IBS TIMES 217TH ISSUE

TEAM IBS TIMES Vikram Leo Singh (Editor in Chief) Neha Thampi (Senior Editor Magazine) Puja Bhowmick (Senior Editor Website) Harshada Mahindrakar Nithin Abraham Preethika Sampath Priyanka Tiwari Utkarsh Shreya Jariwala Sandra Maria Babu Simi Gopalakrishnan

Designed By: Vikram Leo Singh Neha Thampi Puja Bhowmick

1

EDITOR’S LETTER

Dear Readers, The stock market has grown enormously over the years with many people seeing it as an investment avenue that provides higher returns. Despite the growing trend, however, there are still several people who have misconceptions preventing them from entering the market. The most common misconception is that investing in the stock market is like gambling, a chance with luck.

As Peter Lynch said, “An important key to investing is to remember that stocks are not lottery tickets”. This 217th issue covers eleven investors from the world-famous investor Warren Buffet to the famous Indian investor Hitendra Dixit, all who made it big in the stock market. Through this issue, we look at the strategies and beliefs of each of these investors. While they each have their own approach and secrets to success, one thing is for certain- Luck was not what led them to get favourable returns consistently. Head on to the articles to see their perceptions of stock market investing!

As an editor, it gives us immense pleasure when we hear from our readers. We intend to improve ourselves every step of the day and would like to invite you, our readers to support the same. Keep following us on www.finstreetibshyd.in as well. Please write to us and become a part of the discussion.

Email ID: editor.ibstimes@gmail.com Neha Thampi (Senior Editor, Magazine) POC, IBS Times

2

CONTENTS ▪ Bonus Article: Expensive Mistakes in Capital Markets By: Kartik ▪ Biggest Activist Investor: Bill Ackman By: Vikram ▪ King of Corporate Raiders: Carl Icahn By: Preethika ▪ A Player in Intra-Day Trade: Hitendra Dixit By: Shreya ▪ The Secret to Making Money…: Peter Lynch By: Neha ▪ Rich Dad’s Lessons of Investments! Robert Kiyosaki By: Utkarsh ▪ Mirror on the Wall…: Philip Arthur Fisher By: Puja ▪ The Oracle of Omaha: Warren Buffett By: Harshada ▪ Father of Value Investing: Benjamin Graham By: Simi ▪ Analyzing His Way to The Top- Dennis Gartman By: Sandra ▪ The "Arabian Warren Buffet"- Al-Waleed By: Nithin ▪ Conclusion By: Priyanka

3

Expensive Mistakes in The Capital Markets BY: KARTIK I was introduced to capital markets during my MBA program. My college followed the club culture like any other B-school where I took part in the capital markets club. The senior members made us learn about how the markets work, not just Indian but global. At first, I was fascinated by the idea of making good returns through trading as compared to the traditional methodology of having a Fixed Deposit. Although in the later course of time I realized the correct definition of a stock market. Most people misperceive it as a place where high returns can be made overnight if you are able to speculate correctly about the near future.

But the real definition is that stock market is a place where companies raise capital by giving out the opportunity of having ownership in the company and becoming a part of their future by investing some amount in it. The money invested is utilized by the company to make profits and bring better returns to its shareholders in the long run.

Although some of us are really good with speculation and making good returns in the short run as well. The only problem is that there are a few mistakes that every short-term investor makes while learning their way to the top. I don't want the future investors to make such mistakes, hence learning the hard way. Following are the few mistakes that can be expensive sometimes: 1. Putting All Your Money in One Basket Most of us know the concept of Diversification. But there is a deeper meaning to it. The equity market can easily lure people into putting everything they have into it, be it either long-term or short-term.

Salaried individuals putting all their savings in the market to increase their return is very common, especially when they've just started their professional career. Here is the first life lesson for investingAsset Allocation. This is the principal key to any personal portfolio. An individual may expose himself to investing only when he has a sufficient margin of safety and a cushion to fall back on.

Hence, the first step is to establish a source of permanent fixed income which is enough to fulfil your basic necessities and hence get you through tough times when the market has hit rock bottom making your investments turn red. People who don't follow this have to sell their investments at a loss to cover their daily expenses. Hence it is advisable to diversify your investible surplus into different asset classes i.e. equity, fixed income, cash, mutual funds, etc.

4

2. The Sunk Cost Fallacy I will give a famous example of this. Suppose you buy a non-refundable movie ticket and now you've got reviews that the movie is a blunder. You have realized that the storyline is of no interest to you.

You don't wish to see that movie anymore but a part of you says, "now that I have paid for the movie, I should at least watch it." That right there is the Sunk Cost Fallacy. In the world of investing, we do it by 'averaging the losers and selling the winners.' Say you buy a stock for Rupees 10 and now it has gone to Rupees 8. Now you buy another stock and the average cost paid by you for one stock becomes Rupees 9 which is better than the current market price of the stock. You keep on repeating this process until the price reaches Rupee 1. And how do you fund this purchase? By selling the winning stock which was at Rupees 15 that you had bought for Rupees 12. As an investor, it is immensely important to get over the sunk cost fallacy and realize your losses at the earliest, rather than averaging them out.

