There is an exceptionally intersting article in Forbes India magzine about the investment scenerio,outlook ,strategy in 2010 and for future in general.. A must read for anyone who is serious about investing..
Key Highlights:
1.History has shown that economic disasters are often followed by a quick recovery, and then, a slower, less dramatic but more devastating crisis.in 1929 and 1978.. Is the same going to happen in 2010 ? considering the present rally with no substantial reason.. I would think so...
2.For the investor, the choice is clear. Putting your money behind a growth of 7 percent a year seems to be a low-risk bet. The growth could be much higher if you pick the right asset classes and the right securities to play them. The payoff might take three to five years to come, but is sure to be as big as the fuel tank of a Hero Honda motorcycle.
If you fill it, shut it and forget it, you won’t have to be scared of 2010.
Have a look at this article
Friday, January 15, 2010
Wednesday, January 13, 2010
What is FPO(Follow-on Public Offer)
What is FPO?
A Follow-on Public Offer (FPO) is also called further public offer. When a listed company comes out with a fresh issue of shares or makes an offer for sale to the public to raise funds it is known as FPO. In other words, FPO is the consequent issue to the public after initial public offering (IPO). The word FPO came into news after the YES Bank announcement to raise Rs 2,000 crore through FPO and debt.
How is it different from an IPO?
As the name suggests initial public offering (IPO) is the first offer for purchase to public. This is a process when an unlisted company raises funds by offering its shares to the public and consequently gets listed on a stock exchange. However, if the same company comes out with another issue to the public, the second issue would be called an FPO. For instance, ICICI Bank was a listed entity but came out with FPO of around Rs 8,750-crore equity shares in July 2007. The issue remained open for subscription between July 19, 2007, and July 22, 2009. Similarly Bharat Earth Movers (BEML), which was listed in National Stock Exchange on November 5, 2003, came out with a public offer of 49 lakh shares in 2007. Shares of BEML were issued at Rs 1,075 after the closure of the FPO.
Under the Fast Track Issues (FTI), a listed company, which meets certain entry norms, can proceed further with FPOs by filling a copy of RHP to regulators. These companies don’t need to file a draft offer document. However, it is mandatory for a private company, which wants to come out with an IPO.
What are the other kinds of issues through which companies raise money?
Apart from IPO and FPO, a company can raise funds through a rights issue and private placement. A rights issue and bonus issue are made to the existing shareholders. However, a rights issue is also a way to raise funds but in a bonus issue new securities are issued to existing shareholders without any consideration.
A Follow-on Public Offer (FPO) is also called further public offer. When a listed company comes out with a fresh issue of shares or makes an offer for sale to the public to raise funds it is known as FPO. In other words, FPO is the consequent issue to the public after initial public offering (IPO). The word FPO came into news after the YES Bank announcement to raise Rs 2,000 crore through FPO and debt.
How is it different from an IPO?
As the name suggests initial public offering (IPO) is the first offer for purchase to public. This is a process when an unlisted company raises funds by offering its shares to the public and consequently gets listed on a stock exchange. However, if the same company comes out with another issue to the public, the second issue would be called an FPO. For instance, ICICI Bank was a listed entity but came out with FPO of around Rs 8,750-crore equity shares in July 2007. The issue remained open for subscription between July 19, 2007, and July 22, 2009. Similarly Bharat Earth Movers (BEML), which was listed in National Stock Exchange on November 5, 2003, came out with a public offer of 49 lakh shares in 2007. Shares of BEML were issued at Rs 1,075 after the closure of the FPO.
Under the Fast Track Issues (FTI), a listed company, which meets certain entry norms, can proceed further with FPOs by filling a copy of RHP to regulators. These companies don’t need to file a draft offer document. However, it is mandatory for a private company, which wants to come out with an IPO.
What are the other kinds of issues through which companies raise money?
Apart from IPO and FPO, a company can raise funds through a rights issue and private placement. A rights issue and bonus issue are made to the existing shareholders. However, a rights issue is also a way to raise funds but in a bonus issue new securities are issued to existing shareholders without any consideration.
Saturday, January 9, 2010
OPEX & CAPEX..
Heard this terms many times here & there!!and got baffeled as to wat it is??
or went through financials of a stock and could not figure out difference between operational & capital exenditure?? :)
Just a simple explanation is below:
OPEX:
i.e. operating expense, operating expenditure, operational expense, operational expenditure
OPEX is an ongoing cost for running a product, business, or system
CAPEX-- Its counterpart, a capital expenditure (CAPEX), is the cost of developing or providing non-consumable parts for the product or system.
