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How to make decision while investing?

In civilized world, they estimate 10 yr return and identify right PR ratio for that stock.

In Nepal, we should at least estimate 5 year return.

We can compare return in stock with interest rate only in developed countries, even that country, economy push for inflation and increase economy which reflect in company earning too.

In developed countries, some industry cant grow that is why their PE ratio is very low and which has growth prospect has high PE ratio.

In stock, we want return from capital gain, not dividend. In outside Nepal, growing company usually dont give any dividend, they re invest it in same or other business and still their rate is huge.

Let's talk about Nepal:
In Nepal, max interest rate now is 9.25%. So stock need to give at least 12% return.

Let's calculate 5 year return: If return on interest rate for five year is 9.25%/year, in 5th year, Return should be 155%.


Let's calculate return for stock which average growth is 15% for 5 year:
- if dividend is 100 and if there is no growth then its price should be (if we want 12% return)= 833 Rs.
- if growth is 15% for 5 year, its 5th year dividend will be 200. So price should be 1700 in 5th year.
So how much are you willing to pay today, 1200-1400??? If you pay 1400, its PE ratio would be 14.

PE ratio of company which has zero growth be 8.3.
PE ratio of company which has 15% growth be 14
PE ratio of company which has 25% growth be ?????
PE ratio of company which has 35% growth be ????

So in stock, we expect return from capital gain, not dividend. In the world, those companies which has not given any dividend for decades but have high growth is priced the most.

And we also have to assume, in future, when Nepal is more developed, interest on FD will diminish significantly. So it will increase PE ratio too.

So better start investing for long term.

If interest rate falls to 6% then price should increase 30%. So we have to consider future interest rate while calculating PE ratio too.

If they want to build Nepal, Interest rate should be around 8% on loan, so if loan's rate is 8%, how much rate will be on FD? 4%????


Main return from stock is capital gain, not dividend. But Capital gain is determined by present and future income of the company as well as FD rate.

It was wrong of people to consider current FD rate, which is not sustainable, if this rate go on for another 4/5 year, BFis will collapse due to NPL. But our CEO who take crore in salary go around telling Interest rate wont fall for 4/5 year. They cant even see that if interest rate remain this high for another few year, BFIs will collapse.



Above is my rough calculation.


And since, there is some risk that is why you have to diversify your investment. And you expect slightly higher return on stock than in FD.

Also In FD we put cash. Value of cash always diminish which means there is inflation.

And in stock, when there is inflation, company will make more profit so value of your stock will increase with will cross inflation.

Now SBL's PE ratio is 13.5.

No where in the world you will find this cheap share to invest unless that company is about to go kaboom.

Is SBL going kaboom or investor in Nepal is tarkariwala and NEPSE is Tarkari bazzar?

Not all fingers are equal in length. But that does not mean there is no co relation.

If one finger is unusually longer then we can say other 4 will be longer than normal too.

Same with the share. If share price of low EPS is below book value then share with high EPS will be way undervalued too.

And at present, those companies - whose price is below book value- are average and not about to go bankrupt.

There is no country in the world where market value is below book value.

If there had been, then company in other part of the world would have sold the assets of that company and get better price than selling their share at share market. This is basics of economy. And biddwan yuraj k would not know this cause he is ghamandi whose mind is blind. And since he brainwashed 8 class Oli, Nepal economy is going through tough time while it is suppose to start flying high.

No intelligent people would want to invest in a country where market value is lower than book value. In that country, you dont do business. In that country, you buy that company and sell its assets make make profit in the matter of days than run business.

Biddwan yuraj k is destroying Nepal, and I am the only one who is seeing it.

Sati ko sarap.





---------------------------------------------------------- this topic----
My personal view regarding fundamentals of investing:

1: over valued or undervalued- this factor may have 50/100 effect.

2: future prospect- future growth, politics, policies etc- 30/100 effect.

3: availability of fund/cost of fund- 10/100 effect
:if no fund is available when what can i say, same with interest, if interest is 100% then .... if interest rate grows by 2/3% but profit growth is 20/30 percent then not much effect.
I dont think at this time fund and interest rate is that bad.
If everyone once to sell their land, there is not enough, so the y may just abandon their land than sell their land for too low, same with share.
If interest rate for bank deposit is 30%, no need to invest in share just put in bank, but the problem is, the bank, that offers 30% interest is likely to go bankrupt, so better invest in share- its complicated. ha ha

4: season- 5/100
during season or off season- price is suppose to be up or down around 5% or far less but in nepal, some companies price is down by almost half.

