Sell, Hedge Or Lose Everything…Martin D Weiss

The stock market is falling swiftly, and you don’t have the luxury of time. So I’ll get straight to the point:
 
If you haven’t done so already in response to our many earlier warnings, you’d better sell or hedge your vulnerable investments now. If you don’t, be prepared to suffer far deeper losses in the bear market of 2008 and beyond.
 
But beware: Most brokers will try to talk you out of it. They have a hidden agenda. They want to keep you as a customer; and they know that, once customers sell their stocks, they often close their brokerage accounts.
 
With this in mind, many brokers have been trained with up to seven sales pitches designed to keep you in the market come hell or high water.
 
Broker Pitch #1: “Buy more.” Their argument goes something like this: “Your stock is now selling at bargain prices. So if you didn’t already own 100 shares, you’d probably be thinking about buying — not selling. Instead, why not double down and take advantage of dollar-cost averaging?”
 
The more likely result in a bear market: Every time your stock falls by another $1 per share, instead of losing just $100, you’ll be losing $200.
 
Broker Pitch #2: “Hold for a recovery!” They argue that the “market will inevitably recover,” that the “recovery is always bigger and better than any near-term decline,” and that you should therefore “always invest for the long term.”
 
The reality: Bear markets can last for years. It could take still longer for the averages to recover to current levels. During all those years, your money is dead in the water. And don’t forget: If the company goes out of business, your stock will be worthless and will never recover.
 
Broker Pitch #3: “You can’t afford to take a loss.” If you insist on selling, brokers often come back with this approach: “Your losses are just on paper right now. So if you sell, all you’ll be doing is locking them in. You can’t afford to do that.”
 
What they don’t tell you is that there’s no fundamental difference between a paper loss and a realized loss. Nor do they reveal that the Securities & Exchange Commission (SEC) requires brokers themselves to value the securities they hold in their own portfolio at the current market price — to recognize the losses as real whether they’ve sold the securities or not.
 
Broker Pitch #4: “You can’t afford to take a profit and pay the taxes.” If you’ve got a profit in a stock, they say: “All you’ll be doing is writing a fat check to Uncle Sam. You can’t afford to do that.”
 
The reality: Although it’s not shown on your brokerage statement, the true value of your portfolio is NET of taxes. So whether you or your heirs pay those taxes now or in the future is mostly a difference of timing. And if our next president approves legislation to raise capital gains taxes next year, it could actually cost you more. Besides, which would you prefer — paying some taxes on profits or paying no taxes on losses?
 
Broker Pitch #5: The “don’t-be-a-fool” argument. “Stocks look very cheap now and we’re very close to rock bottom,” goes the script. “We may even be right at the bottom. If you sell now, three months from now, you’ll be kicking yourself. Don’t be a fool.”
 
The truth: Brokers don’t have the faintest idea where the bottom is. Nor does anyone at their firm. And they know darn well that stocks do not hit bottom just because they look cheap. Worse, for their own accounts, brokers and their affiliates have been — and are likely to continue — liquidating shares, often targeting precisely the same shares they pitch to their customers.
 
Broker Pitch #6: “The market is turning.” If the market enjoys an intermediate bounce, which it certainly will at some point soon, this pitch is invoked. “Look at this big rally!” they say. “Your shares are finally starting to come back. After waiting all this time, are you sure you want to run away now — just when things are starting to turn around in your favor?”
 
The truth: In a bear market, intermediate rallies actually give you the best opportunity to sell.
 
Broker Pitch #7: The last ace-in-the hole in the broker’s arsenal of pitches is the patriotic approach. “Do you realize,” they’ll say, “what could happen if everyone does what you’re talking about doing? That’s when the market would really nosedive. But if you and millions of other investors would just have a bit more faith in our economy — in our country — then the market will recover and everyone will come out ahead.”
 
The truth: Locking up precious capital in sinking enterprises is not exactly good for our country. Better to safeguard the funds and reinvest them in better opportunities at a better time.
 

