Yogi Knowledge Sharing Hub

  Value Investing & Behavioral Finance This is the universal truth, people earn money only when they do work, and putting money which is work for you is called  Investing . In simple words, we say  "Money work for you, not you work for money".  Basically investing is a combination of science and art.  If you want to be a successful long-term investor, it is very much required to understand the basic pillars of investment. The pillars are : Value investing  strategies (which is developed by  Benjamin Graham ) and  Understanding the basics of  Behavioral Finance  and how it affects markets.    Let us understand what is value investing, The basic idea behind value investing is to buy the stock when prices are low relative to its  intrinsic value , or its business worth and then wait for prices to move up. This type of investing requires sufficient patience to identify a good company and wait for the strategy to work....

  Stock Picking You should remember one thing there is no mathematical formula or algorithm for success in investing. There are so many company stocks listed on the stock exchange and several investment philosophies, strategies, and mindsets that investor use to pick a stock in the market.  In this blog article,  we understand what is stock picking, and what are principles always remembered as an investor. it is a dynamic exercise.  What is stock picking? Stock picking is a combination of art and science but remembering one thing too much is either is a dangerous thing. Discover the right stock picking is one thing but waiting for the right time to buy the stock at a bargain price is the success of the investor.   Don't miss the following principles which are useful for your own stock-picking investment analysis strategies for the long-term investor: Don't invest in a business that you do not understand.  Identify the Competitive advantage or moat of t...

  Stock Market Crash? (As Opportunity/A Panic) A stock market is a place where you can buy shares at a certain price and it is the behavior of the market which provides upward (share prices are up, also called bull market) and downward trends (share prices are down also called bear market).  When a stock market crashes it simply means sharp and sudden stock prices are down or downtrend in the Market which creates a weak, fearful, panic situation and a great depression in the  market sentiment . In this situation,  what you (as an Investor ) should do?  it's a very hard decision for every market participant what to do during and after the stock market crashes.  Here we will understand what is the meaning of a crash and  what are the things investors should do when the stock market crashes. Is the investor taking it as an opportunity🙋🙋🙋or take it as a panic?😨😨😨 It is up to you what to do when the stock market crashes. you react it  i...

  Efficient Market Theory Vs Mr. Market In this article,  I explore to you the concept of Efficient Market Theory and what is Mr. Market as per  Benjamin Graham  the "father of value investor".   The  efficient market theory (EMT)  is a financial theory developed by  Eugene Fama  in 1960. In EMT it is said that : “It is impossible to beat the market because the price already incorporates and reflects all relevant information as soon as it becomes freely available.”  This means when information about a stock is available to one investor it will become freely available to all investors at the same time. Therefore the price of a stock will immediately reflect the knowledge and expectations of all investors. As a result, there is no way for investors to beat the market since there is no way for them to know something about the stock that is not already reflected in the stock price, except for insider information and insider trading whi...

  Valuation of a Company Valuation  is the assessment of a company before buying into the stock. Every stock has a price tag on it. So at what price is a stock considered cheap? Valuation of stock is not an exact science but it is the combination of art and science. So many valuation methods are available which will be used on the type of company. Here we discuss the valuation methods for determining  growth companies .      Price to Earnings to Growth rate ratio ( PEG Ratio)     Discounted Earning Model Price to Earnings to Growth Ratio (PEG) PEG is an important criterion for valuation for growth companies.  The ratio was introduced by  Peter lynch . The PEG ratio can be calculated by:   PEG ratio = PE Ratio / CAGR (Compound Annual Growth Rate) For example company, A has a PE ratio of 25 with a growth rate of 15%. It will have a PEG of 1.6= (25/15). Company B on the other hand has a PE ratio of 35 and a growth rate of 50%. It will ...