5: rest- 5/100


So, if price is way under valued, just buy, other fundamental is not suppose to effect unless, govt is about to nationalize the company or something like that. In the world-
-there are two mentality that effects our decision- culture and intellectual power. Since we dont have share culture many dont buy shares even educated ones, our culture is if you have saving- buy land or gold.. only those who are intelligent enough, buy shares some buy by coping others success.

we may have noticed, those who have been investing in share are usually have far better financial position than those who dont.

Just my view- who dont follow culture.

REBEL

If you like my view, please, read my other post- something like- how to make money by investing.

Thanks kublakhan7.

Dear Rising !
You have genuine approach regarding stock market! I salute for your contribution.....
News regarding bizmandu on 29th Oct 2017 is totally biased.....there are lots of companies which still on way to declare dividend...even top banks such as ebl hbl scb....

what I heard is rbcl is sooner going to declare 70% bonus and 100% above right...

are khate patrakar, one of the world's or the most expensive share in the world is "hathway...." of USA which had never gave any dividend till date for decades.

do you think you khate pratrakar is smarter than those investors in US???


सुको लाभांश नखुवाउने कम्पनीको पनि बजार मूल्य १६ हजारसम्म, प्रतिफल पाउन कति कुर्ने?
http://www.bizmandu.com/content/-29591.html

तपाईं पनि बन्ने होइन त स्मार्ट लगानीकर्ता ? धितोपत्र बोर्डले दियो यस्तो टिप्स
http://www.nepalipaisa.com/NewsDetail.aspx/id/18283

-- point 7 spoils other good advice.

Tell me something, I believe investing in Stock is investing in Property, do you sell property unless you need to sell it?? point 7 splits on the face of the adviser.

I am sure, the above advice are copy paste. I wonder they copied from different sources that is why there is contradiction.

Its like splinter taking advice from splinter coach as well as marathon coach.


PS: pt 7- by the way, what do you want the trader to do with the money/profit he/she made from following point 7. drink rakshi or invest in over valued land or bitcoin?

khate patrakar ko khate buddi

------------------

उसैगरी सानो कारणले कसरी चुर्लुुम्म डूूब्न पुुग्छन् भन्ने कुरा बिहीबारको एप्पल कम्पनीको कारोबारले देखाएको छ ।

एकैदिन सेयरमा १.७ प्रतिशतको गिरावट आयो । एप्पल कम्पनीको पछिल्लो उत्पादन आइफोन ८ को माग खासै नबढेको नकारात्मक खबर सनसनी भएपछि यसरी एकैदिन मूल्य यति धेरै घट्न पुुगेको हो ।
---------------------------

retard patrakar who has been doing dalali for dhoti for a bottle of rakshi, is business small reason which affect share price????


ka ka bata khate haru patrakar huna aucha. problem with nepal is there are too many media which market cant handle so business house cant pay good salary which only attracts those who cant compete in other field. rejected mal.

in the world, present and future business prospect affects share price, where as in nepal? only god knows.

investor like me who talk about fundamental has been looking like a liar in NEPSE. its all cause of sati ko sarap like NRB, sebon, nepse, finance ministry, media, retard investors etc.



===

BY THE WAY, I WOULD HAVE DUMPED SHARE OF APPLE (IF I HAD APPLE SHARES) AS SOON AS I SEE LATEST APPLE LUNCH. Actually, apple shares did fall few months ago, they must have had insider info about the product.

The Business of Investing: Speculation or Analytical Investment?
http://sharesansar.com/c/the/the-business-of-investing-speculation-or-analytical-investment.html

The best strategy to gain significantly is not a rocket science.

Its rather simple.

Invest on good companies, with good governance and invest for long term. PROFIT for sure.

Invest gari halu vanera charma aayekai xaina hajur.

Loan liyera paisa hold ma cha. Byaj next month tirne bela vai sakyo.

Bade bechi halu vanne pani kunai share chaina.

naya laganikarta kina naaatiyosh ta hami purana haru ta soch mei xau.

If we survive nepse stagnation till shrawan, then divident haru le khi haad samma rahat dinxa. Long term ta always UP UP UP.
Down bhayo bhane investment lai jhan ramro.

happy investment

छिमेकी छ देशले सम्बन्ध तोडेपछि एकैदिन आठ प्रतिशतले घट्यो कतारको सेयर बजार
http://merolagani.com/NewsDetail.aspx?newsID=33702


Qatar lost just 8% cause of the crisis while Nepal lost more than 35% and NEPSE still in depression mode, when Nepal's gdp growth about to hit close to record level.


