My-leave-the-worries-behind Car

First time is always memorable in life. Right?

Your first day in school or college or anything for the first time. I am quite sure that you might as well have remembered the first time you drove a car. Same here. I cannot and will not forget my first experience of driving a car. In fact, Our good old car is quite close to my mind and heart.

The 2006 Hyundai Santro Xing arrived in our family, when I was studying in my 10th Standard. I was quite excited to just be there in the car and had not even thought about driving it. I could feel the joy within me, it was an emotion which is hard to express really. I loved the times when my dad used to drop me off to exam centers for board exams. I grew in awe of the little machine which was well taken care of, by my dad.

Good old Trusted Companion!

Years went in a flash and all I had were some more memories with my Dad and elder brother driving it around. All that changed, when I took over the driving duties after learning to drive. My first time was marked with a lot of ecstacy as I managed to take it our for an early morning spin. The 1100 cc engine was a delight to rev hard. I revved it slightly hard, dumped the clutch pedal for throttle and off it went. The pick up, the gear ratios were much more tuned than I had expected. The seating position of the car was again very comfortable. Compact dimensions, peppy engine and great handling made Santro a great fun to drive car. The car feels stable on highways and can easily zip around in city traffic with its superior engine performance.

I loved my first drive and used to look back at that experience as one of the finest till now. I still drive it and the car functions just as well as it used to be (although all the credit should go to my Dad for maintaining the car so well).

I regularly drive my good old Santro and there's always a good feeling while entering the car. My parents are surprised that how much their son has fallen for a 11 year old car. Who says only humans can be companions?

It is my thrill machine and my-leave-the-worries-behind car. 

Books on Investing and Stock Markets

There are a lot of books written on 'investing' and 'stock markets'. Many of these books are a treasure trove of knowledge. In my journey of investing, I have read a lot on markets and still do, whenever I can. 

The following books which according to me, are worth reading time and again:

• 'The Intelligent Investor' by Benjamin Graham. This book is the textbook of investing. Everyone who is into markets or even thinking about it should read this. Timeless wisdom in this book. It should be there in the book shelf. 
• 'Security Analysis' by Benjamin Graham and David Dodd. Basics of fundamental analysis and Interpretation of financial statements discussed in a greater detail. The book espouses the true concept of Value Investing. Must read for anyone who is interested in Fundamental Analysis.
• 'The little book that builds wealth' by Pat Dorsey.
• 'The little book that beats the market' by Joel Greenblatt.
• 'Reminiscences of a Stock Operator' by Edwin Lefevre.
• 'Common Stocks and Uncommon Profits' by Philip Fisher.
• 'Poor Charlie's Almanack' by Charlie Munger.
• 'The Thoughtful Investor' by Basant Maheshwari.
• 'Gurus of Chaos' by Saurabh Mukherjea.
• 'India's Money Monarchs' by Parag Parikh (It's a collection of interviews of prominent Indian investors who have succeeded in the market)
• 'Graham, Buffett and me' by Aryaman Dalmia. This book was written when the writer was 14 years old. Some interesting insights on investing.
• 'The Unusual Billionaires' by Saurabh Mukherjea. The story of 8 companies on how they have built and sustained their competitive moats over a period of time. The book is a must read for anyone having interest in number crunching and financial analysis.

Examples of the Magic of Compounding in the Markets

There have been some great returns from some well run companies for last few decades and that has been attributed to the 'power of compounding'. Now, Compounding is the process of generating earnings on an asset's reinvested earnings. 

To work, it requires two things: the reinvestment of earnings and time. The more time you give your investments, the more you are able to accelerate the income potential of your original investment.

See for yourself, how the magic of compounding works over a period of 20–30 years.