HDIL-Mired In Dharavi

BSE 532873; CMP Rs 338
 
Industrialists/Businessmen/Investors must realise that charity and politics do not go hand in hand in India. Look at HDIL which is undertaking a mammoth project for the reconstruction and rehabilitation of the slums adjoining the Bombay Airport, known as Dharavi.
 
What HDIL promoters and investors do not realise is that the project will see huge arm twisting and flow of grease money to successive political parties which are and would be governing Maharashtra, the labour unions and local legislators.
 
The Dharavai slum rehab will costs huge sums and will be spread over years if not decades, and ultimately meet the same fate as Enron’s 2000 MW LNG based $ 3 bn Thermal Power Plant at Dharwad, which inspite of its re-christening as Ratnagiri Power and owners like NTPC, remains non-operational long after Enron collapsed.
 
The HDIL stock is a Sell, even though the notes given below by the management will make us feel otherwise.
 
Airport project to generate revenues from 1QFY09
 
Management expects that the company will convey ~53 acres of land for the first phase of the project (involving resettlement of 18,000 – 22,000 families) in
1QFY09 . As per estimates this move will generate Land TDR of ~3m sf. Revenues on the same could also be recognised in 1QFY09 itself.
 
The first phase of rehabilitation families is expected to take 24 months.
Recent policy changes on SRA beneficial
 
Management has welcomed the increase in size of tenement given under the slum redevelopment scheme from 225sf to 269sf of carpet area (460 sf super built up) as they believe that while increased FSI will compensate the developers for constructing a larger house, a larger unit size will also make it easier to convince the slum dwellers to move from their existing dwelling.
 
Increase in housing size also adds to the TDR receivable from the airport project, which the management now expects to be 40m sf (construction TDR).
 
Land requirement for airport project
 
The increase in applicable FSI for high density slum rehab scheme from 3x to 4x brings down land requirement for resettlement of airport project to an estimated 150 acres of land. HDIL expects to tie-up the land at an average price of Rs200m/ acre. It has acquired and paid for about 1/3rd of land requirement, which will be utilized for the first phase of the project.
 
TDR realisations
 
In the first phase of the Mumbai airport resettlement project, families will likely move to Kurla, which will be considered as the source of TDRs. Hence, these TDRs could fetch premium valuation as the point of origination will mean that these TDRs could be utilised in high value zone adjacent to Bandra Kurla Complex (BKC).
 
Increase in FSI in suburban Mumbai to 1.33x
 
The move is likely to impact the demand for TDRs adversely as developers will likely buy 0.33x of FSI from the state government.
 
No immediate need to raise additional funds
 
The company’s outstanding debt has increased by Rs18bn so far in FY08 to Rs22bn to buy land for airport resettlement project and the Vasai SEZ project. The gross debt/equity ratio is still reasonable at 0.73. The current cash balance of Rs17bn includes the recent commercial asset sale.

M.B.A Student (vs) B.E Student

A MBA and a BE student go on a camping trip, set up their tent, and fell asleep. Some hours later, the BE wakes his MBA friend and says: “Look up at the sky and tell me what you see.” The MBA replies, “I see millions of stars.” The BE asks, “What does that tell you?”  The MBA ponders for a minute..”Astronomically speaking, it tells me that there are millions of galaxies and potentially billions of planets. Astrologically, it tells me that Saturn is in Leo. Time wise, it appears to be approximately a quarter past three. Theologically, it’s evident the Lord is all-powerful and we are small and  significant. Meteorologically, it seems we will have a beautiful day tomorrow.

What does it tell you?”

The BE is silent for a moment, then speaks.  ”Practically. ..Someone has stolen our tent”.

Chicken story

A farmer rears twenty-five young hens and one old cock. As he feels that the old cock could no longer handle his job efficiently, the farmer bought one young cock from the market.
Old cock to Young cock : “Welcome to join me, we will work together towards productivity.
Young cock : What you mean? As far as I know, you are old and should be retired.
Old cock : Young boy, there are twenty-five hens here, can’t I help you with some?
Young cock : No! Not even one, all of them will be mine.
Old cock : In this case, I shall challenge you to a competition and if I win you shall allow me to have one hen and if I lose you will have all.
Young cock : O.K. What kind of competition?
Old cock: 50 meter run. From here to that tree. But due to my age, I hope you allow me to start off the first 10 meters.
Young cock : No problem ! We will compete tomorrow morning.
Confidently, the following morning, the Young cock allows the Old cock to start off and when the Old cock crosses the 10 meters mark the Young cock chases him with all his might.

