Good Stock. Bad Stock.

Tata Steel showed some gutsy results in the last few quarters, with phenomenal year-on-year growth in their net profits. As western economies have recovered (ever so slightly) the Corus acquisition has helped them in scaling up.
But, the impact of such results for investors has been less than stellar. When Tata Steel announced the Corus acquisition in early-2007, it decided to finance that acquisition through a rights issue and compulsorily convertible preference shares (CCPS), sold to existing investors. The Rights issue allowed an investor with 5 shares to buy one more at Rs. 300 per share. The CCPS was priced at Rs. 100 per share, convertible in 2009 at 6 CCPS to one equity shares, valuing the equity share at Rs. 600 then.
This sounded cheap! The stock price in November to December 2007 — the dates of the rights issue - was between Rs. 800 and 900, much higher than any of the rights or convertible prices. In fact, just the rights issue would have taken your purchase price to the Rs. 750 levels. And the CCPS at 600 looked juicy.
At this price the company was an absolute steal, pun unintended, for investors in November 2007.
Fast forward to today. The Tata Steel share quotes at Rs. 640 and you have had three dividends in between, adding up to Rs. 40. In total, you would have got Rs. 680 — still 10% lower than the purchase price more than three years ago. Not accounting for inflation.
This gets the investor very unhappy — such a big acquisition, and yet, the stock price is dead? Bad stock.
Financially, results have shown an expansion. The company went from making 4,177 crores in the year ended March 2007 to now, when it has made 4,800 crores of profit in just the first nine months. At the current rate it will make more than 6,000 crores for the year as profit, which gets all the more attractive as you realize that the company has had two loss making years (2008-09 and 2009-10) in between.
Now we're thinking: Okay, maybe it was the recession. Good stock.
But before you rush to buy, consider that the earnings per share (EPS), a prime consideration for how much juice you are getting out of the fantastic results, isn't that attractive.
We have a nine-month EPS of Rs. 51 today, which you can extrapolate to Rs. 70 for the full year. This is still lower than the EPS of Rs. 73 in March 2007, meaning — massive profit growth may not necessarily mean growth for you. It's like starting with four apples and four people, and then getting two more apples but having to share everything with 5 more people; you're still getting a bad deal.
We're back to: Bad stock.
But then, markets haven't done anyone justice — the Sensex was between 18,000 and 19,000 then, and it remains that much today. Effectively, on a scorecard starting end-2007, nearly nothing has gone up. A key competitor, Steel Authority of India Limited (SAIL) is down 35% from that time.
Good stock.
Hey, wait. Competitors: Jindal Steel and another player in the metals space have outperformed Tatasteel!
Bad stock.
We could go on and on. But the story contains important lessons for investors.
Stock performance is relative. A stock could have great financial results, but the other companies in the space could have done better. Even if it produced great results, it could have diluted equity so much that it hurts every existing shareholder. You would have done well to pick some of the other players, perhaps; after all, what you want to do is beat the market, not match it.
Specifically, those who care about relative performance are those that manage money. When your performance is judged on how well you put money to use, you had better put it to the best use possible. Basically, they need to choose, or be left behind. In a market that is up 50%, you don't want to be the 40% guy.
But what matters to many of us is absolute performance. You and I don't care about relative performance. We don't feel happy that if the market is down 15%, we are down only 10%.We care about our portfolio growing, and growing faster than inflation, which is currently a positive figure.
Data can be twisted. What you are told is often not the whole picture. Even what I've mentioned about Tata Steel is incomplete — there are some "losses" that they have not accounted for because certain accounting rules allow them to, there is so much steel capacity in China that will flood India if their economy slows down, the cost of coking coal has just gone up substantially this year due to floods in Australia (which hurts Tata Steel's competitors), and so on.  If you're going to analyze companies for investing, data of all sorts should be of interest; and because you can't devote so much time to so many companies, it's best to keep only a few investments in your portfolio.
Luckily, this is not the end of the investing era; most of us have a longer way to travel, and will keep investing. The important point is to learn our lessons and move on.
It's not important for it to grow every year; we all understand that stocks will have periods of underperformance, and then periods of outperformance. In three years, stocks are a few percentage points below their 2008 peaks, but so what? The recovery will be stronger, you might think.
But what if, like the US, we have a 10 year period of nothingness? Or, like Japan, which was an investor magnet in the late 90s, slip to even below the all time highs? Or, again like the US between 1966 and 1982, flirt with a historical high a few times just to reverse back into seriously negative territory? The last example has an uncanny similarity with where we are in India today — a very high rate of inflation, potentially rising oil prices and high gold prices. What broke the back of inflation then was drastic interest rate hikes by the Federal Reserve, resulting in two back-to-back recessions. Will we go the same way?
It's always different this time, of course. And it's always the same. Happy stock picking!