For example, the purchase of a photocopier is the CAPEX, and the annual paper, toner, power and maintenance cost is the OPEX.
this is the money the business spends in order to turn inventory into throughput.
On an income statement, "operating expenses" is the sum of a business's operating expenses for a period of time, such as a month or year.
Operating expenses include :
1.accounting expenses
2.license fees
3.maintenance and repairs
4.advertising
5.supplies
6.attorney fees and legal fees
7.utilities, such as telephone
8insurance
9.property taxes
10.travel and vehicle expenses
11.salary and wages
12.raw materials
Capital expenditures (CAPEX or capex) are expenditures creating future benefits. A capital expenditure is incurred when a business spends money either to buy fixed assets or to add to the value of an existing fixed asset with a useful life that extends beyond the taxable year.
Capex are used by a company to acquire or upgrade physical assets such as equipment, property, or industrial buildings. Capex is commonly found on the Cash Flow Statement as "Investment in Plant Property and Equipment" or something similar in the Investing subsection.
Included in capital expenditures are amounts spent on:
1.acquiring fixed assets
2.fixing problems with an asset that existed prior to acquisition
3.preparing an asset to be used in business
4.legal costs of establishing or maintaining one's right of ownership in a piece of property
5.restoring property or adapting it to a new or different use
6.starting a new business
or went through financials of a stock and could not figure out difference between operational & capital exenditure?? :)
Just a simple explanation is below:
OPEX:
i.e. operating expense, operating expenditure, operational expense, operational expenditure
OPEX is an ongoing cost for running a product, business, or system
CAPEX-- Its counterpart, a capital expenditure (CAPEX), is the cost of developing or providing non-consumable parts for the product or system.
For example, the purchase of a photocopier is the CAPEX, and the annual paper, toner, power and maintenance cost is the OPEX.
this is the money the business spends in order to turn inventory into throughput.
On an income statement, "operating expenses" is the sum of a business's operating expenses for a period of time, such as a month or year.
Operating expenses include :
1.accounting expenses
2.license fees
3.maintenance and repairs
4.advertising
5.supplies
6.attorney fees and legal fees
7.utilities, such as telephone
8insurance
9.property taxes
10.travel and vehicle expenses
11.salary and wages
12.raw materials
Capital expenditures (CAPEX or capex) are expenditures creating future benefits. A capital expenditure is incurred when a business spends money either to buy fixed assets or to add to the value of an existing fixed asset with a useful life that extends beyond the taxable year.
Capex are used by a company to acquire or upgrade physical assets such as equipment, property, or industrial buildings. Capex is commonly found on the Cash Flow Statement as "Investment in Plant Property and Equipment" or something similar in the Investing subsection.
Included in capital expenditures are amounts spent on:
1.acquiring fixed assets
2.fixing problems with an asset that existed prior to acquisition
3.preparing an asset to be used in business
4.legal costs of establishing or maintaining one's right of ownership in a piece of property
5.restoring property or adapting it to a new or different use
6.starting a new business
Sunday, January 3, 2010
What caused the Recession??
We hear a lot about recession .. but do we really know how it occurred or What caused it??
Lot of economies are going into recession and trillions of stock values were wiped out. Aside from these, a lot of companies have reduced their earnings with a lot of plant closures and job lay offs.
We often hear the word recession. We’ve watched news that Singapore, Germany, Japan, and New Zealand officially declared recession in their economies. But what is recession? And what caused it?
please find a simple lucid explanation of the same below:
Recession, in economics, is defined as the contraction of an economy’s Gross Domestic Product for at least two consecutive quarters. That means the economy shrank.
We all know that the world’s largest economy is that of the United States. A lot of countries depend on them most especially countries which depend on export products. There’s this popular saying that “when United States sneezes, everybody catches a cold”. This is so true nowadays which is evident in the domino effect of the global financial crisis with a lot of economies caught colds.
What caused the recession? The problem started in the United States with the so-called Subprime Mortgage Crisis. The crisis was triggered by the rise in mortgage delinquencies leading to foreclosure of houses and ultimately a credit crunch leading to a freeze in liquidity.
Wolla... Went above the head.. lets understand this complicated statement in common terms...