Soon enough, he was behind the Old cock back in a matter of seconds.

Suddenly, Bang! …… before he could overtake the old cock, he was shot dead by the farmer, who cursed, “Hell ! This is the fifth GAY chicken I’ve bought this week !”

Lie detector Robot

One day Kuttappan’s dad bought a robot.

The robot was special in that it could detect a lie and would slap the person who lied on the face.

Kuttappan returned late from school that day and his dad asked him, “Son why are you late from school?”.

Kuttappan answered, “Dad we had extra classes today”.

Much to his astonishment the Robot jumped up and slapped Kuttappan on his face.

His dad told him “Mone (son), This robot is special in that he can detect a lie and will then slap the person who lied now come on tell me the truth, Why are you late?”

“Dad I went for a movie”, ” Which movie?” “The Ten Commandments”,

Splatt

Kuttappan got a tight slap on the face from the robot.

“No dad honest I went for the movie Sex Queen.”

Dad :”Shame on you son when I was your age I never used to do such shameful things.”

Splatt, the dad gets a tight slap on the face from the robot.

Hearing all this, Kuttappans mother comes walking out of the kitchen saying,

“After all he is your son…….”,

to which the robot steps up and gives a resounding slap on Kuttappan’s mother’s face.

Anger and Love has no limits…

While Dad was polishing his new car, his 4 yr old son picked stone & scratched lines on the side of the car.
 

In his anger, Dad took the child’s hand & hit it many times, not realizing he was using a wrench.

At the hospital, his child said “Dad when will my fingers grow back?”
 

Dad was so hurt.

 

He went back to car and kicked it a lot of times.

 

Sitting back he looked at the scratches, child wrote “I LOVE YOU DAD“

SREI STAKE IN TATA TOWER

Quippo Infrastructure Equipment Ltd of the SREI group is set to complete the purchase of a 49 per cent stake in the cellular tower arm of Tata Teleservices by the end of the month.

“We are very close to wrapping up the deal and hopefully all the loose ends will be tied up soon. The valuation has not been altered because of rising steel prices,” said Sunil Kanoria, vice-chairman and managing director, Quippo.

The company is expected to pick up a 49 per cent stake in Tata tower arm Wireless Tata Telecom Infrastructure Ltd as it has a tower business and therefore, cannot compete with the Tatas.

With close to 5,000 towers in its portfolio, Quippo is valued at Rs 3,000 crore.

According to Kanoria, Quippo plans to increase the number of towers to 10,000 by 2009.

Wireless Tata, which has over 10,000 towers under its belt, has an enterprise valuation of over $3.5 billion. The merged entity will command a valuation of around $4.5 billion, according to analysts.

Quippo has earmarked $3 billion for growth both through new facilities and acquisitions this year. Earlier in the year, it acquired the 875 towers of Spice Telecommunications across Punjab and Karnataka for Rs 600 crore.

An investment of $1.5 billion is required to buy a 49 per cent stake in Wireless Tata.

Kanoria had earlier hinted that rising steel prices might lead Quippo to reconsider valuations but has dispelled such notions now.

Rising steel prices not only push up the rent of towers but also make the towers more valuable.

Structural steel angles and plates contribute to around 60 per cent of the cost of a tower, with the investment per tower ranging from Rs 25 to Rs 40 lakh. Companies are now sharing around 25-30 per cent of their networks, which is expected to go up.

