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Warren Buffett Teaches : Part – I

  
  Education
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Buffet learned how to involve in high probably investments since high-school. Back in those years, he and one of his friends bought a reconditioned pinball machine for $25. They put the game in a barber shop. They checked the coin box at the end of the first day and found $4. “I figured I had discovered the wheel,” says Buffet. Eventually the pinball business was netting $50 per week. By the time Warren graduated high school, he is an owner of a small farm in Nebraska and has $9,000 in his bank account (more…)

Four Basic Contingency Plans

  
Analysis, Education
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  • Initialstop loss
    • Establish in advance a maximum stop loss.
    • The moment the price hits the stop loss, I sell the position without hesitation.
  • Re-entry
    • When the market experiences general weakness or high volatility, your stock can undergo a correction or sharp pullback that stops you out. However, a stock with strong fundamentals can reset after such a correction or pullback, forming a new base or a proper setup… Often, the second setup is stronger than the first. The stock has fought its way back and along the way shaken out another batch of weak holders. If it breaks out of the second base on high volume, it can really take off.
    • If the stock still has all the characteristics of a potential winner, look for a reentry point. Your timing may have been off. It could take 2 or even 3 tries to catch a big winner.
  • Selling at a profit
    • Once a stock amasses a percentage gain that is a multiple of your stop loss, you should rarely allow that position to turn into a loss (e.g. stop loss of 7%, if you have 20% gain, move stop to breakeven or trail stop to lock in majority of the gain).
    • When you have to close out a trade, selling into strength is a learned practice of professional traders. It’s important to recognize when a stock is running up rapidly and may be exhausting itself.  Or you can sell into the first signs of weakness immediately after such a price run has broken down.
  • Disaster plan
    • Plan what to do if your Internet goes down, or power fails, or your stock gaps down, company investigated by SEC, CEO embezzled funds.

RBI hikes CRR by 75 bps; repo rates untouched

  
Analysis, Education
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RBI GOVERNER

The Reserve Bank of India, in its Monetary Policy review today has hiked the Cash Reserve Ratio (CRR) by 75 basis points (bps) to 5.75 per cent, while holding the repo and reverse repo rates steady in line with market expectations.

The CRR hike will be done in two tranches. The first one will be for 50 bps with effect from February 13, 2010, and the balance 25 bps will be effective from February 27, 2010. Eventually, this will drain out Rs 36,000 crore from the system.

Repo rate is the rate at which the banks can borrow money from RBI in order to avoid scarcity of funds.

The move comes on the back of spiraling inflation. Food inflation touched 17.4 per cent for the week ended 16 January 2010, slightly higher than previous week’s 16.81 per cent. Fuel price index rose to 5.7 per cent while primary articles price index touched 14.66 per cent for the week ended 16 January 2010.

A median forecast released by the Reserve Bank of India (RBI) in the pre-policy ‘Macroeconomic and Monetary Developments: Third Quarter Review 2009-10’ yesterday raised the economic growth projection to 6.9 per cent from the 6 per cent projected three months ago.

NIFTY Future :In panic low of 4757 was made and now trading at 4801.My Support and expected target was of 4724-4676 in panic.

-Don’t panic @ lower levels.

-If not breaks 4757 & trades above 4812 with volumes will take to 4845-4856 & there after watch unexpected buying upto 4889-4900 level.

Updated at 11:25/29th Dec/Baroda

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