Herd mentality

I my quest to fnid out the ways and means of the stock market, I came across an interesting article. The pink section of today's DNA told a story. Robert P Miles, the Warren Buffet investment advisor had, in a conference, asked people to bid for a business that would generate Re 1 every year for 10 years. And people started bidding. Herd mentality followed, and raised the tag to Rs 1000. this clearly shows how irrational the stock market can be. And this is how stocks tend to get overvalued.

The rational method of evaluation of the stock is the discounted cash flow method, an inevitable part of the finance basics. A cash flow of Re 1 for 10 years would bring the present value to nothing more than Rs 6.14 (taking 10% discounting rate) But the people did raise the price!!

ABN Amro dividend yield fund

ABN Amro mutual fund has launched the dividend yield fund, which would
focus on the companies having a dividend yield higher than the BSE
Sensex. The other dividend yield funds available today are:

• Birla dividend yield fund – The stocks in this fund are selected if
its dividend yield is twice that of the sensex.
• Principal yield dividend fund – Dividend yield of the stocks
invested in needs to be 1.5 times nifty.
• Tata dividend yield fund – stocks should have a dividend yield
higher than the BSE sensex.

The entry load for this fund is 2.25% for investments upto Rs 5 crore.
No exit load, and the minimum investment is Rs 5000. the last date of
the offer is 30th August.

As per the stated asset allocation, the fund will invest 65-100 per
cent of its assets in high dividend yield stocks, and up to 35 per
cent of its assets in stocks which do not have a high dividend yield.
The fund can also invest up to 35 per cent of its assets in debt and
money market instruments

Commodities

A bulk good traded on an exchange or cash market is a commodity. We have food grains, gold, silver, oil, and the being traded in the commodities markets. A basket of commodities constitutes a commodities index. This index has a different weight for each commodity and its performance is a decisive factor in a number of commodity derivatives. It seems that from now on trading would be possible in small amounts. This would attract retail investors. Already commodities mutual funds are finding their takers, it would not be long before commodities would be sold in equities, just the way the securities are sold. We can expect a dramatic increase in transactions in the commodities exchanges like NCDEX (national commodities and derivatives exchange)

First and second

In response to

http://tinyurl.com/blxnj

To be the amazon of Indian price sensitive market, firstandsecond needs to work on lowering the prices and improving its service. It's common knowledge that an online shop implies lesser cost than a brick and mortar store for the entrepreneur. So getting a better bargain on books would only be a right of the net savvy customer. Indians may not be too inclined to shop online, but a new breed of online enthusiasts would be ready to buy books, music or even groceries if available at a discount. And this tribe will only grow; now that Internet has crossed 10 years of existence in India (VSNL was launched as the first ISP on Aug 15, 1995)

There is no description or reviews of the books. Even a few sample pages could do the trick. When I search for a book on firstandsecond.com, I am presented with a plethora of options, most of which are supposedly foreign editions with skyrocketing prices. I don't see many takers for this kind of service. In spite of a far lesser collection of indiatimes, it does deliver cheap and fast. Finally, as a customer, I would not purchase a book online when I get a 20% off on the MRP at the bookstores at Fort area of Mumbai, or I would rather go for some experience shopping at Oxford or Crossword!

Amazon may have graduated from the largest online bookstore to the largest online store in the mature American market, but the huge untapped potential in India does lay in online shopping experience. But the key remains in tapping the Indian needs, the first being low prices!!

1Gbps Internet

The internet is not an area of no constraints. The main bottleneck is
the low bandwidths. But with the new broadband of 1Gbps getting real,
the day is not far when we would be hooked on the Internet (always
online), just the way we are always online on your wired or mobile
telephones.

The GPON is set to set up a new wave of changes, watching movies
online is only for the privileged few. But watching it online would be
real, people might even decide not to buy TV and have computers
instead.

The rampant piracy would rise to no limits. Currently only small
software are available online, but in future, you might even find
operating systems getting downloaded (and installed too) in a jiffy.

If you wanted to install updates, it would take seconds. That would
require an additional constraint, that of the server. So now the
services would be constricted by the capacity of the server, not the
connecting media.

Will this new technology be restricted to Internet only? Currently, we
use a 10 Mbps LAN, it would be a shame if we can download a file
faster from the Internet than from the office LAN!!

Perhaps its too early to wonder, but I am eagerly waiting for this new
technology to happen!!
In response to the hindu business line article