Doing so will keep you out of the long-term winners. In the United States, for example, this mentality would have kept you out of General Electric, which was up 188 per cent between January 1995 and December 1997 only to see it rally another 96 per cent by the end of 2000. It also would have kept you out of Cisco, which was up 376 per cent between January 1995 and December 1997, and then it moved up another 312 per cent by the end of 2000. These are only two examples, but there are many others.

More important than how much the stock is up is its supply and demand relationship. By evaluating the point and figure chart, you can gain insight into this relationship and whether or not the stock is likely to move higher. Stocks that double can easily double again. Don't miss out on these great opportunities.

4. Don't sell a stock simply because it has gone up

Doing this cuts profits short. Buying a stock right is only half the battle. You have to be able to sell it right to win the war. Just because a stock has rallied 30 per cent or 50 per cent, don't be tempted to take your trade off for that reason alone.

Consider trimming the position and leave part on the table to continue in the uptrend. Let profits run.

5. Don't buy stocks in extended sectors because 'it's different this time'

On the surface, the stock market appears different all the time. The leadership changes: in come new stocks into the Nifty 50, and then out they go. Small-cap stocks outperform for a while, then it's back to the large caps.

However, the underlying forces that drive the stock market are always the same. They are true and time-tested and do not change. They are supply and demand. That's why buying sectors that are extended (overbought) will not be different this time.

6. Don't try to bottom fish a stock in a downtrend

'The trend is your friend' is a true statement. So don't go against it without some inkling that the trend has changed.

Bottom fishing a stock in a downtrend is the opposite of being afraid to buy strong stocks. Do not buy a stock just because it fell sharply. You want to buy a stock that is likely to move higher, not one that is not likely to fall further.

At a minimum, wait for the stock to show a sign that demand is back in control and suggesting higher prices. That may be a simple buy signal on the chart or a reversal back to the upside after holding an area of support. Also remember why you initiated the position. Be careful not to let a trade turn into something else.

7. Don't buy a stock simply because it is a 'good value'

These days, value is in the eyes of the holder, and therefore it is a subjective term at best. If a stock has become a good value, ask why. This is important, because a stock can stay a good value by not moving for the next decade, or worse, become a better value by dropping another 20 per cent.

The true value of a stock is determined by its capital appreciation potential, not numbers on a balance sheet. The basis for capital appreciation lies in the supply and demand relationship of the stock. Appreciation can occur only if demand grows stronger for the stock and buyers are willing to pay a higher price. Watch the point and figure charts to determine if a stock is likely to move higher in price and become a good value.

8. Don't hold on to losing stocks and hope they come back

Hope is eternal, but your portfolio is not. Holding on to a losing stock is the best way to let your losses run. Combine this mistake with selling a stock that has gone up and you can create a portfolio of dogs.

When buying stocks, there will always be some losers: Count on it. However, how you manage that loss often determines the success or failure of the overall portfolio. Keep losses small so that you have the capital to play again. Hanging on to losing positions, hoping that they will come back, can be deadly.

A $50 stock that is stopped out at $40 is a 20 per cent loss. It's a bad trade, but it is manageable. In order to recoup that loss you would have to make 25 per cent on a $40 stock. What if you held on to that $50 stock, hoping that strong earnings would come in and turn it around, but instead it continued lower to $25?

Finally, you decide to exit, but now it takes a 100 per cent return from a $25 stock just to get back to even. Those results are hard to find, and if you are able to find one, you don't want to waste it on getting back to even

Learn to recognize your losing positions for what they are. If a stock cannot trade above its support line or is not outperforming the averages, find one that is and swap it.

9. Don't pursue perfection

There are two types of mistakes to discuss here. The first is the constant belief that there is a better system out there, and you need to find it.

Using a new system to invest each week will not get you to your goal. You will become good at nothing and moderate to bad at everything. To be good requires that you stay focused, disciplined, and skilled at whatever methodology you choose.

You need to have the strength of conviction in your chosen discipline to learn from mistakes rather than to run away from them and find another methodology. There is no Holy Grail in investing.

The second mistake is to wait for the perfect trade. There is no such thing. If you only buy stocks that have all positive attributes you will maintain a portfolio of cash. Rarely, if ever, do you find a stock that has all the pluses on its side.

Look for the big ones like relative strength, trend, and signal. Also remember that 80 per cent of the cause of price movement in a stock is based on the market and sector. You are better off being approximately right than precisely wrong.

10. Don't do anything based on a magazine cover

Following the hot news that appears on magazine covers is a shortcut to the poor-house. Why should you follow the advice of someone who has just moved from the society pages to the business section?

SEAMEC ltd---- BUY

According to Sharekhan's result update, SEAMEC's Q1CY2009 results were
much ahead of estimates on account of a strong top line growth and
further improvement in margins.

It says that the company's valuation is particularly attractive given
the company's strong return ratios and debt-free status. It maintains
Buy call on the stock with a target price of Rs 197 per share which is
an upside of over 130 per cent.