"Sati ko sarap" are running NEPSE and including majority of investors.


Ps- by the way, Qatar is being isolated cause Qatar is getting too close with Iran, dont believe in propaganda of fake news. and by the way, qatar's media "alzazera" is nepal's enemy who was anti NEpal during IndiaBlockadesNepal, so 4K Qatar.

राजपालाई उम्मेदवारी दर्तामै रहेको समस्या समाधान गर्न स्थानीय तह निर्वाचन ऐनमा संशोधन हुँदै, संसदमा संशोधन प्रस्ताव दर्ता

http://bit.ly/2s9MKfE


Will market increase if biharis join election????

Nothing matters now, holding of election, change of govt, budget, nearing of dividend season.

Market is going down 18 day in a month at a time where market is suppose to increase slowly.

I have no fate in Nepali investor, they are bad investor,
bad voter- votes for dalals,
bad judge- thinks who distribute money is hero and who made that money is no body, wait till money maker left nepal and only dalals and criminals are left- kasmir.

Waiting for NRN and international investors to enter NEPSE. And those running NEPSE, Sebon, nRB, finance minister to die along with their family member.

sati ko sarap

Alibaba (BABA) share in US increasing during last few days expecting higher than expected growth, they were expecting 48% while real is 52 around.
Its PE ratio is 50+.

-This is how international market works, expectation and reality.

But in Nepal, they talk about fundamentals- off season ha ha.

In nepal, MNBBL growth is 40% now and will be well above 50% in 4th qtr and Its PE ratio is just above 25. They say its down cause of fundamental- off season.

HA

Some may ask me, why could not you grab the opportunity by selling share when nepase was at close to 1900?

there are many reasons-
1: I simply could not predict/tell what is the highest price, who far price will fall? I did guess, last season, nepse will be around 1800 but in my mind, price of companies were different what what it was then.

NEPSE reached 1800+ cause of 10/20 shares (which were over valued) and most of others shares where still undervalued. So no way that i was going to sell my under valued shares.

In school, we were taught, bird in hand has more value than the bird in the sky. Many may fill pages explaining in the essay buy in real life they could not tell what that is? But for me, undervalued shares in my hand was the bird.

weeks before dashain, market started to fall. I thought, people come to sell during dashain, so big player are not buying, so I guessed market will start to go up after dashain, then after too, kept falling, then again thought, after thiar market will rise. but it did not.

Till then it was too late for me. price of shares were already too undervalued already. So no way I was gonna sell.

Months kept passing, price kept on falling. Since, i was not going to sell, so question was, how could i take benefit from the situation.

I had only one option left. BUY BUY BUY.

2: since, 95% of my investment were for long term. for me, having to buy back by paying 5% more that the price i paid was heart breaking than making 10% profit by selling long term investment.

this feeling has always been the main reason, i have never been able to take benefit from crash.

Now my strategy is, when there is big crash, buy buy for long term.


Many people dont have guts to invest, in my case, I dont have guts to sell.

HOPE I WOULD DO GOOD IN LONG RUN.

Good luck to all.

My personal view regarding fundamentals of investing:

1: over valued or undervalued- this factor may have 50/100 effect.

2: future prospect- future growth, politics, policies etc- 30/100 effect.

3: availability of fund/cost of fund- 10/100 effect
:if no fund is available when what can i say, same with interest, if interest is 100% then .... if interest rate grows by 2/3% but profit growth is 20/30 percent then not much effect.
I dont think at this time fund and interest rate is that bad.
If everyone once to sell their land, there is not enough, so the y may just abandon their land than sell their land for too low, same with share.
If interest rate for bank deposit is 30%, no need to invest in share just put in bank, but the problem is, the bank, that offers 30% interest is likely to go bankrupt, so better invest in share- its complicated. ha ha

4: season- 5/100
during season or off season- price is suppose to be up or down around 5% or far less but in nepal, some companies price is down by almost half.

5: rest- 5/100


So, if price is way under valued, just buy, other fundamental is not suppose to effect unless, govt is about to nationalize the company or something like that. In the world-
-there are two mentality that effects our decision- culture and intellectual power. Since we dont have share culture many dont buy shares even educated ones, our culture is if you have saving- buy land or gold.. only those who are intelligent enough, buy shares some buy by coping others success.

we may have noticed, those who have been investing in share are usually have far better financial position than those who dont.

Just my view- who dont follow culture.

REBEL

If you like my view, please, read my other post- something like- how to make money by investing.