1. Read everything you can — the earlier, the better.
“By the age of 10, I’d read every book in the Omaha public library about investing, some twice. You need to fill your mind with various competing thoughts and decide which make sense. Then you have to jump in the water – take a small amount of money and do it yourself. Investing on paper is like reading a romance novel vs. doing something else. You’ll soon find out whether you like it. The earlier you start the better.”
.2. Credit cards aren’t your friend.
If you’re willing to pay 18% on a credit card, you will not come out well.
3. Invest in yourself. Imagine that you had a car and that was the only car you'd have for your entire lifetime. Of course, you'd care for it well, changing the oil more frequently than necessary, driving carefully, etc. Now, consider that you only have one mind and one body. Prepare them for life, care for them. You can enhance your mind over time. A person's main asset is themselves, so preserve and enhance yourself.
4. Most people would be better off not trading stocks.
“Just pick a broad index like the S&P 500. Don't put your money in all at once; do it over a period of time. I recommend John Bogle's books — any investor in funds should read them. They have all you need to know."
“If you invested in a very low cost index fund – where you don’t put the money in at one time, but average in over 10 years –you’ll do better than 90% of people who start investing at the same time.”
“If you like spending 6-8 hours per week working on investments, do it. If you don’t, then dollar cost average into index funds. This accomplishes diversification across assets and time, two very important things.”
5. Know what you don’t know.
There is nothing wrong with a ‘know nothing’ investor who realizes it. The problem is when you are a ‘know nothing’ investor but you think you know something.
6. Don’t follow the pack.
You need to divorce your mind from the crowd. The herd mentality causes all these IQ's to become paralyzed. I don't think investors are now acting more intelligently, despite the intelligence. Smart doesn't always equal rational. To be a successful investor you must divorce yourself from the fears and greed of the people around you, although it is almost impossible.
 7. Ask for a raise the right way.
Write down all of the reasons why you believe you deserve a raise. Some of the things which will be important to demonstrate are reliability, honesty, and dependability. You might also be able to demonstrate that other people in the neighbourhood are being paid more than you for the same service. Then go visit your employer and present your case. The better prepared you are to present your position, the more likely you will be successful.
8. Look at everyone else’s mistakes — and don’t repeat them.
The best thing is to learn from other guy’s mistakes.[General George S.] Patton used to say, "It's an honour to die for your country; make sure the other guy gets the honour." There are a lot of mistakes that I've repeated. The biggest one, the biggest category over time, is being reluctant to pay up a little for a business that I knew was really outstanding.
9. Work shouldn’t always be about the money.
You should do the job you love whether or not you are getting paid for it. Do the job you love. Know that the money will follow
You're rich if you are working around people you like. You will make money if you are energetic and intelligent. This society lets smart people with drive earn a very good living. You will be no exception.
10. Communication is one of the greatest skills you can learn.
If you improve your value 50% by having better communication skills, it’s another $500,000 in terms of capital value. You can dramatically increase your value by improving oral and written communication skills.
11. Detach yourself emotionally.
In ‘97-’98, people weren’t rational. People got caught up with what other people were doing. Don’t get caught up with what other people are doing. Being a contrarian isn’t the key, but being a crowd follower isn’t either. You need to detach yourself emotionally.
12. Know your own motives for investing.
Rationality is the only thing that helps you. One thing that could help would be to write down the reason you are buying a stock before your purchase. Write down “I am buying Microsoft at $300 billion because…” Force yourself to write this down. It clarifies your mind and discipline. This exercise makes you more rational.
13. Forget the Joneses.
I’m not interested in cars and my goal is not to make people envious. Don’t confuse the cost of living with the standard of living.
Just keep up with the Buffets. We’ve always been fans of living within your means and income. You’ll have a lot more income later on. [Children] will follow the example of their parents. You shouldn’t increase your cost of living without improving your standard of living.
14. Don’t spoil your kids.
I believe in giving my kids enough so they can do anything, but not so much that they can do nothing.
15. Choose your influencers wisely.
I had a great teacher in life in my father. But I had another great teacher in terms of profession in terms of Ben Graham. I was lucky enough to get the right foundation very early on. And then basically I didn't listen to anybody else. I just look in the mirror every morning and the mirror always agrees with me. And I go out and do what I believe I should be doing. And I'm not influenced by what other people think.
16. Sometimes spending is OK, too.
There are plenty of people I don’t advise to save. If you already have money in a 401(k) and Social Security and have a little left over, who is to say you should give up taking your children to Disney World and the associated happiness now for a 30-foot boat later vs. a 20-foot boat later.
There are benefits to spending now. It is not always better to save 10% than 5%, but definitely better than spending 105%. You need to live a life that is true to yourself. We don’t encourage extreme frugality. You are not a better or worse person if you live differently from your neighbour
17. Education is everything.
One can best prepare themselves for the economic future by investing in your own education. If you study hard and learn at a young age, you will be in the best circumstances to secure your future.
18. Learn to be lovable.