"The Q1CY2009 results of SEAMEC were much ahead of our estimates on
account of a strong top line growth and further improvement in
margins. The revenues for the quarter grew by 149% to Rs100.1 crore,
as all four of its vessels were deployed during the quarter against
just two in the same quarter of the last year.

Currently, the contracts for all the vessels are in place and all its
vessels would be operational for the first half of the fiscal.

The company has recently received a one-year contract for Seamec II,
though at lower rates, while it has also received a two-month contract
for Seamec Princess, starting May 15, 2009. Going forward, in the wake
of lowering global exploration and production (E&P) capital
expenditure (capex), the deployment of assets would also be a
challenge.

We have already built in the likely softening in the rates into our
estimates for CY2009 and CY2010. There is no dry-docking expected for
any of its vessels in CY2009, while dry-docking for Seamec I is due in
CY2010.

We are slightly fine-tuning our CY2009E sales estimate due to a
stronger dollar, but are raising our profit estimate by 18.2% on
account of strong improvement in the margins. We are also introducing
our CY2010E earnings estimate in this note.

For CY2010, Seamec I is likely to go for dry-docking, while currently
the company has contract only for Seamec II, which would expire in
June 2010.

In view of the tough outlook on the industry and softening rates, we
expect the company to report a 7.5% decline in its revenues, while the
margins are also likely to contract on a year-on-year basis on account
of lesser utilisation. Consequently, we are building in a profit
decline of 21% year on year (yoy) in CY2010.

On the valuation front, the stock appears to be trading at an
extremely attractive valuation of 2.4x CY2009E earnings and 3.1x
CY2010E earnings. The valuation is particularly attractive given the
company's strong return ratios and debt-free status.

Moreover, at the end of CY2008, the company had cash on books to the
tune of Rs63.5 crore, which works out to Rs18.7 per share. Further, on
the back of strong performance, we expect excellent cash inflows for
the company, with the cash flow from operations expected at Rs121
crore for the current year.

We maintain our Buy recommendation on the stock with a price target of
Rs 197," the report said.

Cos may land a windfall from FCCB buybacks

WHEN Moser Baer, the world’s second-largest manufacturer of compact
discs, bought back foreign currency convertible bonds worth $51
million in the last three months, it had to pay just $12.4 million.
Depressed market conditions and a liquidity crisis helped the company
make a gain of around $38.6 million, which translates into an
extraordinary gain of over Rs 190 crore at the current exchange rates.
“We have bought back the FCCBs at a discount of around 75%,” said
Yogesh Mathur, chief financial officer of the company.
Apart from bringing down the liabilities on the company’s books,
the transaction may also help it bring down mark-to-market losses
provided for against the FCCBs. These gains will help the company post
better results in the fourth quarter of the fiscal ended March 31.
Ever since the Reserve Bank of India allowed Indian companies to
buy back FCCBs in December 2008, a dozen companies have redeemed such
bonds worth $340 million at deep discounts to the conversion price. As
in the case of Moser Baer, these companies also will earn twin
benefits from FCCB buyback. When they pay off a loan at a discount,
they earn a substantial one-time gain. Also, they need not carry the
mark-to-market losses for the redeemed FCCBs.
During the first nine months of the last fiscal, firms following
Accounting Standard 11 had written off heavy mark-to-market losses
towards outstanding FCCBs with the rupee depreciating significantly.
For example, Jubilant Organosys wrote off over Rs 410 crore in the
first nine months, while JSW Steel booked Rs 808 crore as MTM losses.
According to industry sources, a part of such earlier provisions
representing the bought back FCCBs could now be reversed.
Although these companies have published their FCCB buyback
exploits, some of them, such as M&M and Firstsource Solutions, remain
tight-lipped about the discount they received, which could give away
the possible extraordinary gains they are likely to book. A press
release by Financial Technologies, which redeemed FCCBs of $9.5
million face value, mentions the average discount was a little above
37%. This could earn the firm Rs 17.5 crore of gains the quarter.
Ruchi Infrastructure had to pay a little more than 50 cents to a
dollar according to their release, which translates into a gain of
around Rs 37.5 crore. Wherever the firms had booked accrued interest
on these zero coupon bonds, the book value of such bonds will be
accordingly higher and hence, the extraordinary gains will also be
higher.
So far, Jubilant Organosys has taken the maximum benefit of this
opportunity, redeeming $60.9 million of FCCBs in the March quarter and
now has $192 million of FCCBs outstanding. The average discount the
firm received was 40% of the maturity price of the FCCBs, said R
Sankaraiah, finance director, Jubilant. Firstsource Solutions ($49.7
million), JSW Steel ($47.8 million) and Uflex ($45 million) are the
other companies.
Most firms went in for ECB for this purpose, wherever their forex
earnings fell short. “We have arranged a seven-year ECB line for
repaying $49.7 million of FCCBs due in 2012 at a deep discount. So,
not only our liability has gone down, we also have a longer duration
to repay it,” said Farid Kazani, CFO of Firstsource Solutions. K
Chandrasekhar, senior VP, finance, M&M, also acknowledged raising ECB
for redeeming $10.5 million of FCCBs.