Cases of dubious media reports, policy bloomers and other curious trends

Sucheta Dalal

Not So Nifty
 
The market share of the Bombay Stock Exchange (BSE) is declining but its 30-share sensitive index, the Sensex, has remained extraordinarily popular and is considered the market benchmark. However, Pune-based technical analyst, Deepak Mohoni, has staked copyright claim on the word ‘Sensex’ which he claims is his coinage. One assumes that the coinage may lose its relevance if it is de-linked from the 30-share index; in fact, its popularity is more dependent on BSE’s ability to launch and popularise Sensex-based derivatives. Since Mohoni has moved court, this is now a legal issue.
 
The National Stock Exchange (NSE), on the other hand, has a monopoly in the equity derivatives space, and is racing to capture leadership in the currency futures and the proposed SME market as well. Yet, its index, the Nifty, isn’t half as popular as the Sensex — even after splurging loads of money on an advertising campaign to promote it as a brand. That makes it all the more ironical that an Internet-based tip-sheeter has swiped the name SNPNIFTY, way back in May 2000 and even hosts a website at www.snpnifty.com offering stock tips on multiple platforms including phone, SMS and live chats. It calls itself a ‘market leader’ in stock market consultancy services, but has no information whatsoever about its promoters, although the name ‘Maheshwari’ turns up in an email ID under ‘Contact Us’.
 
The NSE owns and conceives its indices through a joint venture with Crisil (Credit Rating and Information Services of India Limited) called India Index Services & Products Limited (IISL). So we asked NSE and Crisil for their reaction to SNPNIFTY. IISL’s CEO, Suresh Narayan, wrote to thank us for drawing their attention to the ‘misuse’ of trademarks and said that they had “initiated appropriate legal measures against the concerned parties to protect our interests.” The lesson is that one may launch an advertising blitzkrieg to popularise a brand but one needs market intelligence and open communication channels to protect it. Here is a tip for those who subscribe to tip-sheets: avoid websites and blogs that do not have proper ownership details under the ‘About Us’ tag.
 
Insider Action?
 
The biggest corporate story in recent times was the sudden sale of Ranbaxy on 11th June to Daiichi Sankyo of Japan. The stock hardly reacted at all to this bombshell and closed at Rs561. Apparently, there was no more value left to extract, even though the Sensex was up nearly 300 points that day. Now, recollect 10th June when the Sensex fell 500 points. On that day, Ranbaxy was one of a handful of stocks to buck the trend and rise by Rs35 to Rs561. In fact, the stock has been moving up steadily from 1st February, when it was at Rs359, to the current level of Rs561.
 
The Securities and Exchange Board of India’s (SEBI) expensive Inter Market Surveillance System (IMSS) ought to be taking a close look at the interesting trajectory of the Ranbaxy scrip. The question is: has SEBI mothballed the IMSS system? It is over a month since two stocks — KGN Industries and Sylph Technologies had grabbed media headlines with their sizzling rise on very thin trading, but we still don’t know who was responsible. On asking, we find that SEBI is waiting for the BSE to submit a report on price manipulation. Does this mean that the IMSS, launched with big claims by M Damodaran, has been quietly mothballed?
 
Tippler Tips
 
While on tip-sheets, a reader has sent this interesting case pertaining to the liquor company Khoday India which produces brands such as Peter Scott. The company had a net loss of Rs5.2 crore in FY06 and a net profit of Rs11.5 crore in FY07. In late April, a report by the Atherstone Institute of Research (copy available with us) was reproduced by several web-based investor forums and Internet groups. The report projected a big turnaround in Khoday’s business prospects, where increased volumes would lead to higher margins and allow the company to foray into realty development. It projected a net profit of Rs17.42 crore for FY08 and a significantly bigger jump in FY09 and FY10. It also projected a target price of Rs482 against a 52-week high-low of Rs425-Rs46.
 
The report apparently lured several investors to jump into the stock. When the results were finally published, the actual net profit was 50% lower — at just Rs7.94 crore. An agitated investor writes to say that the Atherstone group deliberately misled investors. Well, we sympathise with Atherstone’s clients who acted on the report, but not those who read it on the Net. After all, it was not meant for public circulation and carries a bunch of disclaimers. Those who reproduced it on investor forums and others who acted on its claims are fully responsible for the consequences. The price, while writing, was a mere Rs103.
 
