Definition of Technical Analysis Technical analysis is the process of utilizing past trading information and stock price trends related to a specific security, and then equating those to how other likewise investments have responded throughout history to similar patterns. Further, when a pattern is identified, the investor can predict that the future pricing of the target investment is likely to respond in a similar manner to patterns observed earlier. Technical analysis of stocks assumes that current prices should represent all known information about the markets. Prices not only reflect intrinsic facts, they also represent human emotion and the pervasive mass psychology and mood of the moment. Prices are, in the end, a function of supply and demand. However, on a moment to moment basis, human emotions,fear, greed, panic, hysteria, elation, etc. also dramatically affect prices. Markets may move based upon people’s expectations, not necessarily facts. A market “technician” attempts to Continue reading
Investment Management
Sources of Buy Back of Securities
A company can Buy Back its own shares or other specified securities out of three sources: Free reserves Securities premium account Proceeds of an earlier issue of shares or other specified securities. [Section 77A(l), The Company’s Act 1956]. Buy back of any kind of shares is not allowed out of the proceeds of any earlier issue of the same kinds of shares. 1. Free reserve The term free reserve has been defined to carry same meaning as has been assigned in clause (b) of Explanation to section 372A of The Company’s Act 1956. For the purpose of section 372A the term ‘free reserve’ has been defined as those reserves which as per the latest audited balance sheet are free for distribution as dividend and it includes balance of securities premium account. Free reserve means the balance in the share premium account, capital and debenture redemption reserves shown or published Continue reading
Abhijit Sen Committee Report on Commodity Futures
In the wake of consistent rise of rate of inflation during the first quarter of calendar year 2007 and responding to the concerns expressed at various forums, Parliamentary Standing Committee of the Ministry of Consumer Affairs Food and Public Distribution, appointed an Expert Committee under the Chairmanship of Prof. Abhijit Sen, Member of Planning Commission, to examine whether and to what extent futures trading has contributed to price rise in agricultural commodities. The objectives of the committee were: 1. To study the extent of impact, if any, of futures trading on wholesale and retail prices of agricultural commodities 2. Depending on this impact, to suggest ways to minimize such an impact 3. Make such other recommendations as the Committee may consider appropriate regarding increased association of farmers in the futures market/trading so that farmers are able to get the benefit of price discovery through Commodity Exchanges. In order to examine Continue reading
Risk and Return in Portfolio Investments
Risk in Portfolio Investments The Webster’s New Collegiate Dictionary definition of risk includes the following meanings: “……. Possibility of loss or injury ….. the degree or probability of such loss”. This conforms to the connotations put on the term by most investors. Professional often speaks of “downside risk” and “upside potential”. The idea is straightforward enough: Risk has to do with bad outcomes, potential with good ones. In considering economic and political factors, investors commonly identify five kinds of hazards to which their investments are exposed. The following are different components of risks associated with portfolio investments: A. Systematic Risk Systematic risk refers to the portion of total variability in return caused by factors affecting the prices of all securities. Economic, Political and Sociological changes are sources of systematic risk. Their effect is to cause prices of nearly all individual common stocks or security to move together in the same Continue reading
Life Insurance – Definition, Need and Benefits
Human life is subject to risks of death and disability due to natural and accidental causes. When human life is lost or a person is disabled permanently or temporarily, there is a loss of income to the household. The family is put to hardship. Sometimes, survival itself is at stake for the dependents. Risks are unpredictable. Death/disability may occur when one least expects it. An individual can protect himself or herself against such contingencies through life insurance. Though Human life cannot be valued, a monetary sum could be determined which is based on loss of income in future years. Hence in life insurance, the Sum Assured (or the amount guaranteed to be paid in the event of a loss) is by way of a ‘benefit’ in the case of life insurance. It is the uncertainty that is risk, which gives rise to the necessity for some form of protection against Continue reading
Six Dimensions of Emotional Style
According to neuroscientist Richard J. Davidson, each person has a unique emotional profile. As he puts it, “Just as each person has a unique fingerprint and a unique face, each of us has a unique emotional profile, one that is so much a part of who we are and those who know us well can often predict how we will respond to an emotional challenge.” Based on his research, Davidson identified six dimensions of Emotional Style in his classic work The Emotional Life of Your Brain written with Sharon Begley. According to him, Each of the six dimensions has a specific, identifiable neural signature—a good indication that they are real and not merely a theoretical construct. The six dimensions of Emotional Style are as follows : Resilience Style : People at one end of this dimension recover quickly from adversity whereas people at the other end of this dimension recover Continue reading