CONTENTS
Preface
to the Fifth Edition
Acknowledgements
The
Dalal Street Dream Machine
Bulls,
Bears, Brokers and Investors
Investors
and Their Investment Strategies
The
Promised Land
The
Bright Side
The
Dark Alleys
The
Risk Return Trade-off
A
Framework for Intelligent Stock Market Investing
Appendix 1.1: Monthly Return (%) on Nifty Companies
Appendix 1.2: Recent Dividend Rates of Selected Companies
Appendix 1.3: How the BSE Sensitive Index is Computed
Appendix 1.4: List of Shares Comprising the S&P CNX Nifty Index
Appendix 1.5: Methodology of Computing the NSE Nifty
Appendix 1.6: Salient Features of National Stock Exchange (NSE)
Appendix 1.7: Movement of Sensex and Nifty 50
Keep
a Watch on International Factors
24
/ 7 Information Glut -- Impact on Investing Decisions
Living
in Harmony with the World
The
Rupee and Its Movements
Asset
Bubbles and Market Linkages
Satyam
Fraud -- Impact on Stock Markets and Investors
Shareholder
Activism
Appendix 2.1:
Movement of Sensex and Dow Jones: Inferences
Appendix 2.2: Sensex
Milestones
Major
Factors which Influenced Indian Share Price Movements
A
Random Walk Down Dalal Street
Can
You Outguess the Market? No, Says EMT
Value
Investing
Significance
of the Stock Market
Appendix 3.1:
Current Research on Random Walk in Dalal Street
How
Emotions Affect Decisions Investment
Know
Thyself
Know
the Market
Day
Trader
Efficient
Market Hypothesis vs. Behavioural Finance.
Bulls
and Bears Fight, Pigs Get Trampled
Investment
Risks
Risk
versus Staying Power
Risk
and Benefits -- An
How
to Measure Risk
Factor
Models of Investment Returns
Active
/ Passive Investment Management
Risk
Adjusted Performance Measures
Appendix 5.1:
LTCM Collapse
Important
Market Intermediaries
Important
Stock Market Procedures
Investor
Grievances
Appendix 6.1: Addresses
of BSE’s Regional Arbitration Centres
A
Bewildering Variety of Stocks
Classifying
Stocks by Quality-Price Matrix
Classifying
Stocks by Management and Investor Rewards
A
3-Phase Analysis
Components
of Economic Analysis
Key
Economic Indicators
A
Quick Look at the Indian Economy
Life
Cycle of an Industry
Analysis
of Competitive Conditions
Industry-Wise
Classification and Identification of Profitable
Segments
International
Trends
General
Analysis of Companies
The
"S" Curve Approach to Company Analysis
Financial
Analysis of Companies
Interfirm
Comparisons
Sustainable
Competitive Advantage and Leadership
Mergers
and Acquisitions: Impact on Near Term Cash Flows
Appendix 10.1:
Financial Ratio Analysis -- The DuPont Model
Appendix 10.2:
Accounting Frauds
Approaches
to Equity Valuation
Discounted
Cash Flow Model
The
Comparable Approach or the Relative Valuation Approach
Option
Pricing Model
Binomial
Model
Black-Scholes
Model
Common
Misconceptions about Valuation
Conclusion
Appendix 11.1:
Valuation of Equity -- Working Example
Introduction
The
Dow Theory
Technical
Indicators of the Overall Market
Charting
Techniques
Four
Stages of Price Movement
Relevance
of Technical Analysis for Blue Chips
Technical
Analysis and Behavioural Finance
Conclusion
Stocks
Keep Changing Bear Colours
Why
People Hesitate to Disinvest
Factors
Influencing Disinvestment Decisions
Fundamental
Signals for Disinvestment
Technical
Signals
Cut-loss
Limits
A
Practical Approach
Asset
Allocation -- The Foundation for Prudent Long-term
Investment
Sector
Rotation Investing Strategy
Value
vs. Growth Stocks -- The Importance of an Appropriate
Investment Strategy
Bargain
Hunting
Formula
Plans
How
Formula Plans Work
Constant
Rupee Value Plan
Constant
Ratio Plan
Variable
Ratio Plan
Pitfalls
of Formula Plans
Rupee
Cost Averaging (RCA)
Systematic
Investment Plan (SIP)
Contrarian
Investing
Diversification
of Portfolio Risk by Global Investing
Invest
in Businesses, Not in Stocks
Only
Buy Businesses that You Understand
Buy
Companies with Defensible “Franchise”
Hold
for the Long-Term
Ignore
Short-Term Fluctuations in Price
Buy
Good Businesses When Prices are Down
Do
Not Over-Trade
Do
Not Over-Diversify
Invest
only When There is a Margin of Safety
Evolution
of Mutual Funds in
Types
of Mutual Funds
Advantages
of Investing in Mutual Funds
Drawbacks
How
to Select a Good Equity Mutual Fund
Evaluating
a Fund’s Performance
Measures
of Performance
Future
Perfect
Appendix: 16.1:
Average Assets Under Management (for the quarter January to March 2011)
Appendix 16.2:
Calculating Risk-Adjusted Return
Appendix 16.3:
CRISIL Mutual Fund Ranking Methodology in Brief
What
Are IPOs?
Facilitators
to the Public Issue
Documents
to the Public Issue
Reading
Between the Lines
Pricing
of an IPO
How
to Go About Investing in IPOs
Pros
and Cons of Investing in an IPO
Performance
of IPOs
Profiting
from IPOs
Appendix 17.1:
IPO Terminology
What
Are Derivatives?
Features
of a Derivative
Types
of Derivatives
Derivatives
versus Stocks
Equity
Derivatives in India
Futures
Options
Risk
and Returns under Derivatives Trading
Derivatives
Market -- A Tool for Price Discovery
The
Four Approaches
Objectives
of Portfolio Management
Selection
of the Asset Mix
Identifying
the Efficient Portfolios
Formulating
a Portfolio Strategy
Diversification
of Portfolios
Evaluation
of Portfolio Performance
Professional
Assistance
Portfolio
Revision
Conclusion:
The Ten Commandments
Tax
on Dividends
Tax
on Capital Gains from Equity
Securities
Transaction Tax
Tax
Implications of Rights Issue
Tax
Implications of Bonus Issue
Tax
Implications of a Stock Split
Tax
Implications of Employee Stock Options
Tax
on Investments in Mutual Funds
Tax
Treatment of Loss in Derivative Trading
Tax
Treatment of Capital Loss on Investments
Bibliography
Index