3. Stop Loss Whether you're an intraday trader or a long-term investor, if you do not have a stop loss pre-defined then you're destined to lose all your capital. Now, what is a Stop Loss?

It is the level beyond which the stock will no longer sit in your portfolio irrespective of whether you're trading or investing. Before entering the purchase, based on your risk tolerance, you need to define a stop loss. It can be 5%, 10%- a level till which you can see your money go away.

As a thumb rule, it is advisable to have a lower range of stop-loss for a shorter time frame.

4. Getting Over-Ambitious and Proud After seeing your investments grow each day, there will be a time when you will become so ambitious that you will forget the first rule and will think of investing all your money in a single share to multiply your returns. This is a time when you're positive that the price will increase in future. Pride that you cannot be wrong and being over-ambitious can lead to grave financial losses and erase all your past gains in a matter of days.

5. Position Sizing A lot of conventional wisdom does not talk about it. Once you've defined your asset allocation levels, it is important to go a step further to define your individual position sizes. Suppose you've Rupees 100 and you wish to invest in 6 stocks. You need to get the position evened out across these stocks to avoid unnecessary skew bias. For some reason even if one stock goes to Rupees 0, you'll still have 5 others to rely on. Position sizing becomes more important when dealing with derivatives. Retail investors see Futures and Options as a way of making a fast buck only to realize they've lost all their money. It is advisable to enter the derivative market only when you've knowledge, experience and a good backup for your investment.

5

6. Risk Management While accounting for the expected upside, it is also important to account for the downside. Equity markets surely have a higher risk than the debt market where bonds and fixed deposits are most common. Although, one should always evaluate their risk-bearing capacity and then only enter into these markets, especially when dealing with F&O. The more you increase the risk, the more is the return expectation which leads to negative returns that you may not be able to handle.

7. Leverage, Margin and Losing Track of System Most brokerage firms provide you with margin against your existing portfolio of shares to undertake new trades. What it means is suppose if you have a portfolio that has shares worth Rupees 200, then the broker will allow you to undertake trades of say up to Rupees 150 or 180, depending upon the type of securities you're holding. This is all good until you're making money and you're making winning trades. Although, all hell breaks loose when things go the other way. If the trade goes wrong and you do not have proper risk management practices in place, it may come to a place where your entire portfolio has to be sold off forcibly to fulfil your margin call. Taking on leverage/debt to take trades is a strict NO. I have never engaged in the latter while I have witnessed the former blowing up my friend's portfolio causing deep regrets.

Hope you guys will consider all these points before becoming future investors.

6

BIGGEST ACTIVIST GAMBLOR: BILL ACKMAN BY: VIKRAM William Albert Ackman is an activist investor which means he also acts as an owner of the company he invested in. He is a Hedge fund manager and is celebrated and ridiculed for his confidence when it comes to making big bets on a handful of positions. His all or nothing approach has led to some of the greatest, most predictive calls in the investing world and some of the biggest busts. His career in investing can be categorized into two parts one being the Rough Patches where his investment portfolio nearly deprived half of its value and second is the Comeback of Bill Ackman with his investment strategies.

ROUGH PATCHES The troubles began when a Canadian pharmaceutical company Valeant collapsed. The near failure of this company blew off his portfolio and reputation. Pershing Square had a deteriorated return as -4% in 2017, 13.5% in 2016 and -20.5% in 2015. Over the same period, net assets fell from more than $20 billion to $8.4 billion. He lost another $1 billion betting’s against multi-level marketing company Herbalife. Toward the end of 2017, Ackman, the former Wall Street star, set out to restore his reputation and improve returns for his investors. The mistake he tends to make regularly is going after too many opportunities with a finite cash base and a high broker fee. In 2008 his expense ratio was disastrous at 4.3%. He tends to believe in Old School Value which is a suite of value investing tools designed to fatten your portfolio by identifying what stocks to buy and sell. It is a stock grader, value screener, and valuation tools for the busy investor designed to help you pick stocks 4x faster.

STRONG COMEBACK In my opinion, Ackman's persistence was the main reason he has been able to make a comeback. Ackman's fund Pershing Square had returned 503% since it was founded, to its investors as of the end of 2016, it also outperformed compared with the S&P 500's 163.4% return over the same period. By adopting back, the fundamental principles and persevering through the bad times, Ackman has started to rebuild his reputation.

Pershing Square is up more than 40% year-to-date. Ackman explained that the mission at Pershing Square is to have a permanent capital structure. He said they took a step in that direction, launching a publicly-traded fund in 2014 with the long-term plan to have a majority of capital in that vehicle.

Quoting him "I guess the way to think about it is it's very hard to lose money by buying great businesses if you pay a fair price, for a while there, we forget that our main job was to make money, so we woke up, and now we're back in the money-making business."

BILL ACKMAN INVESTING STRATEGY The points of Bill Ackman’s investing strategies: ● Investment selection process 1. Mid – large-cap companies (small investors can include small caps as well) 2. Typically, not controlled (if the company is controlled and refuses to unlock shareholder value even with an activist, what hope do we have?)

