Thursday, December 24, 2009

20-20 rule in stock selection? Interesting!

ET has this interesting article on stock selection in a bearish/bullish market. The idea it churns out is something like this.

When the markets are declining, people don’t buy stocks because they doubt that the stock prices would decline further, resulting in a loss or else they will wait to buy the stock at the lowest point. But the article argues that waiting to buy stocks at the lowest point may not be fruitful because, less and less people sell stocks as its price nears the lowest point.

On the other hand, when the markets are bullish, people don’t sell stocks because they doubt the stock prices would go higher or they wait for the stock prices to reach the highest point. And, here the article argues that at the highest point there would be less and less people willing to buy the stock and hence selling it at the highest price may not be possible.

Due to this phenomenon, the article suggests that in a bear market, buy stocks when the market goes down by 20%, rather than waiting for it to touch the lowest point and in a bull market, sell stocks when the markets goes up by 20% rather than waiting for it to touch the peak.

Interesting though!

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Friday, December 18, 2009

New system for inflation rates in India

No, the government is not moving towards implementing CPI based inflation calculation, but from October onwards, instead of releasing weekly inflation figures, the full data on wholesale price index will be released only on a monthly basis.

As per the decision taken by the government, the weekly index figures will not be released for manufactured products, but will be limited to primary articles and fuels. Manufactured products have a weightage of 63.74851%, while primary articles and fuel have weightages 22.02525% and 14.22624% respectively in inflation calculation.

The government says that the practice of releasing weekly inflation rates is scrapped to curb "volatility" in the markets. But, is it a gradual shift towards adopting CPI, where CPI figures are generally released on a monthly basis?

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Wednesday, December 16, 2009

India moving closer to adopt GST

The 13th Finance Commission (TFC) has endorsed its proposal for single goods and services tax (GST) and recommended a “revenue-neutral” rate of 12% – Livemint.

Of the 12%, 5% will go to the center and 7% to the states. From the state’s share, 2% will go to third tier of governments made up of panchayats and local bodies.

Currently different states charge different tax rates for the same goods and services and there’s an incentive for an individual to purchase goods from a state where tax rates are lower. The difference in tax rates sometimes lead to the smuggling of goods as well.

Once adopted, GST will enable uniform tax rates for similar goods and services across the country. It would economically unify the country, reduce the incidence of tax and ensure greater revenue through better compliance. Most of developed countries of the world use GST.

The union government had promised to adopt GST by 1st April 2010, but has been unable to get the states to agree to the schedule. Some states fear that they would lose their existing tax revenues if they adopt GST.

To take care of this apprehension, the commission recommends creating a ‘safety net’ (a compensation fund with a corpus of Rs. 30,000 crore) in five years by the center. Any state which suffers a revenue loss from implementing GST shall be compensated using the safety net.

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Monday, December 14, 2009

Online car insurance rates

It is unavoidable to have insurance for our car when we own one. Car insurance not only covers the money required to do rework on a car after an accident, but it also covers the life of the passengers inside. Hence, driving without car insurance is a huge risk that a person is taking. And most of the times a car insurance is mandated by the laws of a nation. Then it becomes all the more important to have insurance for our car.

There are umpteen insurance companies that offer car insurance to the public. They offer various schemes with varying options. So much so that sometimes we have to do a thorough research before finalizing on a particular insurance company. That’s where websites that provide auto insurance reviews come to our rescue. They provide all the information one would need when he is going for car insurance.

The site allows us to compare car insurances offered by several companies so that we can make an informed decision before we purchase one. It also helps the users to evaluate insurance coverage and rates of various insurance policies and has good articles that can educate an interested person. Thus finding car insurance that is appropriate for one’s personal needs would be quite easy while using the site.