• Rs 10,000 invested in Eicher Motors in 1992 is worth today - Rs 80 lacs
• Rs 10,000 invested in Asian Paints in 1986 is worth today at Rs 90 lacs
• Rs 10,000 invested in Dr Reddy’s Labs in 1986 is worth today at mindboggling Rs 10 crores.
• Rs 10,000 invested in Shree Cement in 1990 is worth today at Rs 2.90 crores.
• Rs 10,000 invested in Torrent Pharma in 2008 is worth today at Rs 2.19 lacs (approx) (that’s more than 21 times in 9 years)
• Rs 10,000 invested in Granules India in 2008 is worth today at Rs 2.97 lacs (almost 30 times in 9 years) (Stock was at Rs 28.20 back in 2008 and there was split in face value from 10 to 1 in 2015)
• Hold your breath for this one. Rs 10,000 invested in Ajanta Pharma in 2008 would be worth today at Rs 24.42 lacs. (More than 240 times in 9 years)

Barring these companies there are many companies which have grown tremendously in the last 20–30 years. We all have read about the investing returns from Infosys and Wipro over the last 3 decades.

There are companies like Bajaj Finance, BPCL, Lupin, Natco Pharma and HPCL which have delivered 50–60x over a period of last 20 years.

Happy Investing!

(Source; Compiled information available on various websites like Money Control, BSE India, Yahoo Finance and Google Finance)

Ways to Find Stocks which are Under Valued

You need to have a strong grasp of finance and accounting. In addition to that look at some of the things like market crash or a government policy having an adverse effect on stock(s).

You should have certain parameters to find stocks which are undervalued. Those can be:

• Price to Earnings ratio(PE) - A very simple way to gauge whether the stock is undervalued or not by comparing it with peers or sector average or with its own historical PE.

• Earnings Yield - Earnings yield are the earnings per share for the most recent 12-month period divided by the current market price per share. The earnings yield (which is the inverse of the P/E ratio) shows the percentage of each dollar invested in the stock that was earned by the company.
• Price to Book value - The price-to-book ratio (P/B Ratio) is a ratio used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share. Calculated as: A lower P/B ratio could mean that the stock is undervalued.
• Price to Sales - Price–sales ratio, P/S ratio, or PSR, is a valuation metric for stocks. It is calculated by dividing the company's market cap by the revenue in the most recent year; or, equivalently, divide the per-share stock price by the per-share revenue.
  
• Intrinsic value of share or a firm - Intrinsic value refers to the value of a company, stock, currency or product determined through fundamental analysis without reference to its market value.

You can also use a stock picking tool like Stock Screener for Indian Stocks: Screener.in

• Find top stocks with our stock screener
• Stock Screener - Yahoo Finance

Anecdotes from life and lessons learnt

All through my school life, I was an introvert and lacked an ability to start conversations. I went on with the same mindset in college but the environment was different. College taught me to explore, to dream big and work towards it, to make lifelong friendships and many more such things. I went on with the environment and now I can see the benefits of that.

Lesson learnt - Be ready to change when you can see that it's for the good. It helps being dynamic and in not being rigid. If we are open to ourselves, we can unleash our potential.

I was someone who tried to manage things by studying less and scoring more than average. I was getting confident of soaring through CA but my habit of studying less and relying on instincts and at last moment studies did not work. I failed during my CA - IPCC (Intermediate Level). It broke me. I could not gather my confidence back and as a result I became insecure in life. I wanted an approval from my family that I am doing things correctly even though I was not. Finally, those delusions came to an end one day when I had decided to take charge and lead my life through perseverance. That helped immensely.

Lessons learnt 

- There's just no shortcut to success. You have to work hard to earn it. Even if you fail there will always be a satisfaction that you tried your best.

- It is about accepting yourself the way you are. 

Very often in life, we all are very harsh on ourselves. If we do not succeed the pangs of self guilt create a huge problem in accepting those failures. We try to fight with reality but to no avail. We need to accept ourselves the way we are. That is of course, after working hard to achieve something.
If something doesn't come to us even after working hard then we need to accept ourselves and the reality. It will be satisfying and it will surely create a base for success in the future.

My close friend and cousin sister moved to Mumbai in March 2015 after bagging a great profile at one of the big four. I became possessive and demanding, all this while her job required her to put in a lot of hours. As a result, I was always left with little or no time with her. I felt like being left out but soon developed other interests and I was able to understand her situation very well. This in turn made her happy.

Lesson learnt - Don't be way too possessive about people whom you love. Sometimes, just giving a little extra makes all the difference.