Budget Deficit and Greece Problem...issue 1

Though the world economy is coming on to tracks there is a possibility that it might get derailed because of budget deficit of many countries is increasing including india and if this continues until they make some measures to decrease the gap by increasing taxes , reducing public expenditure (it would be great if they reduce government running expenditure rather than on money they spend on people..but i guess they(politicians ) do the later..will see that in coming days) and making public sector companies more accountable to owners(public) ..Though i believe Govt should spend more in times of depression kind of times we are see now a days is once a life time chance..only history books will tell this in coming days..but Govt at some point of time should reduce this expenditure on public other wise there budgets will become deeper..so after reducing this they should be in quick position to collect the funds from market or else if another slump happens then they will be in very bad shape i guess...atleast they should have enough funds by another slump so thay they resume pumping liquidity back into system...

Now guess why am talking all these things now is coz of late am hearig news in western media about Greece having budget deficit of over 13% and more...and also they fudged statistics to enter in Euro Zone..and there is also talking going about Euro going down...that inturn will make Dollar also low at some point...this is indeed is sensed by Chineese i guess and they quietly did a a monetary tightening today ..which inturn is warning to normal investors to not to go for risky assests like equities..And this effect is seen in Dow going down by 1%..will see what our nifty will do on monday...

Stock Option Greeks

brief video on Stock Option Greeks which are used pricing the options

Investment Related Books

• Lynch, Peter, and Rothchild, John. Learn to Earn: A Beginner's Guide to the Basics of Investing and Business, 1995. A good place to start for the true novice. Written at a level anyone can understand.

• Malkiel, Burton A. A Random Walk Down Wall Street, 8th ed., 2003. A must read for anyone seriously interested in understanding investments. Extremely well-written, humorous, and well documented. A thorough reading of Malkiel will give you a good understanding of the world of investments and finance. This is a book you will want to save for a long time.

• Lynch, Peter, and Rothchild, John. One Up on Wall Street, 1989. Lynch's first book on Wall Street. Read what he says on page 165 about stocks with high P-E ratios: "If you remember nothing else about p/e ratios, remember to avoid stocks with excessively high ones. You'll save yourself a lot of grief and a lot of money if you do."

• Lynch, Peter, and Rothchild, John. Beating the Street, 1993. Lynch talks about how a grade school class picked winning stocks, just by paying attention to what was around them, and beat most of the pros.

• Haugen, Robert A. The New Finance: The Case Against Efficient Markets, 1995. Value Stocks (low price to book value) consistently yield superior returns, with lower risk, than do growth stocks (high price to book). It appears that the cheap companies are those in trouble, and in competitive markets many of them eventually turn around. The expensive stocks are those which have been doing great, but entry erodes their profits and brings them back down to reality.

• Fischel, Daniel. Payback: The Conspiracy to Destroy Michael Milken and His Financial Revolution, 1995. An alternative view of Milken and the "decade of greed." Argues that Milken was railroaded by a conspiracy of ambitious prosecutors and corporate leaders who felt threatened by Milken. The book gives good insight into Milken's long-term impact on corporate restructuring.

• Buffet, Mary, and Clark, David. Buffettology, 1997. A good synopsis of Warren Buffett's approach to what is called "business perspective" investing. Mary Buffett, the former daughter-in-law of Warren Buffett, details Warren Buffett's journey from Benjamin Graham to Philip Fisher and Charlie Munger and to his own synthesis of how to choose stocks.

• Shiller, Robert J. Irrational Exuberance, 2000. In reading Shiller's descriptions of past speculative bubbles, one has the rather eerie sense that we are reliving what we have gone through before. Shiller does a masterful job of detailing those factors, economic and particularly psychological, that lead to speculative booms.

• Siegel, Jeremy J. Stocks for the Long Run, 1998. Siegel demonstrates convincingly that stocks have outperformed other investments by a wide margin, at least over the past, in U.S. markets, with a broadly diversified portfolio, and with a long time horizon. This book, as much as any other, provides the basis for the "Gospel of Stock Market Investing," the good news that if you just put your money in stocks and hold on for the long run you will come out ahead.

• Smithers, Andrew, and Stephen Wright. Valuing Wall Street: Protecting Wealth in Turbulent Markets, 2000. Tobin's q, expressed as a ratio of market value of stocks to the replacement cost of their underlying assets, appears to be mean-reverting over long periods of time. When q has been very high, as it has been recently, stock returns over the next ten years have tended to be low.

• Lowenstein, Roger. When Genius Failed: The Rise and Fall of Long-Term Capital Management, 2000. John Meriwether, of legendary fame from Michael Lewis' Liar's Poker, combined with two Nobel Prize winners to amass a huge pool of capital and then convinced banks to lend much more for investment in their hedge fund. Then excessive leverage and a series of improbable events brought it crashing down. A fascinating story of hubris run amok and how the Fed at last had to intervene in an impending crisis.

• Lewis, Michael. Liar's Poker: Rising Through the Wreckage on Wall Street, 1989. A fascinating story of life on Wall Street, at least as it was in one firm twenty years. Michael Lewis describes how he entered Solomon Brothers as a young trainee, how he mastered the game and rose through the ranks, and then how he left a bit jaded.

• Lewis, Michael, The New New Thing: A Silicon Valley Story, 2000. Here Lewis describes, through the career of Jim Clark (Silicon Graphics, Netscape, and Healtheon), how the "new economy" firms were able to raise vast sums of money from venture capitalists well before they had any real prospects for profit. This turn in financing set the stage for the rise of the dot.coms and then for the collapse of so many of them.

RishabDev TechnoCable

I recommended this stock to few people when it was around 17 RS.(now CMP is 11 RS )expecting that company is going to give good results with EPS around 10, but now i think its not going to make it. Now a days i started analyzing balance sheet and the interesting thing which i saw in the balance sheet of this company is its paying more then 1/2 profit as Tax and interest expenses.

Question: why is it paying so much interest rate?
Coz it took loan to run its business and the business is not making enough money to repay it
Question:why business is not making money?
answer i know its its total cost of raw material is increase rest all components remain the same from previous quarter
Question: What is the future price movement?
I expect the stock to fall for some more time and settle around 4-6 RS

And also i started looking at Gordon Growth model..hope i can place this over there and see where it ends up..Will see where the slide stops at

Domino Effect

Just got this into my mind ..--what are the effects of printing money by govt (they gave a nice word called stimulus) is going to show effects on common man...we can think of increase of purchase power which inturn lead to increase in price of items ..which inturn will make farmers or industries to supply that product to market there by stopping the production of item/crop which is giving less margin..which inturn will lead to demand-supply mismatch....which again will lead to price rice...but for this viscous circle is going move on

oops..i havent talked about Domino Effect right...no time now..will post it sooner
Thanks
Pradeep Reddy Lekkala