COMMON MISTAKE MADE BY INVESTOR

Throughout your investing career, it is likely that you will be guilty of committing a lot of mistakes. There is no one today who has not committed costly financial mistakes including the legendary Warren Buffet. However it is the ability to recognize and learn from your mistakes that will determine whether you are able to achieve your investment objectives. It is thus paramount to commit as few mistakes as possible. Failure is often the best teacher provided you allow yourself to be taught.
The last three months have exposed investors to several such mistakes. Here we highlight eight of the common ones.
1.Relying on tips and hearsay is the first and most common mistake committed by most investors.
2.Expecting Big Gains fast. Very few people have the mindset and patience required to invest in equity. A common expectation is to make big gains quickly. There is no focus on the risk the investment exposes your portfolio to. A classic example of recent times was the Power sector. Any stock that had the name ‘Power’ in it was considered sacrosanct. People did not even care about risk involved in taking exposure to such stocks. Instant gratification is injurious to your wealth.
3.Leverage in equity markets can have disastrous consequences not just on your financial health but on your physical health.
4.It’s not easy to always MAKE MONEY in equities and there could be periods of negative returns. Though over time, returns can even out, in the short run there could be sizeable downside. So don’t be surprised by it. Understand, expect corrections and be realistic.
5.Have reasonable expectations from equity. As an asset class equity should technically deliver returns in line with corporate earnings. However we do not invest in a utopian stock market but a market that drives on hope, greed and fear. Hence you are bound to see eras of excesses and exuberance and those of pessimism.
6.It’s all easy to know ‘Buy low and sell high’, but majority of people would end up doing exactly the opposite. Most investment banks, brokerages, hedge funds, FIIs, domestic investors, gurus and analysts are super confident in a bullish market when highs are torn apart every other day. Things suddenly change for them when the market corrects and no one is ready to put even their thumb in the market. Learn to embrace market sell offs. People who could not earlier invest had an excellent opportunity to invest at 14000 to 15000 levels but I do not know too many people who had the gut to really invest.
7.When the market corrects, Do not put all your eggs immediately. Corrections that happen after very sharp rallies tend to extend themselves over a few months. One of the strategies that can be adopted is to invest in a staggered fashion. You should start investing if the market has corrected by more than 15-20% and go higher when it crosses 30-35%. There is no way to know what the bottom could be and I don’t know how people come up with their holy predictions on how lower can the index go. When the going is bad, all one hears is bad news and it’s very important to grow beyond these daily projections. Investing is certainly not a poker game and you would be harming your economic interests by following what a bunch of unknown people are doing.
8.Don’t keep looking at your portfolio because things are not going to change even if you see it many times. A quarterly or semi annual review should be good enough for most people. Looking daily is harmful to your overall thought process and can urge you to take emotional decisions whether on the way up or way down.
This is the time to take stock of what you actually have. The first step is to understand the various investments in your portfolio and how they fit within the overall scheme of things. Most people would like to see their investments grow right from day one. For a long term investor, it should not matter if prices do not rise right away. Infact if investment values indeed go down, you should be happy to see your buying happening at lower levels. Eventually when the market recovers, you are bound to get much higher returns because of these inefficiencies in a turbulent market. The only time your stock prices should be up is when you need to sell.
Currently one sees lower volumes in the market due to fear and several other factors. The increase in STT (securities transaction tax) and short term capital gains tax also has had some impact on volumes. There is a lack of clarity on the direction of the market. However just because this is the case, there is no need to change your investment strategy. Continue to buy in a staggered fashion and just stay put if you already have.

India's Rural Electrification to Lend $894 Million to NTPC Unit

Rural Electrification Corp., the state-owned lender to power projects in India's villages, will lend 38 billion rupees ($894 million) to a utility that's partially owned by NTPC Ltd.
NTPC Tamil Nadu Power Co., a joint venture by India's biggest power producer and the Tamil Nadu Electricity Board, will use the funds to set up a 1,000 megawatts-power generation plant near the southern city of Chennai, the ministry of power said in a statement on a government Web site today. The utility will start generating power in the year ending March 31, 2011.
The ministry didn't provide the interest rate at which the loan will be given, or the tenure. Rural Electrification plans to provide 160 billion rupees to finance the addition of 3,000 megawatts-capacity by the Tamil Nadu Electricity Board, the statement said.

BSEL May Invest 15 Billion Ringgit in Malaysia Iskandar Region

BSEL Infrastructure Realty Ltd., an Indian property developer, may invest 15 billion ringgit ($4.6 billion) over 12 years in Malaysia's so-called Iskandar Regional Development in the southern state of Johor.
BSEL has signed an initial agreement to develop projects in the area, the Iskandar Regional Development Authority said in a statement today. The authority will seek approvals from various authorities to facilitate Mumbai stock exchange-listed BSEL's projects, it said.
BSEL, which has information technology park projects in India and builds shopping malls, is developing a project for 70 million square feet in Iskandar over three phases, the development authority said.
BSEL would invest 2 billion ringgit initially, and then 4 billion ringgit and 9 billion ringgit later, the Iskandar authority said.
Developers in the Iskandar region will be exempt from paying income tax until 2015 on earnings from land sales and until 2020 on income from the rental or sale of buildings, the Iskandar Regional Development Authority said on Oct. 9 last year.
Malaysian Prime Minister Abdullah Ahmad Badawi is wooing foreign money with easier investment rules and tax breaks, aiming to attract 382 billion ringgit in two decades to redevelop Johor, 2 1/2 times the size of neighboring Singapore, and turn the southern state into a global destination for business and leisure.

Blackstone to up focus on India

Blackstone Group, a global private equity player, is set to increase its focus on India. After setting the ball rolling on its corporate private equity and recently starting off its real estate opportunity focus, the company during the past week has set up Blackstone Altius Advisors, an event-driven strategy focusing on opportunities in the Asia Pacific region. Event-driven strategies are those where PEs fund merger and acquisitions or bankruptcies scenario.
According to a statement from Blackstone, a global, highly-experienced investment team will be headquartered in Hong Kong, with additional professionals based in Tokyo, Mumbai and New York for the foray.
Estimates indicate that close to $1 billion has already been committed by this player to the Indian market.
The statement from Blackstone further added that its Asia business includes its fund of hedge funds and two close-end mutual funds - The India Fund and The Asia Tigers Fund.
Blackstone Altius Advisors will be led by Aaron Nieman, who previously was with SAC Capital Management as managing director in the Canvas Capital Management division. Stephen A Schwarzman, Chairman, CEO and Co-founder of the Blackstone Group, said in a statement: "Aaron has a superb history of developing teams and investing in Asia. He will add greater depth and intellectual capital to Blackstone's wide range of alternative investment businesses, and we are delighted that he has chosen to join us."
Antony Leung, chairman, Blackstone Greater China, added, "As Blackstone continues to aggressively seek opportunities within Asia, Aaron and his team will provide additional investment capability that will bolster our presence in the region."
"Blackstone has a good global alternative investment platform. The synergies that exist within Blackstone's various businesses will provide us with a significant advantage investing in the Asia Pacific markets," said Aaron Nieman, senior managing director and chief investment officer of Altius Advisors.