News source- http://in.finance.yahoo.com/news/Good-Stock-Bad-Stock-yahoofinancein-3375840036.html

Mamata, Jayalalithaa join fuel hike rollback call

		The UPA government on Monday continued to face pressure from the Opposition as well as its own allies over the steep hike in prices of petrol. The Trinamool Congress, one of the UPA's key constituents, criticised the hike in petrol rates and announced an agitation in West Bengal on Monday. The party alleged that it had not been consulted before the hike - the second within a month. The AIADMK also slammed the Congress and the DMK for the hike in fuel rates. Party chief J. Jayalalithaa demanded an immediate rollback of petrol prices. State-owned oil marketing companies had on Saturday increased petrol prices by Rs 2.50 to Rs 2.54 per litre. The hike, it is feared, may push inflation further up. The Trinamool has been worried that the rising food inflation, coupled with another hike in petrol prices, could mar its prospects in the forthcoming West Bengal elections."Trinamool workers will protest against the price hike. Despite being in power, we were not informed about the decision. Price hike affects people. We have always stood by the people. That is why we have not revised fares (of railway)," Trinamool chief and Railway Minister Mamata Banerjee said. Mamata also hit out at the West Bengal government, saying that the fuel cess in the state was the highest in the country. "Had they not been charging such a high cess, fuel prices would have been lower in Bengal," she said.

This news is taken from- http://indiatoday.intoday.in/site/Story/126839/top-stories/mamata-jayalalithaa-slam-government-for-hiking-fuel-prices.html

For Japan, 2010 was a year to forget on many fronts

TOKYO — Japan has been overtaken by China as the world's No. 2 economy. Its flagship company, Toyota, recalled more than 10 million vehicles in an embarrassing safety crisis. Its fourth prime minister resigned in three years, and the government remains unable to jolt an economy entering its third decade of stagnation.

For once-confident Japan, 2010 may well mark a symbolic milestone in its slide from economic giant to what experts see as its likely destiny: a second-tier power with some standout companies but limited global influence.
As Japanese drink up at year-end parties known as "bonen-kai," or "forget-the-year gatherings," this is one many will be happy to forget.
Problem is, there's little to look forward to. With a rapidly aging population, bulging national debt, political gridlock and a risk-averse culture slow to embrace change, Japan's prospects aren't promising. And a tense, high-seas spat with China has intensified fears of its neighbor as a military as well as economic threat.
A few optimists hope Japan can harness its strength in technology and its "Cool Japan" cultural appeal — from fashion and art to "anime" cartoons. The country needs to shed its reliance on manufacturing, they argue, and find new growth areas such as green energy, software engineering and health care for its elderly.
But talk to university students, and their outlook is bleak.
Many worry about finding steady jobs and whether they can support families — concerns that have contributed to Japan's low fertility rate of 1.3 children per woman. Average household income has fallen 9 percent since 1993.

advertisement | ad info

Advertisement | ad info

Advertisement | ad info

Makoto Miyazaki, a 22-year-old student at prestigious Keio University in Tokyo, senses forces outside his control — and Japan's — are going to dictate his future.
"Internationally, Japan is between big countries like China and the U.S. And Korea is becoming a major competitor — that's a big threat to Japan," he said. "I feel like we have fewer choices."
It's a startling contrast with the 1980s, when Japan was flush with cash and some experts believed its economy was poised to dominate the world.
Millions have given up the goal of lifetime employment at a major corporation and become "freeters," flitting among temporary jobs with few if any benefits. As companies cut costs, temporary workers have grown to a third of the work force, up from 16 percent in the mid-1980s.
Further, the population is projected to fall from 127 million to 90 million by 2055 — 40 percent of them over the age of 65. That's going to place a heavy tax burden on workers.
Economic difficulty is a chief reason more than 30,000 Japanese have committed suicide every year for the past 12 years.
Hopes for change from the Democratic Party, which toppled the long-ruling conservatives last year, have fizzled. The Democrats lost control of the upper house of parliament in July elections, setting the stage for political gridlock.
Prime Minister Naoto Kan has acknowledged Japan's declining status.
His prescription: "Open up the country." He advocates reducing trade barriers, loosening regulations and making the country a more attractive place to invest.
His Cabinet recently approved cutting the corporate tax rate by 5 percentage points to 35 percent and is weighing whether Japan should join a U.S.-led free trade zone, the Trans-Pacific Partnership, that would slash tariffs on everything from electronics to food.
Business leaders say doing so is vital, but farmers fear a flood of cheaper imports would ruin them. Analysts say it could be a vehicle for economic revival but also lead to job losses and social dislocation, especially in rural areas.
"Merely unleashing the forces of competition and the free market isn't going to do the trick because people who feel vulnerable will crawl back into whatever they have," said Koichi Nakano, a political science professor at Sophia University in Tokyo.