  Understand the Business model (how the company makes money ) Understanding the business model of the company is an important step in an  investor-type mindset . The business model means how the company makes money. What's a business model?  You are evaluating a company as a possible investment then you learn exactly how the company makes its money, after knowing the business model then you can think about how attractive and profitable that business model is. Understanding the business model gives you confidence in your investment decisions.  Knowing the business model inside out should provide you some level of certainty and reduce the risk when purchasing the stock. Basically, there are two types of the company either they sell products or provide services.  Fundamentally you must understand the inputs used to produce final products (or services) sold to the customers. identify the largest product or service contributing to the revenue and earnings of a busin...

  Understand the Management The future growth of a company is highly dependent on its management. They are  Board of directors,  CEO,  Chairman,  Executive or non-executive and  Independent directors  as well as the senior management team at the divisional level. Management trustworthiness is very important.  We have never succeeded in making a good deal with a bad person. There are some checkpoints that you can check to understand the quality of the management. They are One way to ascertain the management’s commitment is to gauge the percentage of ownership that individual managers have in a company. The percentage of shareholder patterns is found in the annual report of the company. Avoid boards with low ownership stakes because they are much more interested in taking their profits from the company than adding value to it. Access the management team through the compensation packages they receive. From an investor’s point of view, it is obvious t...

  Understand the numbers Check the financial or performance to confirm if the business and management have a good track record. 

  Margin of Safety (It is the best way to reduce the risk)                                         Three Important words in Investing are " Margin of Safety ". Capital preservation is the first rule in investing. Why everybody thinks we don't lose money in the stock market, in other words, we think everybody in the stock market wants to need to have good protection on their investments.  So we first understand the concept of margin of safety. The margin of safety is the core principle of  Benjamin Graham  the father of value investors. The future value of any investment is a function of its present price. The investment return is based on what we pay for that security. if we pay a higher price then we will get a lower return. No matter how careful we are, the one risk no investor can ever eliminate is the risk of being wrong. We can use the con...

  Where I got Investment Ideas &  what information do we collect to identify the company stock In the investment world,   it is very difficult for any investor how to get investment ideas. Investment ideas find in any source. Some of the sources are: 1.        Read Newspapers on daily basis-  Find company-related information, read policy articles, management interviews, etc. 2.       Read Business Magazine 3.       Research upcoming IPOs 4.       Research old IPOs last ten years.  In the above sources, we find several companies and note down the  general information and  categories of the company of stock in the present situation to the following categories  (which is Described  By Peter Lynch  ) Slow Growers Stalwarts Fast growers Cyclical Asset play Turn Around  Apply the criteria on the basis of the company stock categorie...

  👌 👌 👌 Investment Vs Speculation  👌 👌 👌 We always listen near our surroundings, investing is a game of speculation or the share market is a game of speculation. That's why people do not invest or hesitate to invest in the share market. This happens due to people don't differentiate between the words investment and speculation.   Understanding the two basic words  Investment and Speculation  is the very first step to achieving investment success in the financial world.  Financial market participants can be divided into two groups  investors and speculators . Assets and securities can often be characterized as either investments or speculations. The distinction is not clear to most people, In both groups, they can be bought and sold. Investors  think of stock as a piece of paper representing as fractional ownership of underlying businesses. They think buy and sell decisions on the basis of the current price of the stock in the stock exch...

  Mental Accounting (R elated to our emotional state ) I personally think that money is a very important part of human life without money it is very difficult to maintain human financial needs. It is very much required for daily living expenses & needs, but sometimes investors ( all humans like)  take irrational decisions about the money. Why this? In this blog we try to understand the following question in our mind: Why do we take irrational decisions related to money in their spending and investment behavior?  Why this happens and how to avoid or stop them? Let's first, understand,  What is money?  Money is nothing but a  medium of exchange and it  acts as an intermediate in the exchange process. A person holding money can easily exchange it for any commodity or service that he or she might want.  It is a human tendency to link money to a particular purpose (expenses/savings) and also take decisions, for money based on where the money comes ...