The most powerful force in the world is unconditional love. To horde it is a terrible mistake in life. The more you try to give it away, the more you get it back. At an individual level, it’s important to make sure that for the people that count to you, you count to them.



1. Outstanding Management: 

An investment truism is that investors invest in people, and this is even more true for companies going public. Every company going public needs experienced and talented management with high integrity, a vision for the future, lots of energy to withstand the rigors of the IPO process, and a proven ability to execute.

2. Market Differentiation:

IPO candidates need a superior technology, product or service in a large and growing market. Ideally, they are viewed as market leaders. Appropriate intellectual property protection is expected of technology companies, and in some sectors patents are de rigueur.

3. Substantial Revenues: 

With some exceptions, substantial revenues are expected—at least Rs 25cr to 50cr annually—in order to provide a platform for attractive levels of profitability and market capitalization.

4. Revenue Growth: 

Consistent and strong revenue growth—25% or more annually— is usually needed, unless the company has other compelling features. The company should be able to anticipate continued and predictable expansion to avoid the market punishment that accompanies revenue and earnings surprises.

5. Profitability: 

Strong IPO candidates generally have track records of earnings and a demonstrated ability to enhance margins over time.

6. Market Capitalization

The Company’s potential market capitalization should be at least  Rs 100 cr to Rs 150 cr, in order to facilitate development of a liquid trading market. High growth companies are likely to be smaller, and usually have a shorter history of profitability. 

7. Corporate governance

Beyond the above  IPO candidates need to be ready for public ownership in a range of other areas, including accounting preparation; corporate governance; financial and disclosure controls and procedures; external communications; and a variety of corporate housekeeping tasks.


Satyam's Ramalinga Raju who defrauded the investors around Rs 8000 crores  has been found guilty of corporate fraud and awarded them seven years of rigorous imprisonment.


(This article was first published on 05-06-2014)

KARVY Stock Brokings which has been recently barred by market regulator SEBI, from taking up new assignment or launching new schemes for six months in respect of its role as a stock broker, has come out with a research report wherein it says that Sensex will touch 1,00,000 mark by 2020. 

KARVY has 5 reasons why Sensex will touch that magic figure.

First: Macro-economic revival in India will open opportunities to make strong returns in the next few years. 
Second:  A real GDP growth of 6% along with Inflation of around 7% should lead to a nominal GDP growth of 13%.
Third: KARVY believes that earnings growth for new five to six year business cycle should be at least 20% considering the economy will revive from a very low base.
Fourth: If the infrastructure cycle revives quickly, the earnings growth revival will be faster with even 25% CAGR looking possible. 
Fifth: An earnings growth between 20-25% and multiple re rating from 15x to 16-17x in the next few years can lead to a 25% compounding of Sensex returns, which will take it to 100,000 levels by calendar year (CY) 2020.
What KARVY has not factored in are:
1. Happening of a 'Black Swan' event - like the one occurred in 2008 which led to global melt down. A sub prime crisis. Prior to the global melt down in 2008, Sensex was hovering around 22,000 and experts like KARVY then predicted that Sensex will touch 50,000 mark by 2014. Believing this theory millions of investors jumped in to the market. Then came the melt down. Equity markets across the world plummeted. Within few months Sensex came down to 8000 levels. Most investors lost money, some went bankrupt, few committed suicide. Brokerage houses down sized their operations.  It took nearly 6 years for Sensex to come to the level of 2008. Between June 2008 and June 2014, in full 6 years, the Sensex has moved by just by 3000 points.
2. Mansoon failure - This will apart from deterrent to GDP will be a drag on some segments like FMCG, auto and banks.
3. Fluctuations in currencies of major economies which will hinder our import / export.
4. Regime change / change in the economic policies in countries where in India is a major trading partner. 2016 is a big year for world economy. U S will elect its new president. The incumbent may be not as friendly as the current one. 
5. Slow down in world's major economies like  U S, China and Japan will have an impact on  India's growth story.
6. Terror strike similar to 29/11 which will make the  world economy crawl.
7. Spurt in oil prices internationally, reasons other than production and supply. We import 80% of oil requirements. If oil prices in international markets raises unreasonably as it happened in 2008-09, where in one barrel had touched $ 150, our economy will go for a tailspin.
8. Nature's fury - floods, earth quake and tsunamis. Capital earmarked for development will be diverted towards rehabilitation, will impact growth.
9. Scams, fraud in stock market - similar to one committed by Harshad Mehta and Ketan Parekh. Investors will lose faith in the system, market. We shall be back to square one.

10. Failure of a big bank / financial institution, globally. Money will flow away from equity markets to commodity / other segments.

( KARVY made the above prediction in first week of June, 2014. The sensex was hovering around 25,500 at that time).

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