State of the Media
 
In early June, an investor event conducted by www.myiris.com, held a discussion titled “How Much of the News Can You Trust” which saw a heated debate among participants from CNBC India, NDTV Profit, UTV Business and MoneyLIFE. Although most participants denied there was ‘any’ editorial interference in their work, public perception is that news is, indeed, compromised by management interference and corporate pressure. Things are the same in the world’s leading democracy. At a National Conference for Media Reform in June, Dan Rather, former anchor of the hugely popular CBS 60 Minutes, “delivered a blistering critique” of the media. The event was hosted by Free Press.
 
Rather made the point that a series of mergers and acquisitions had ensured that most large news organisations were owned by a “shocking few” for whom “news is but a miniscule part of their overall business interests.” It is the same in India. Apart from the owner’s business interest and lack of guts, the media is also silenced (especially by government agencies), by threatening to ‘block access’ to important people. This is, indeed, the fastest way to silence the best journalists and is successfully used by the Indian government, regulators and large corporate houses. Once ‘access’ is blocked, a journalist has to work much harder to get news and face the harassment of being kept out of official events. As Rather says, “It is rare, now, to find a major news organization owned by an individual, someone who can say, in effect, ‘The buck stops here’. The more likely motto now is: ‘The news stops… with making bucks’.”
 
The emphasis on the bottomline is enhanced by the need to deliver higher profits quarter-on-quarter. That is why, he says, “Political analysis (is) reduced to in-studio shouting matches between partisans armed with little more than the day’s talking points. Precious time and resources wasted on so-called human-interest stories, celebrity fluff, sensationalist trials, and gossip. A proliferation of ‘news you can use’ that amounts to thinly-disguised press releases for the latest consumer products.” If this sounds disturbingly familiar, it is because India has caught up with global trends.
 
Sundry Denials
 
·        On 2nd June, Blue Dart Express told the exchanges that it is “unaware” of any move by DHL Express to make an open offer to Blue Dart shareholders. The language of the denial indicates that the report is not necessarily incorrect.
·        On 5th June, Deepak Fertilisers reacted to a report that it plans to “foray into contract mining as a part of a strategic growth initiative” by claiming that it had “not reported the information to the media” and the news appears “speculative”. Not a particularly convincing denial, once again.
·        On 29th May, Indiabulls Financial Services re-emphasised to the bourses that it had no plans to acquire a strategic stake in Blue Bird (India) and the media report included the denial but was still published

How to file your IT return online…. A guide

You can submit your IT return on-line by following process.

1. GO TO http://incometaxindiaefiling.gov.in/portal/index.jsp

2. REGISTER AND CREATE USER (USERNAME AS YOUR PAN NO)

3. GO TO https://incometaxindiaefiling.gov.in/portal/individual_huf.do

4. DOWNLOAD ITR-1

5. FILL THE FORM

6. CHECK THE FORM

7. GENERATE BARCODE

8. GENERATE XLS AND SAVE ON YOUR SYSTEM

9. GO TO https://incometaxindiaefiling.gov.in/portal/login.do AND LOGIN AGAIN  

10. CLICK ON SUBMIT RETURN.

11. UPLOAD XLS FILE.

12. CLICK ON UPLOAD.

 
Congratulations:

YOU HAVE SUBMITTED YOUR RETURN.

YOU CAN ALSO CHECK YOUR refund STATUS IF ANY.

Men are always better friends..

Men always have better friends….

They will stand by you, no matter what….!!! 

 

Here’s an example:-

Friends of Women:

A wife was not at home for a whole night.

 

So she tells her husband the very next morning,

 

that she stayed at her (girl) friend’s apartment overnight.

 

So the husband calls 10 of her best (girl) friends and

 

none of them confirmed that she was with them.

 

Friends of Men:

A husband was not at home for a whole night.

 

So he tells his wife the very next morning,

 

that he stayed at his friend’s apartment over night.

 

So the wife calls 10 of his best friends and 5 of them confirmed that

 

he stayed at their apartments that night and

 

another 5 claimed that he is still with them!!