3. Low financial leverage and modest economic sensitivity (No start-up software or tech companies as many are extremely leveraged) 4. Catalyst for value creation (there should be a catalyst. A cheap price is not a catalyst because there is a reason why it got there in the beginning) ● Concentration 1. Invest in the best ideas. Approximately 8-12 (I lost far too many opportunities because I was going after too many mediocre opportunities rather than the best one) 7

2. Willing to replace existing holding for a better idea (willing to sell even at a loss to capitalize on better ideas?) ● ● ● ● ●

Generally, no margin leverage (if you don’t have the cash, don’t play the game) Not worried about sitting on cash (I chased too many mediocre opportunities and was fully vested.

Missed out on my truly best ideas.

Avoid controlled companies Own high-quality businesses at attractive prices Few exceptions unless extraordinarily cheap

GREATEST HITS AND MISSES The Wendy's Company Wendy’s was one of Ackman’s first successes at the helm of Pershing. In 2004, Pershing took a large stake in the fast-food chain and successfully pressured management to a spin-off. Ackman would later exit his position at a substantial profit, though Wendy’s stock price would underperform in the post-spinoff, without the presence of its fastest-growing unit.

General Growth Properties Inc. The greatest bet of Ackman’s career, and arguably one of the best hedge fund trades of all time, was Pershing Square’s turnaround of troubled mall operator General Growth Properties from the brink of bankruptcy, netted the hedge fund a whopping $1.6 billion return on a $60 million investment.

Valeant Pharmaceuticals International Inc. Unless you’ve been living in a cave, you would be well aware of Pershing Square’s nightmarish position in the troubled pharmaceutical company, Valeant. Originally entered at around $180 per share, Ackman’s massive 8.5% stake in the company has been thoroughly smashed, following accusations of channel stuffing/fraud levied against Valeant. The company is battling a host of challenges, including management mishaps, horrible earnings and guidance slashes, shady conference calls, and the possibility of covenant breaches leading to technical defaults on the company’s debt.

Herbalife Ltd. Perhaps the biggest trade associated with Bill Ackman is his conviction short of a health supplement company, Herbalife Ltd. (HLF). Arguing that the company was a pyramid scheme, with an intrinsic value of zero, Ackman entered into a short position worth $1 billion in 2012. The trade has been chronicled at length by almost every financial news outlet even to this day and was famous for an on-air argument between Ackman and Carl Icahn on CNBC, who (amongst other major hedge fund players) had taken a long position in the stock. In the weeks following his short position, Ackman saw Herbalife's shares plunge around 60 percent, but the company has proven remarkably resilient and has rebounded to its pre-short levels, thus costing Ackman millions in borrowing fees, and paper losses. As of February 28, 2018, Ackman has reportedly exited his entire short bet on Herbalife

8

KING OF CORPORATE RAIDERS BY: PREETHIKA "I make money. Nothing wrong with that. That’s what I want to do. That’s what I’m here to do.

And that’s what I enjoy."

-Carl Icahn Carl Celian Icahn is one of Wall Street’s most successful investors and has been making a drastic reorganization in corporate America for decades. He was born on February 16, 1936, Queens, New York, U.S., an American financier who was a board chairman of Icahn Enterprise, a holding company with a diverse portfolio. Apart from being a seasoned investor, Carl Icahn is also an established businessman and a philanthropist. After graduating from Princeton University with a degree in Philosophy, he studied Medicine at New York University before dropping out and entering the U.S Army. After his discharge he became a stockbroker for Dreyfus Corporation.

He began his career in Wall street in 1961 and has become one of the most well-known and influential investors in America. In 1963, he left Dreyfus and became a trader in stock options at Tessel, Patrick and Company. A year later, he continued with options trading after moving to Gruntal & Co. In 1968 Icahn borrowed $400,000 from his uncle to purchase a seat on National Stock Exchange (NSE) for Icahn & Company, his new brokerage firm. While dealing in the stock market, he became interested in risk arbitrage- buying stocks in anticipation of a takeover bid that lifts the stock price. Icahn began to initiate takeovers himself after taking a large investment in Tappan Company, a manufacturer of kitchen stoves. In 1978, he started taking very substantial and controlling positions in individual companies. Icahn used his shares to gain a seat on the board of directors, and then arranged to turn the company over to Swedish firm AB Electrolux, thereby making a profit of $3 million for himself. In 1980’s, he was called a corporate raider, but in later years he was more often labelled as activist investor.

Today, Icahn is the chairman of Icahn Enterprises (IEP), a diversified holding that owns businesses in several different sectors, including energy, transport and financial services. He is also the chairman of biopharmaceutical company, ImClone and Auto-parts supplier, FederalMogul. Carl Icahn has made his wealth by gaining controlling positions in the companies by either forcing them to buy back their stocks at premium prices or manipulating the company’s decision to increase their shareholder’s price. Icahn had actively impacted the management and leadership of many of his acquisitions, compelled them to change rules, forced some to break up, drove some into debt, and helped to rebuild others.

