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Team Multi-Act

why invest in gold

Why Indian Families Must Invest in Gold and Gold Mining Shares

By | Gold, India Equity | No Comments

Gold has been in use as a form of currency or a high value commodity for at least three millennia. Records show that India has had an intense relationship with this glittering metal for almost as long. The picture of an Indian bride is incomplete without her being weighted down by masses of gold jewellery and tales of palaces being inlaid with gold leaf abound.

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Why care about China’s Shadow Banking Crisis?

By | What We Are Reading | No Comments

In this article:

Credit growth is a well-known factor behind bubbles and China’s credit growth in the recent past should be a definite concern. Shadow banking channels (which make traditional reporting obscure) is a further negative. History shows, in many cases, how it ends in the scenario of tightening or loss of confidence among participants walking a tightrope of duration mismatch.

Read on for more insight on shadow banking risks in China.

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Bad News Investor – Buying “Bad” Stocks

By | What We Are Reading | No Comments

In this article:

Bad news investor is a person who invests primarily in stocks of companies that are in news due to bad reasons. But does it make sense? Theoretically it does. You need to be sure as to why your reason for investing in so-called bad stocks is sounder than the reasons of those who are selling.

Cyclical businesses are known to witness regular flows of good and bad news depending on the cycle of their businesses and effects of bad news can be temporary. So what should you do if you hear some bad news about the company whose stock you always wanted to buy? Learn how bad news can actually be good for you here and how to choose what stocks to buy.

Read the original article here

Bad News Investor – Investing on Bad News

 

traditional market conditioning approach

Traditional Market Conditioning: Why We Need to Break Away from It and How

By | Behavioral Finance, Global Equity | No Comments

It is important to remember that all investments are subject to a certain amount of risk. ‘Risk” can simply be defined as the probability of losing whole or part of the sum invested. This probability must be considered before investing. Various tools may be employed to identify investment-worthy stocks such as fundamental analysis, price-to-earnings ratio, technical and quantitative analysis. Fund managers may combine two or more systems to determine the strength of investment.

By and large, traditional investment strategies are based on a fixed percentage mix of stocks, bonds, and cash for varying risk tolerances. It is often the money manager’s job to select the best investment options based on various theories that can be based on the long-term average performance of investment assets. For example, a moderate risk investor is likely to keep fully invested in 60 percent stock and 40 percent bond allocation without taking into consideration the risk. Institutions and fund managers may follow a relative investment approach, which in our opinion, has fundamental flaws as it focuses on short-term horizons and fails to incorporate emerging trends.

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social network connection for online business

Companies and their Moats: Network Effects

By | Investment Insights | No Comments

When Warren Buffett stated “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price,” he was talking about companies with wide economic moats. The term Economic moat, famously coined by Warren Buffett, refers to the sustainable competitive advantages that immunize a business from competitors – similar to a moat protecting a castle. Mr. Buffett’s investing strategy is to invest in companies with strong economic moats as they are likely to remain successful over a long period of time.

Different types of Economic Moats offer different competitive advantages. Of all the competitive advantages a company can have, network effect is the rarest that is produced but once it occurs, it is likely to last for a long time.

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Volatility is not the same as Risk

By | What We Are Reading | No Comments

In this article:

Why do people equate volatility with risk? Volatility is NOT the same as risk. Risk is defined as the chance of losing some or all of your investment. The path that the price of the stock takes between when you buy it and when you sell it shouldn’t matter, at least from a financial point of view. In fact, in many cases higher volatility equals LESS risk

The psychological impact of the price changes can convince you to make non-optimal choices with your money. Read this article to find out how volatility and risk are related in an investment scenario and learn how you can minimize investment risk.

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Macro

The Rising LIBOR Pains

By | What We Are Reading | No Comments

In this article:

Since mid-2015, 3 month USD LIBOR has soared from a low of approximately 22.5 basis points to its current level of 115 basis points.

It is now more than 5 times higher than two years ago. Banks have vacated their previous role of market makers. The demand for corporate debt and in particular junk debt has been enormous, and corporations have obviously sated it by producing more debt than ever before. Such a scenario implies a latent risk, one that keeps growing and is ready to bust.

Rising interest rates and a slowdown in credit growth imply that this precondition is very likely to prevail when the next batch of problems shows up.

Learn the impacts of rising LIBOR in this in-depth analysis of LIBOR.

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Are Global Housing Prices Fairly Valued?

By | What We Are Reading | No Comments

In this article:

The National Association of Realtors estimates that Chinese investors bought 29,000 American homes for a total of $27bn in the year to March 2016. Foreign buyers focus on a handful of cities: San Francisco, Seattle, New York and Miami. Foreign money has helped propel skyrocketing prices in other places, too. London’s mayor has ordered a study on foreign ownership in the capital after property prices rose by 54% in four years. Central bankers fret about the dangers fickle capital flows pose to financial stability.

Are houses fairly valued across the globe? Learn more about how these changes have impacted House Prices around the world in this interactive chart.

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Macro

The Time Arbitrage Investment Strategy

By | What We Are Reading | No Comments

In this article:

This article talks about the edge that an investor can have by focusing on the long term when the entire market is obsessed with short term data/events. The underlying value of a business is determined by stream of cash flows that it is going to earn over long time. We at Multi-Act believe that any event that does not structurally impair long term earnings power of a business would provide an opportunity if the market is worried about its short term impact. Read how many have found success through this investment activity.

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Macro

The Consequences of Command and Control Economics

By | What We Are Reading | No Comments

In this article:

Everyone knows that the law of supply and demand is designed to bring equilibrium in the economy. If it is true for commodities, the same rule should apply to interest rates as well. But like Soviet Russia where the price of sugar has very little to do with supply and demand because it runs on a command-and-control economy, central bankers have been setting the price for the most important commodity in the world: money. How will all this end? Does anyone know?

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