advertisement | ad info

Advertisement | ad info

Advertisement | ad info

Nakano and others say sweeping changes are needed in both policy and mindset, from expanding the social safety net to overcoming a deep fear of failure that has constrained entrepreneurship and risk-taking — and Japan's economic potential.
About 77 percent of Japan's jobless aren't getting unemployment benefits, according to International Labor Organization data, in part because temporary workers don't qualify.
Japan can be innovative: It is the world leader in hybrid vehicles and industrial robots. Nintendo's Wii gaming console is a hit in living rooms around the world. Entrepreneur Tadashi Yanai, Japan's richest person, built Fast Retailing Co. and its low-cost Uniqlo brand into one of Asia's biggest clothing retailers.
But Japan sometimes undermines itself by being insular. Its sophisticated mobile phone industry, for example, has failed to grow overseas because it operates on a network hardly used anywhere else — earning it the nickname "Galapagos Syndrome."
One optimist is Michael Alfant, an American who has worked in Japan for 20 years. He sees the country becoming more entrepreneurial and focusing on opportunities in service industries.
"Japan is reinventing itself," said Alfant, CEO of Fusion Systems, a startup software company, and the incoming president of the American Chamber of Commerce in Japan. "I'm very confident Japan will get there."
Any change is likely to come gradually.
A conformist, consensus-based culture means Japan is generally slow to make changes or respond to crises — as seen in Toyota Motor Corp.'s handling of its safety woes.
"One would think there would be more of a sense of urgency here," said Jeff Kingston, director of Asian Studies at Temple University's Tokyo campus. "At best, Japan will muddle through, meaning it will avert catastrophe, but it is hard to see anything but bleak prospects in a country that should be doing better given its enormous strengths."
to know more about it click here...

Indian entrepreneurs rule the world: Hilde Schwab

"Social entrepreneurs in India are role models today for countries globally and provide lessons for China and other countries on how to fuel innovation for inclusive growth," says Hilde Schwab, 64, who along with husband Klaus (founder and executive chairman of World Economic Forum) founded the Schwab Foundation for Social Entrepreneurship in 2001.
Speaking to Business Today at the World Economic Forum's India Economic Summit in New Delhi, she said: "Today, we get the highest number of top quality applicants from India for our 'Social Entrepreneur of the Year competition."
They got 104 such 'high quality' applications this year from across the country, against an average 60 to 80 from others.
What she finds striking is the degree of innovation in this area of expertise in India. Schwab said: "I do not see this innovation coming out of any other country. Also, a typical social entrepreneur working in India has 10 to 100 times more impact (in terms of reach out to beneficiaries), than we see elsewhere in the world."
The Schwab Foundation founder said the models here, like the four finalists this year - LifeSpring Hospitals' Anand Kumar with low-cost maternal hospitals; Vaatsalya Healthcare's Ashwin Naik with focus on setting up hospitals in tier II and tier III towns of India; Aajeevika Bureau's Rajiv Khandelwal and Krishnavatar Sharma with focus on helping rural seasonal migrant workers succeed in difficult economies and AISECT's Santosh Kumar Choubey that has pioneered a model of ICT-based education in rural India - show radical method of looking at extreme affordability and ultra-low prices.
"With this kind of innovation, India is surely leading the way," she opined.
The Foundation has long involved social entrepreneurs from India in its network - since the very beginning in 2001 - even before it started the 'India's Social Entrepreneur of the Year' award in 2005.
"We have only 30 social entrepreneurs that we can bring to the annual meeting in Davos, and the largest numbers from any specific country are always the Indians. They are the top role models that we can showcase and leverage at the annual meeting, she said.
Adding: "This will be particularly relevant for our upcoming annual meeting, where we will focus on the theme 'India inclusive' and highlight several models of entrepreneurship from the country."
In the selection of social entrepreneurs, Schwab said: "It is important for them to have models that are self-sustainable and not dependent on state subsidies or grants. The criteria for selection include aspects like innovation, sustainability, direct social impact, reach, scope and reliability. Surely then, social entrepreneurs from India have reasons to see themselves as role models for a global audience."
This article is taken from- http://businesstoday.intoday.in/bt/story/10378/1/indian-entrepreneurs-rule-the-world-hilde-schwab.html