As a leading shareholder activist, Icahn’s efforts have unlocked billions of dollars of shareholders and bondholder values have increased the competitiveness of American companies. Icahn and his affiliated companies have currently owned business in a wide range of industries including Real Estates, telecommunications, transportation, industrial services, oil refining and manufacturing. The companies in which they currently hold majority positions include American Railcar, XO Communications, PSC Metals, Tropicana Entertainment, Viskase Companies, CVR Energy, WestPoint Home, Icahn Enterprises LP, and Federal-Mogul.

They also hold stakes in many other public companies. Icahn Enterprises LP is Icahn’s flagship company through which he has acquired many of these positions.

Icahn has said "My investment philosophy, generally with exceptions, is to buy something when no one wants it." His approach is what sets him apart from the competition. Like Warren Buffet, Carl Icahn likes to take big positions in his favourite companies, which gives him controlling interest as one of the largest shareholders.

More specifically, as an investor, he identifies corporations with stock prices that are reflective of poor price to 9

earnings (P/E) ratios or with book values that exceed the current market valuation. Icahn aggressively purchases a significant position in corporate & either calls for election of an entirely new board of directors or divestiture of assets in order to deliver more value to shareholders. After Icahn’s first victory by takeover through proxy vote of Tappan company, he won a seat on the board, he engineered the sale of a company in a transaction which doubled his initial investment and soon after he targeted Marshall Fields and Phillips Petroleum, both of which yielded a significant return.

Icahn's reputation as a ruthless corporate raider was born in 1985 after his hostile takeover of Trans World Airlines (TWA), a struggling airline company. Icahn was able to extract around $1 billion profit from the deal with little capital. After executing a hostile takeover and selling TWA assets to pay back the loans, he bought the company in the first place. Icahn took TWA private in 1988 for a profit of more than $465 million in less than 3 years and then he sold TWA's lucrative London routes to America Airlines for $445 million. Carl Icahn's current portfolio has a largest holding in his $17 billion hedge fund Icahn Enterprise at 34%. CBR energy is close behind at 16%, while Chesapeake clocks with a 6% allocation. He also carries a $1 billion allocation to Netflix, which Icahn had initiated in December after shares had fallen from an all-time high approaching $300 to less than $100.

From Icahn portfolio, we can learn three things about his investing approach: 1. Carl Icahn is more into trading than investing • •

An analysis of his portfolio reveals that most of his stocks were brought in the last 2 years and it is his habit of not keeping stocks in his portfolio for more than one and a half years.

When he invests in a company, he invests to the extent that he becomes the largest stakeholder of the company. Icahn is more concerned in making short term profits than caring about long-term viability of the company.

2. He invests in securities with high conviction: •

When Icahn invests in a stock, it is highly likely that he has a strong conviction behind the investment. He invests in the equity of the company where he has a gut feeling of earning more returns. Icahn purchases stocks of those companies which are poorly managed and not performing profitably with an intention to force changes to occur in their operations and management.

3. Icahn is an activist investor • •

Icahn is a frequent stock trader. He majorly invests in equities of the companies with the objective of making changes in those companies. He makes an effort to push the stock prices.

The management of a company can easily ignore an activist holding a small number of shares. But if a billionaire investor holds a high percentage of a company, he/she can't be easily ignored by the company.

CONCLUSION In order to be a successful financial investor, an individual needs to be a finance enthusiast first of all.

Secondly, one needs to study financial markets from various books and follow macroeconomic events & global stock markets. Lastly, it is important to study investment approaches of renowned investors to understand their investing psychology. Carl Icahn is a different type of stock market investor as compared to Benjamin Graham and Warren Buffett. Unlike these two gentlemen, Carl Icahn is more into trading than investing. He also focuses on Corporate Governance of the company whose share he buys. His philosophy is more based on short term profiteering rather than long term value investing.

10

A PLAYER IN INTRA-DAY TRADE: HITENDRA DIXIT BY: SHREYA BACKGROUND Here is a similar explosive journey of Mr Hitendra Dixit, an intraday trader, who hails from Surat. His innovative rules, pragmatic approach and never-ending zeal to learn can inspire you and will change your attitude towards successful trading. Mr Dixit has created a buzz by training many potential intraday traders through live market training and as a professional intraday trainer across the nation. He imparts training through NIFTY TRADING ACADEMY (NTA), which is a pioneer in India to provide online LIVE market training. He has done extensive research, learned a lot by closely observing the market and has gone through all the hardships in understanding the science behind trading. He took the market by the storm.

Hitendra Dixit did his Civil Engineering and got his first job in a construction company with a salary of Rs.15000 per month. With such a petty source of income it was difficult for him to bear family expenses, therefore he left his job to pursue other lucrative jobs. He found a job In Surat that would suffice his needs but unfortunately these expenses outgrew his income since he had no relative staying in the same city.

