Thought Garage

A choice between money now and money later.

Just watched Uncle Ben goes shopping on Active Player . The Federal Reserve is trying to stimulate the economy by buying billions of dollars worth of bonds from banks. Senior Editor Paddy Hirsch explains how that's supposed to work. Uncle Ben goes shopping from Marketplace on Vimeo . Source : Uncle Ben goes shopping from APM: Marketplace Whiteboard ( Feed ) via Active Player

BanyanTree is a group of friends that hang around once a month to discuss a variety of topics of interest. I would like to share some notes and ideas from those meetings. The following is a Questionnaire from such a discussion on Value Investing moderated by Harish . I understand in concept what is value investing all about, but haven’t got a chance to read any literature yet to fully grasp strategies based on Value. For those like me that don’t know much about ‘Value Investing’, here is a quick excerpt from Wikipedia : Value investing is an investment paradigm that derives from the ideas on investment and speculation that Ben Graham & David Dodd began teaching at Columbia Business School in 1928 and subsequently developed in their 1934 text Security Analysis . Although value investing has taken many forms since its inception, it generally involves buying securities whose shares appear underpriced by some form(s) of fundamental analysis . -- Source: Value Investing...

I love the way Paddy Hirsch explains complex market place dynamics in the simplest way possible that even I can get a glimpse of how it works. In this week, he explains how banks are making money without practically lending to people or small businesses that desperately need it. How the big banks make the big bucks from Marketplace on Vimeo . This is almost like a scam. How can this be all legal and allowed? Why do Government allow these banks to buy Treasury Bonds with money given by Federal Reserve for lending activities. Wouldn’t buying treasury bonds considered as an investment?

If you are investing in stock market, it pays to understand how a company (that you love to invest in) works. Like,  how does a company makes money: what kind of products/services it sell, where it is making money, what markets it operate and what are its strategies for both short term and long term revenue generation. Easier and the cheapest way to understand where the money is made, is to look through the Financial statements. But, sifting through 100s of pages of SEC filings and financial statements is not easy and decipher the meaning hidden in complex market jargon. If you are looking for a simpler way, meet Trefis . Its a nice tool, that will help understand the revenue part, in a way that is quite intuitive and easy to understand. It breaks down revenue stream as a % of each product/service a company is offering. Another wonderful part of this tool is it will let  you forecast each of those based on your understanding of market conditions. For instance, you can...

Stumbled upon this website that appears to be a Mint.com for Indian consumers. Collect data from all your Banks, Credit cards, investments etc and provide analysis, alerts and reports at one place. Perfios is for anyone who wishes to solve the problem of managing wealth distributed among various asset classes and among various institutions. If you have bank accounts, credit cards, Mutual Funds, Equity etc with multiple institutions, how often have you felt that - ‘what if all of this could be accessed at one place?’ Perfios addresses exactly this aspect (and more!) and provides access across asset classes on one platform and in the process takes care of your other worries too! Source: Perfios Website

If you have watched this wonderful talk by Rory Sutherland “ TED Talk : Rory Sutherland: Life lessons from an ad man ”, you must have seen this big Red button, showed while explaining that “interface” determines the behavior. Paraphrasing a bit, “if there is a large red button on a wall in your home and every time you press this button it will save you $50, then you will save a lot. Because interface fundamentally determines our behavior. Marketing has done a very very good job of creating opportunities for impulse buying but never for impulse saving”. And of course, as he admits, that is against consumerism and act against the very ambitions of companies that create these advertisements, so probably will never build such an interface. So, when a company says they built an interface that makes saving money a lot easier, you better bring your instincts and not believe it at once. When I saw the promotional advertisement “Keep the change” by Bank Of America that will make savi...

“..software is perhaps the ultimate building material: it springs from pure thought and is intrinsically malleable, yet it can be made manifest in our hardware systems, limited only by our vision ..” – Grady Booch Mint.com is an idea about 3 years back. Now its a 170M business (with projections running in Billions of dollars in next few years) that helps millions of people save money and organize their finances. There is no doubt, it would be every aspiring entrepreneur’s dream to convert their idea into a multi million dollar business. If you are one of those, this 22 minute talk by Aaron Patzer, CEO of Mint.com is a must watch. There are some great tips on mechanics but also quite an invaluable advice on the most important aspect of any business, managing finances.   Mint CEO Aaron Patzer on Startups from Techcrunch on Vimeo . Towards the end of the presentation, Aaron talks about what building Mint.com really meant to him (along with tons of money tha...

Promise of a stable government? or Promise of a growing economy? Or both? Its great to the FII flowing again.   Foreign institutional investors (FIIs) have pumped in Rs 20,117 crore (US$ 4.3 billion) into the Indian equity markets in the month of May 2009 — the highest in 19 months. India's market capitalisation (m-cap) has touched the US$ 1 trillion-mark, propelling it back among the top-ten in the world m-cap rankings. At US$ 1.04 trillion, India's m-cap is the ninth largest in the world and in equivalent rupee terms, it is closer to the country's gross domestic product (GDP) of Rs 5,332,753 crore (US$ 1.13 trillion). India attracts US$ 4.3 billion worth FII in May 2009

  The recent results of Nielsen’s Three Screen Report - a quarterly analysis from Nielsen’s Anywhere Anytime Media Measurement initiative (A2/M2) - show that the average American watches approximately 153 hours of TV every month at home, a 1.2% increase from last year. In addition, the 131 million Americans who watch video on the Internet watch on average about 3 hours of video online each month at home and work. Source: Nielsen’s Anywhere Anytime Media Measurement initiative (A2/M2) If we get little bit materialistic ... Even at the bare minimum of $5 per an hour, and extremely materialistic view that ignores the pleasure and joy of watching TV and replace with money you could have earned if you had spent that time in doing something,  that is $765 per month. Consider other costs of watching TV : An article put the cost of TV, Cable, Movie rentals and money you would spend after so positively influenced by TV Advertisements at $700 per month. If you add bo...

In multiple interviews, Peter Schiff, explains that US Economy foundation is weaker and 'the game is over America'.  He also predicted in detail what markets are affected, credit crunch and how it will lead to recession, only to be laughed away by rest of the Pros on TV.  We all should have watched it earlier :-((

Good news for first time home buyers. You may defer tax up to $7,500 in your next year tax filings and you get 15 years to pay that tax amount. First-Time Home Buyer Tax Credit at a Glance The tax credit is available for first-time home buyers only. The maximum credit amount is $7,500. The credit is available for homes purchased on or after April 9, 2008 and before July 1, 2009. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. The tax credit works like an interest-free loan and must be repaid over a 15-year period. For more visit http://www.federalhousingtaxcredit.com/index.html .

There is a silver lining to the economic turbulence in Indian markets. Net effect of the economic turbulence is that top 10 firms in fact notched up their market valuations. Breaking its six-week long losing trend, country's top 10 club added over Rs. 20,000 crores to the combined market valuation in the past week, even as Reliance Industries and Infosys suffered losses. The top 10 companies together gained Rs. 23,273 crores in market cap last week, while country's most valued firm Reliance Industries alone lost Rs. 24,063 crores from its valuation. Also IT bellwether Infosys' valuation declined to Rs. 6,371 crores in the past week. At the end of Friday's trade, the total market value of the 10 most valued firms, comprising six from public sector and four private sector entities, stood at Rs. 10,15,150 crores, up from Rs. 9,91,877 crores a week ago. ... As per the elite list of top 10 firms, RIL is followed by ONGC (Rs. 1,58,619 crores), NTPC (Rs. 1...