Subprime Mortgage are mortgages given to high default risk credit borrowers. A lot of mortgages issued in US are called subprime which means that little or no downpayment was made by the borrowers to buy houses, cars, etc. Some credit were even given to low income families or with bad credit history. Because of the nature of these mortgages, a lot of borrowers defaulted on their loans which led to banks foreclosing securities of these loans including houses, cars, etc.
All these accumulated and led to the “credit squeeze”. There were no more cash available to other borrowers as all these cash were frozen to foreclosed houses with no willing buyers. The tightening of credit led to a slow down of the economy as there were no more loans available to other borrowers which they can probably use as capital in their businesses. Now, this led to a series of events:
Low Demand. Because of the tightening of credit, there was a slow demand of products of these businesses.
Decrease of Profits. Because of low demand, then there was a decrease in profits for these businesses.
Plant Closures. Because of decrease of profits, then companies need to shut down some of their plants to reduce costs. There was also a notable increase in bankruptcy filings.
Job Lay Offs. Because of plant closures and bankruptcy filings, then companies laid off a lot of their employees and unemployment rate rose.
Stock Market Decline. All these series of events led to the rampant fear of stock investors dumping their stocks which led to tremendous wipe outs of stock values.
The United States and other countries are all doing their best to combat this financial crisis by using different strategies including the recent US$700 Billion bail out plan to increase liquidity in the economy. US Treasury is providing millions and billions of loans to ailing companies to sustain this financial crisis and prevent further recessionof other economies.
The current recession have caused some companies to succumb and declare bankruptcy. Two of these companies include Six Flags, the world’s largest theme park and CIT Group, the American commercial and finance company.
What about a more severe type of recession called depression? I did some study specifically on what caused “The Great Depression” in the 1930s.
Lot of economies are going into recession and trillions of stock values were wiped out. Aside from these, a lot of companies have reduced their earnings with a lot of plant closures and job lay offs.
We often hear the word recession. We’ve watched news that Singapore, Germany, Japan, and New Zealand officially declared recession in their economies. But what is recession? And what caused it?
please find a simple lucid explanation of the same below:
Recession, in economics, is defined as the contraction of an economy’s Gross Domestic Product for at least two consecutive quarters. That means the economy shrank.
We all know that the world’s largest economy is that of the United States. A lot of countries depend on them most especially countries which depend on export products. There’s this popular saying that “when United States sneezes, everybody catches a cold”. This is so true nowadays which is evident in the domino effect of the global financial crisis with a lot of economies caught colds.
What caused the recession? The problem started in the United States with the so-called Subprime Mortgage Crisis. The crisis was triggered by the rise in mortgage delinquencies leading to foreclosure of houses and ultimately a credit crunch leading to a freeze in liquidity.
Wolla... Went above the head.. lets understand this complicated statement in common terms...
Subprime Mortgage are mortgages given to high default risk credit borrowers. A lot of mortgages issued in US are called subprime which means that little or no downpayment was made by the borrowers to buy houses, cars, etc. Some credit were even given to low income families or with bad credit history. Because of the nature of these mortgages, a lot of borrowers defaulted on their loans which led to banks foreclosing securities of these loans including houses, cars, etc.
All these accumulated and led to the “credit squeeze”. There were no more cash available to other borrowers as all these cash were frozen to foreclosed houses with no willing buyers. The tightening of credit led to a slow down of the economy as there were no more loans available to other borrowers which they can probably use as capital in their businesses. Now, this led to a series of events:
Low Demand. Because of the tightening of credit, there was a slow demand of products of these businesses.
Decrease of Profits. Because of low demand, then there was a decrease in profits for these businesses.
Plant Closures. Because of decrease of profits, then companies need to shut down some of their plants to reduce costs. There was also a notable increase in bankruptcy filings.
Job Lay Offs. Because of plant closures and bankruptcy filings, then companies laid off a lot of their employees and unemployment rate rose.
Stock Market Decline. All these series of events led to the rampant fear of stock investors dumping their stocks which led to tremendous wipe outs of stock values.
The United States and other countries are all doing their best to combat this financial crisis by using different strategies including the recent US$700 Billion bail out plan to increase liquidity in the economy. US Treasury is providing millions and billions of loans to ailing companies to sustain this financial crisis and prevent further recessionof other economies.
The current recession have caused some companies to succumb and declare bankruptcy. Two of these companies include Six Flags, the world’s largest theme park and CIT Group, the American commercial and finance company.
What about a more severe type of recession called depression? I did some study specifically on what caused “The Great Depression” in the 1930s.
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