Hitendra Dixit understood life’s enigma during his father’s retirement. He used to observe his father daily and it struck him that no work or activity could lead a person to boredom after retirement. After this he decided that he would pursue an activity which he could continue after he retired from service. This was when he stepped into stock markets. It was a very challenging and bold decision he took but it was also something that made him curious and that is how he landed in stock markets.

Challenges faced by him as a beginner The first rule for an investor who has just started investing in stock markets is never to be a pessimist. Hitendra Dixit was always an optimist and “NO” was the word that was exempted from his dictionary. His mentor Mr. Satish just like others had advised him not to step in an uncertain market where you lose more than what you earn, but his inner instinct and passion did not stop him from entering the market and continuing with the trialerror approach in the market.

Until 2010, he was working in a construction company while simultaneously investing in stock markets. Slowly and steadily his focus shifted from his construction clients to learnings in stock markets and that is when he decided to start- The Nifty Trading Academy.

Mr. Dixit- A professional Trader To be a professional trader one must have dedication, experience and the zeal for self-learning. All these would lead you to the path of success. Some ways in which Mr. Dixit learnt stock Markets are: 1. He used to relate theories of stock markets to the society at large. Example- If there is something good or bad happening in the society it creates volatility in the stock markets.

2. When society does not give credit, the prices move sideways.

He also develops his own winning and stop loss strategies. It is said,” No one in the stock market can decide on the profits one can earn, but yes loss can be decided beforehand”.

11

Best and worst trade so far The best trade that Mr. Dixit punched was Rs. 3.5 lakhs profit book on Infosys stock in Intraday trading. If we talk about his worst trade it would be a loss of Rs. 1 lakh in half an hour in Nov 2010. The loss was incurred on LIC stock because he gambled in that trade.

What makes you a professional trader?

1. Firstly, you should have passion towards stock markets because you will not achieve your goals unless you are passionate about it.

2. Secondly, every trade has something new to teach you. It’s like a test every day. It is a lucrative field and profits are fruitful.

How to mitigate risk?

One must manage risks or losses by giving ample time for in-depth stock market analysis. The past trend helps a person to learn the stop loss strategy. Mr. Dixit has developed the theory of 1:5 and 1:10 risk reward ratio.

Best Strategies 1. One must use a minimum stop loss strategy and unique entry in the market.

2. Mr. Dixit strongly believes that traders should always buy from the bottom and sell from the top.

Beliefs 1. “Sharpen your axe first”. Invest in yourself. Never think twice about spending money on learning. It's one of the best investments one can do.

2. Never share profits with anyone.

3. Think, Understand, Trade. (Sochkar, Samajhkar, Investkar) 4. Market is an ATM- Anytime Money.

There are certain rules to be followed in any profession to be successful and there are rules to be followed even while you trade in Intraday trading.

Mr. Hitendra Dixit Intraday trading rules are as follows: Rule no 1. A mistake is when you don’t have any rules. When you don’t follow any rules while trading then everything you do is a mistake.

Rule no 2. Always follow rule no. 1.

Rule no 3. Never forget rule no.2 There are trading stories and rules everywhere but not everyone in the world is successful. It is said that 95% of the traders lose money and everyone wants to be in the remaining 5% margin who are successful. When hard work, dedication and persistence come together they explode giving SUCCESS as the final product.

12

PETER LYNCH BY: NEHA “The secret to making money in stocks is not to get scared of them” The idea of investing in the stock market or becoming a full-time trader is daunting to many and is often seen as a gamble. Every investor who has made it successfully, however, will say otherwise and Peter Lynch is one such investor.

Who is Peter Lynch?

Peter Lynch is a billionaire investor, author, and philanthropist who made history as one of the most successful investors of all time. At the tender age of 11 when most children were interested in reading or playing games, Lynch developed an interest in the stock market through conversations he overheard while working as a caddy at a golf course. Once he was done caddying, he would go back and read up on these stocks and follow their movement in the newspaper.

When Lynch was a student at Boston College, he bought his first stock of an air freight company, Flying Company based on his findings from a study on the air freight industry. Shortly after Lynch purchased the stock, the Vietnam war broke out and the air freight industry took off with soldiers and cargo being airlifted to Vietnam in hordes. The stocks went up by nine or tenfold and helped him pay for college.

In 1977, Lynch took over Fidelity’s Magellan Fund, a capital appreciation fund formed in 1963 that dealt with mostly domestic investments. He ran the fund for 13 years (1977-1990) during which he increased the value of assets under his management to $14 billion from $18 million. The fund outperformed the S&P 500 index all but twice and gave an annualized return of 29.2%. His success at Magellan allowed him to retire at the age of 46 as one of the greatest mutual fund managers in history.

INVESTING TIPS Lynch has authored several investment-guide books in which he shares his knowledge and strategies to pick the right stocks and how to identify investment opportunities for the retail investor.

1) If you don't study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.

Lynch stressed the importance of researching stocks and evaluating several stocks before making the final call. Evaluation could be carried out using basic investment metrics like• Percentage of sales: Before selecting a company based on the success of their product, it is important to check for the percentage contribution of the product to the total revenue. If the product’s sales do not account for a substantial part, it most likely does not have much impact on the company’s success.