Over 300 delegates attend life sciences summit in Dublin

Over 300 delegates discussed Ireland's life sciences sector yesterday, at the Life Sciences International Summit held in Croke Park, Dublin.

Experts from the pharmaceutical and fine chemicals sectors and international venture capitalists marked Ireland’s achievements to date and focused on Ireland’s strategy for further innovation.
Speaking at the Summit, Minister for Science, Technology & Innovation Conor Lenihan stated that “Life sciences are enormously important to the Irish economy and its development to date and into the future.
"Looking at 2009 alone, the Life Sciences Sector here generated in excess of €53 billion in exports last year and directly employed over 52,000 people, with many others employed in ancillary support jobs.
"In addition, the Life Science sector contributed approximately €4 billion to the exchequer by way corporation tax and total tax receipts annually. Quite simply, it’s critical to our success” the Minister concluded.
The event – themed Towards 2020: Harnessing the Opportunities –provided delegates with an overview of the challenges facing the global life sciences sector as well as critical insights into possible developments and solutions. Jim Breslin, Assistant Secretary at the Department for Health and Children, discussed in relation to the health sector - access, quality of service, cost and the need for increased efficiency and effectiveness in meeting patient’s needs.
The event was hosted by Business & Finance Media Group and partnered with IDA Ireland, Science Foundation Ireland and Enterprise Ireland, PwC, ByrneWallace and MSD.
This article is taken from- http://www.businessandfinance.ie/cat_news_detail.jsp?itemID=3175

Commodity Outlook for Gold by Kedia Commodity

Gold surpassed 20300 for the first time when investors bought the metal as a currency hedge before the talks by the Group of 20 nations later in the week. The sales figures for the festival week haven't been computed yet, but the World Gold Council expects gold sales in the week to Nov. 6 to rise by upto 40 percent from 56 tonnes in the year-ago period. Gold opened on its low\s at 19996. Strong buying interest as investors worried about euro debt, took gold out of its sluggishness, eventually reaching an all time high of 20375. Gold quietly ended the day at 20336. Now support for the gold MCX is seen at 20096 and below could see a test of 19857. Resistance is now likely to be seen at 20475, a move above could see prices testing 20615.

Trading Ideas:
Gold trading range is 19857-20615.
Gold ended higher as investors bought the metal as a currency hedge
Gold looks to take support at 20220 and resistance at 20440.
Spdr gold trust holdings rose by 2.43 tonnes to 1294.20 tonnes

This article is taken from- http://www.topnews.in/commodity-outlook-gold-kedia-commodity-2288987

Obamas floored by Tata Nano

Mumbai: President Barack Obama, who heads the world's richest economy, today checked out the world's cheapest car -- Nano.

No sooner the powerful US couple was introduced to Ratan Tata, who heads the USD 72 billion conglomerate, President Obama told the first lady Michelle that this is the person who created the USD 2,500 wonder car.

Eyewitnesses said that Michelle immediately expressed the desire to see the car that revolutionised the auto industry and put India prominently on the global map.

After the discussion last evening, Tata immediately organised a gleaming Nano along with a chauffeur, right at the porch of luxurious Taj Mahal Palace hotel in front of Gateway of India, where Obama and entourage was camping since yesterday.

The couple stepped out in the morning to have a good look at the car, with Michelle even sitting in the small Nano and admiring the engineering marvel.

When contacted, a Tata spokesperson confirmed. "Yes, we showcased the Nano at the Taj Mahal hotel."

After years of hard work, Tata fulfilled his commitment to bring the world's cheapest car on road for Rs one lakh last year.

This information is taken from- http://ibnlive.in.com/news/obamas-floored-by-tata-nano/134579-7.html