Ankit's Financial Blog

I was reading sixth edition of Security Analysis by Ben Graham and David L Dodd and in 1934 they provided the answer to this question. Here is what they said about investing in Fixed Income Securities: I. Safety is measured not by specific lien or other contractual rights, but by the ability of the issuer to meet all of its obligations. II. This ability should be measured under conditions of depression rather than prosperity. III. Deficient Safety cannot be compensated for by an abnormally high coupon rate. IV. The selection of all bonds for investment should be subject to rules of exclusion and to specific quantitative tests corresponding to those prescribed by statue to govern investments of savings banks. In first point above Safety not measured by lien but by abilty to pay they further explain: The basic difference confronts us at the very beginning. In the past the primary emphasis was laid upon the specific security, i.e., the character and supposed value of the property on whic...

India is a developing country and economy is growing at approximately 8%. The Indian stock market though volatile, is booming. If you live in USA and want to invest in India, you can invest in either INP, EPI or PIN. INP is an ETN (Exchange Traded Notes)whereas EPI and PIN are both ETFs (Exchange Traded Funds). EPI and PIN are relatively new (inception in March 2008) and INP has been there for long time. The basic difference between ETF and ETN is, after creation ETF is placed with the trust and usually the company which created it acts as the adviser. If the adviser goes bankrupt then the trust replaces the adviser with someone else and your money is safe. ETN on the other hand, are the bonds issues by a company. So if the issuing company goes bankrupt then you are basically standing in line with other creditors to recover your money. So before investing in ETN, read the terms and conditions very carefully. I have not got a chance to compare the three so I can not basically tell which...

Accenture is considered a power house by many investors. I was reading a magzine last year and one of the most influential mutual fund manager described Accenture as consulting and outsourcing power house who thought that accenture's share at $41 was a bargain. Now after an year, its share are struggling at $34. Last year was difficult and most of the companies saw correction. But what about the future. Can accenture grow and deliver superior result to boost its share price? I really doubt it. Accenture has grown really rapidly in India. I myself saw that growth. In Dec 2002, I went to Accenture India office for an interview for the position of software engineer. The office was still under construction in Bangalore and only staff they had was HR. I was among the first 30 people who joined Accenture Bangalore in Jan 2003. By the end of Feb 2003 Accenture had more than 3,000 employees and by the end of 2003 the number was probably more than 10,000. In Jan, 2003 there was no project a...

This Friday, Fed lent the money to Bear Stern to avoid Bear from falling down disorderly. Was this a right move? Should Fed bail out financial institutions which willingly made subprime mortgage loans and invented complex financial instruments to fool the investors? They knew in advance that these were bad loans, people won't be able to pay them back. And, to fool the investors and avoid the risk, they created CDO and sold it to pension funds, municipalities and other naive investors. Now think about the people who invested their life's earning into securities. Municipality workers who will lose their jobs because of these CDOs. Shouldn't financial institutions be held responsible for this? I don't know what you think, but in my opinion this certainly is a bad move by Fed. Why? Because this tells investors that financial institutions instead of getting punished for such actions, get bailed out. There is no punishment for cheating investors. As an investor I will not t...