• Debt Equity ratio: The ratio can help ascertain the financial strength of the company.

• Price-to-earnings ratio: It is the most widely used metric particularly for comparing companies in the same industry with similar growth rates and financial conditions. It is calculated by dividing the annual earnings of the stock of its current price.

• Cash position: This refers to the amount of cash a company has in relative to its debt which is an important indicator of financial flexibility.

13

2) Only invest in what you understand This is one of Lynch’s most popular investing lessons that he shared with aspiring investors in his book “Once upon a Wall Street”. The average investor would be more likely to do well when they invest in companies that they know and understand well.

3) Know what you own and know why you own it Trends can also be predicted from what one sees in daily life. For example, one of Lynch’s successful investments was Haynes- the company that manufactured the L’eggs hosiery. His wife Carolyn brought to his attention to the success of the product and its rising market share. He purchased the shares after understanding the company and their market growth and profited immensely when the prices rose.

4) Diversify your portfolio Diversification was one of the key factors why the Magellan fund grew as much as it did; at one point they had more than 1000 stock options. The main idea behind this was to invest in stocks to not just diversify and reduce risk but also pick those stocks that were the best in their respective fields and at a reasonable valuation.

5) The typical big winner in the Lynch portfolio generally takes three to ten years to play out Small investors have the edge of long-term holdings over professional investors which they often fail to utilize. Over the long run, market timing does not matter as investing with a long-run perspective will give higher annualized returns.

6) In the stock market, the most important organ is the stomach, not the brain The stock market is volatile, and it has its share of ups and downs. Most people who do well are the ones who can stomach the unexpected dips and wait it out.

7) Focus on businesses Wall Street is ignoring The average investor has the advantage of a small scale, they can invest in small scale holdings and reap the benefits as compared to an institutional investor. This was also one of the secrets behind the Magellan fund portfolio; Lynch invested in stocks of several small but well managed and rapidly growing companies that the institutional buyers ignored.

While implementing these strategies will not guarantee a Peter Lynch success, these tips will certainly help pick the right stocks and help in better understanding the stock market and the factors that influence the price and performance of stocks.

14

RICH DAD’S LESSONS OF INVESTMENTS- ROBERT KIYOSAKI

BY UTKARSH “Winners are not afraid of losing. But losers are. Failure is a part of the process of success. People who avoid failure also avoid success.”

These are the words of Robert T. Kiyosaki. An American businessman and author, founder of the Rich Dad Company which is a private financial education company that aims to provide personal finance and education in business to people through books and videos. Robert Kiyosaki has changed the way of life of millions of people who think about money, across the globe. Being an entrepreneur, he believes that the world needs more entrepreneurs.

He is an author of a series of books including the profoundly famous “Rich Dad Poor Dad” Series, whose more than 27 million copies have been sold globally. Kiyosaki’s main financial teachings are focused on the idea of becoming financially independent by focusing on business and investment opportunities such as real estate, stocks and commodities. Kiyosaki’s primary source of income comes through franchisees of Rich Dad Seminars.

Robert Kiyosaki believes that CASHFLOW QUADRANT is the beginning of a change of mindset about money. E is for employees and is associated with security. These kinds of people believe in less risk and education for them is about learning the skills for a high paid job rather than learning about money and how it works. S is self-employed quadrant as these people have high risk appreciation but still are associated with security. Although they don’t own a business but still like working for themselves just like businessmen or entrepreneurs. E.g. Doctors, lawyers etc. The right side of the quadrant is the business owners who create jobs for people. These people are risk takers and have the skills to hire specific people for specific jobs. And finally comes the investor. The investors are said to have the highest financial education in the four quadrants. They understand the strength of cash flow an asset can generate. Globally the richest people are

Fig: Cashflow Quadrant

investors as nearly 70% of their wealth accounts from investments. In order to make more money Robert believes that people need to shift from the left to right side of the quadrant. That is to invest in cash flowing assets to generate money frequently and this transformation of moving from the left side of the quadrant to the right side requires a change in mindset and a change in behaviour.

15

Robert Kiyosaki has given few fundamental rules for investing Rule 1: Adjust your money mindset- The poor and middle-class people believe and teach their children to get a good job out of hard work. But the business minded and rich people believe and teach their children in understanding how the money process works and understanding how to make more money by investing in cash flow assets. A middle-class person always believes that he/she can become rich out of regular pay checks however a businessman can make more money out of profits and can reinvest in another product thereby reducing his taxable income. Therefore, it is very crucial to adjust the money mindset.

Rule 2: Know what kind of income you are working for- There are different kinds of income people work for: i.

Ordinary Earned income: This is the type of income which most of the people work for. They are a 9-5 set of people who receive a fixed pay check for their fixed working hours. Government charges taxes out of pay checks and hence the chances of becoming rich out of the salary paid frequently becomes very slow. ii. Portfolio income: Usually the high salaried employees have a portfolio income. This includes mainly returns from mutual funds, stocks and commodities. Unlike the ordinary earned income, it is usually fluctuating and the quantum of money return is dependent on highs and lows of the market. iii. Passive income: Income that comes to an individual whether he or she is working or not. The income is said to generate cash flows from the asset. These include real estate, royalties and business distribution. They usually have high financial IQ.

