Financial journey since May 2007

Well, I seem to be blogging very little about finance these days. My time is mostly consumed by my new interests.. photography, bird watching and wildlife.

It is a surprise even to me as to how a strongly left-brain oriented person like me has taken to right-brain activities like photography and birding (ok.. they are not entirely right-brain).

But finance has been a favorite topic since a long time. As a kid I used to love monopoly. As a student, I loved math and numbers. Now as a BI (business intelligence) expert, I love charts. I like to ponder over monthly savings ratios, net worth growth rate, expense pie charts, etc. Though I am struggling to balance a few unrelated interests, it is but natural for me to keep returning to my financial interests.

I decided to break the jinx and blog a bit on finance, on my journey since May 2007. (Please read my disclaimer too).

Why May 2007? Because I made a major change in my investment style at that time. I consciously made a decision to go passive, go large cap. Index funds (actually exchange traded funds) were in. Most of my individual stocks were sold. Active stock picking was mostly out except for a few niche holdings. Mutual funds too were reduced to a few concentrated large cap holdings. I chose steady performers (like Franklin India taxshield, HDFC Equity) over star performers. I chose to focus more on my career and kept my finances on auto-run. I opted for SIP’s, made regular purchases of Nifty Bees and slept peacefully most of the time.

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Fantastic interpretation of world statistics

Please have a look at this video.

Be patient for the first 3-4 mins. The real show begins after that!

I was really thrilled seeing the way the speaker had handled data… intertwining it with design!!!

You will love statistics if it is presented this way.

And the other thing is the clarity the data throws on issues like poverty, GDP growth, internet user growth, life expectancy curve, etc.

Who said data is boring?

This video is a must watch!!!

8 free software to enhance your life

We all love free software.

But not all free software is good.

How wonderful it would be if good software is available for free?

Well, I have a list of 8 wonderful software that can enhance your life.. and are free at the same time.

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If cash is king… GnuCash is the emperor

Thanks to Gnucash. My financial tracking is so much easier and simpler these days.

If you haven’t downloaded it yet, I urge you to do it today!!!

Now!!! Here.

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Track your finance… for free!

Wouldn’t you like to track all your assets? Wouldn’t you like to know how much you spent last month?

That too centrally, without having to juggle between several sheets and tools?

And wouldn’t you love it, if it is free?

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Conservative investors sleep well !! Good book!!!

I just finished “Conservative Investors sleep well“  by Phil Fisher. (It is also sold as part of “Common Stocks and uncommon profits”). Its really very good and I enjoyed it a lot. Here is a brief on it.

Fisher talks about Four dimensions of conservative investing.

1. First dimension

Excellence in the following activities

A. Low cost operation. (High profit margins)

B. Stong marketing organisation.

C. Strong research and technical efforts.

D. Good financial skills.

And of course the skill to integrate all of this in the right mix.

2. Second dimension.

This is the people factor. Competent management and good labour force make all the difference. Fisher also talks about 3 elements needed with regards to this dimension. They are

1. Managements need to realize that the world is changing fast.

2. Take efforts to make the employees feel that their co is a good place to work for.

3. Orientation towards sound & long range growth.

3. Third dimension

These are the characteristics that make the business favorable as a conservative investment. They are

1. Profitability.

This can be expressed in ROIC and OPM. But also the sales turnover is also an important consideration.

2. Economies of scale.

3. Market leader in sales and high OPM

4. Multidisciplinary technology development

5. Well marketed products that have become habit buying now

6. Extremely high ROIC is also a danger, says Fisher as it might attract a lot of new people to start business thereby reducing profits.

4. Fourth dimension.

This dimension talks about how the Financial community

1. values an industry

2. values a company

3. values stocks in general.

A stock price is not only what the financial community thinks of the company, but also of the industry and also of stock picking in general. During a time when the industry is viewed negatively, even a good company would be valued low. And during times when stocks as a whole are considered as bad investments, again, stocks of such companies would be cheap.

This is only a very brief gist. Please do take the time to read this fantastic book.