Rule 3: Convert ordinary income into passive income- People earning ordinary income should invest in cash flowing assets. If people receive the Paychex and apart from this the extra incentives add a layer to the earnings, then instead of saving people should go for investing in cash generating assets.

Rule 4: Investor is the asset or liability: Instead of believing that the investment is risky it is more affluent to think that the investor is risky. The financial knowledge of an investor can be asset or liability. Therefore, it is more important to first invest in financial education and start with small time investments then only it can turn out to be an asset or liability.

Rule 5: Good deals attract money- It is more crucial to find and generate more good deals so that money finds its own course. Getting money is the easiest part but to find a good deal is the challenge.

Rule 6: Learn to evaluate risk and reward- As a smart investor it is very essential to understand the risks associated and the rewards it will generate. For instance, an investor uses several parameters to identify the kind and nature of an investor. The investor will never put his money on an amateur with a vague idea and daydreaming results. The investor should have knowledge of the risks associated and returns.

Some of the basic rules of investments and strategies have Robert Kiyosaki a demanding name in financial education. Understanding these will ultimately turn any amateur into a full-time investor.

16

MIRROR ON THE WALL, SHOW THE FAIREST STOCK OF ALL! BY: PUJA Sometimes we really wish for the ‘Magic Mirror’ which will show us the appropriate stock and the correct time to buy or to sell. Even though we do not have the privilege to access the Magic Mirror, the world has given us few great investors to look upon and Philip Arthur Fisher is one of them.

About the Man The American greatest investor was born on 8th September, 1907 in San Francisco, California. He was born to Arthur Lawrence Fisher and Eugenia Fisher. In 1927, Philip Arthur Fisher completed his education from AB, Stanford University, 1927 and further he joined the newly created Stanford Graduate School of Business to pursue higher education. He dropped out from the college in 1928 and started his career as a securities analyst with the Anglo-London Bank in San Francisco. He worked in a stock exchange firm for a brief amount of time and then he started his own money management company named Fisher & Co, founded in 1931. Philip Arthur Fisher was not only a great investor but also a preacher, an educator and an author. He was a secretive person and gave very few interviews. In the Annual meeting of stakeholders in Berkshire Hathaway's 2004, Warren Buffet mentioned Fisher and his good work. He also admitted that Fisher’s had a great contribution to contour his investment practise.

Philip Fisher as An Author Philip A. Fisher came into the limelight when his first and most important book, Common Stocks and Uncommon Profits, was published in 1958. In all of his books he mainly focussed on the research and analysis part. His books are his assets. He is no doubt an inspiration for all the investors. The list of books by Philip Arthur Fisher is: ● ● ● ● ● ●

Common Stocks and Uncommon Profits Paths to Wealth Through Common Stocks Conservative Investors Sleep Well Developing an Investment Philosophy Philip Fisher Investment Classics The Fisher Genealogy

17

Philip Fisher as An Investor Philip A. Fisher is considered to be one of the fathers of the qualitative equity valuation models. The policy that Fisher’s followed throughout his life is “Almost Never Sell a Stock”. He used to identify a potent portfolio of companies which has alluring growth prospects and on which, one has great grip and understanding. He mainly focuses on sales growth of a company which in turn will provide return on capital investment. Most importantly, hold the stocks for a longer time. He believed in qualitative analysis of quantitative elements which would help an investor in the decision-making process. He had prescribed some “15 points” and “four dimensions” which one would derive as a final result of the qualitative research. He had an inclination towards oligopoly companies so that new entrants will find it hard to enter the market. That way, the company will continue to get its full share of the expected growth. He advised his investors to concentrate on the historical data of the company which will reveal how successful the company is in terms of return on investment. He believed in investing in companies which had very strong management because they have their own secrets of success. He believed and practised the procedure of “timing of growth stocks”. As change is believed to be the only constant, he used to advise the investors to observe and keep an eye on every slight movement of the company or industry that we are interested in. He strongly believed in “looking beneath the surface” because all the superficial and easily available information and data might not be accurate all the time. Fisher proposed his model of qualitative analysis and a certain conception of the use of numbers in equity valuation to look beneath the surface and find out the reality. According to Fisher, quantitative analysis of a company’s historical data is not enough to appreciate its future prospects and determine its intrinsic value thus he prefers qualitative analysis. Fisher is well known for his “sense of numbers” and for the depth of his research on companies with which he would invest. He strongly recommended investing in businesses which had growth orientation, high profit margins, high return on capital, a commitment to research and development, a superior sales organization, a leading industry position and proprietary products or services. He relied on personal connections or which is famously termed as “business grapevine” before buying stock. Fisher would create a spectrum of companies’ stock on which he was interested to invest in. The band would range from financially strong companies to small and young companies which would have great prospects in the future.

Fisher often mentioned that the yardstick of financial statement ration can sometimes prove to be cruelly misleading. This is because the ratios are derived from past data which may fail to predict the far future.

Moreover, the rules of accounting give a company liberty to calculate an item in their financial statement in so many ways thus there is a lack of uniformity. As a result, it varies from company to company and even in the same company but with different years and the interpretation is also subjective. One of Fisher’s methods is called “scuttlebutt” which is also known as semi-structured interviews with the current employees of the company or with the present investors using which one can achieve further knowledge about the stock. In his book he also mentioned some ratios like Research and Development ratios, the “inexistent” sales efficiency ratios, Production costs ratios, Quality of a company’s labour and personnel ratios etc which are also crucial for the analysis. His most wise stock pick was Motorola, which he purchased in 1955 and he held it till the end.

Look Before You Leap The Money that comes quick may evaporate quicker within a blink of an eye. Thus, one must invest lots of time on research and have lots of patience. Fisher would only use historical financial statements if it can indicate a trend of a particular stock. Fisher would draw a holistic picture through the use of ratio as a rough sketch as the first step, followed by the collection of qualitative information based on his qualitative analytical grid which is the “Fifteen points” and the “Four dimensions” fed through the method of “scuttlebutt.” Thus, the FSA act as a supporting character in the entire movie whereas the Qualitative Research acts as the Protagonist. Philip Fisher’s investment pattern will hugely involve lead research, doing homework intensively and approaching the management. Fisher’s attitude towards investment was “Look before you Leap”. One must know it all and concentrate on every minute detail before investing. He even mentioned different ways to find the loopholes in the data provided by any company in his books. Philip Arthur Fisher is the Magic Mirror for us who can show us ways and procedures on how to use our money wisely.

18

THE ORACLE OF OMAHA- WARREN BUFFETT BY: HARSHADA Who hasn’t heard of Warren Buffett – one of the most successful, wealthiest and respected investors in the world? He is One of the world’s richest people, who’s constantly ranking high and is the second richest member according to Forbes in 2019 with a net worth of $84.5 billion. This CEO and chairman of Berkshire Hathaway is the great role model of the classic value-based investing style.

First Lesson Warren Edward Buffet was born on August 30, 1930 in Nebraska. they say, he may have been born with business in his blood as he used to work in his family grocery store in Omaha.

His father, Howard Buffett, owned a small brokerage and Warren would spend his days watching what investors were doing and listening to what they said. At the age of 11, he bought three shares of cities service preferred at $38. Which soon fell over $27 per share. A frightened but resilient Warren held those shares until they went up to $40 and promptly sold them which he soon regretted as the share price of cities service shot up to $200 per share. This experience taught him the basic lessons of investing: Patience is a virtue.

Education In 1947, buffet graduated from high school. He never intended to join the college as he already earned $5000 (which equals $57,669.96 in 2020) by delivering newspapers, then he was just 17 years old but his father had other plans which made him attend the Wharton Business School at the University of Pennsylvania. After studying there for 2 years warren returned to Omaha, complaining that he knew more than his professors. He started studying further in the University of Nebraska-Lincoln. Despite working full time, he managed to graduate only in three years.

After getting rejected by Harvard Business School quoting him as “too young” for further studies he applied for university of Columbia where he met his mentor Ben graham and David Dodd who gave him that experience that changed his life. In one of his recent interviews Warren Buffet mentioned Ben Graham as “Greatest teacher” who set him on the path of professional analysis to the investment markets. It was Graham's class where he learnt about the securities analysis and the fundamentals of value investing.

Buffet’s style of investing Buffet was a disciple of Benjamin Graham's philosophy from the book “the intelligent investor” where Graham introduced the idea of intrinsic value - —the underlying fair value of a stock based on its future earning power.

However, Buffett invests using a more qualitative and concentrated approach than Graham did. Graham preferred to find undervalued, average companies and diversify his holdings among them; Buffett prefers quality businesses that have reasonable valuations and potential for large growth. He does not get influenced by day to day changes in the stock prices as he invests for long term and does not chase short term gains. He does not invest in particular stocks because their share prices are going up, he focuses on buying good businesses that are well run. This technique worked out successfully as Berkshire Hathaway’s delivered annualized returns of 20.5% for investors as of mid-2019. Buffet says, “if you are willing to own a stock for 10 years, do not even think of owning it for 10 min”.

While taking his investment decisions, he follows value investing methods. His interpretation of value investing is very simple, simple but not easy to execute. He uses key considerations or investing tenets, which are categorised into the areas like business, management, financial measure and value.

19

Warren buffet’s circle of competence Buffet only invests in companies he understands and believes have stable or predictable products for the next 10 – 15 years. This is why Berkshire Hathaway’s top holdings include most banks and typically avoided technology companies. This deep understanding of the operating business helps to forecast future business performance. According to him, if you don't understand the business, how can you project performance?” this concept is referred as “circle of competence” he once said,

“you only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important, knowing its boundaries, however, is vital.”

First, Buffet analyzes the business, not the market, the economy, or investor sentiment. Next, he looks for a consistent operating history. Finally, he uses that data to ascertain whether the business has favourable longterm prospects.

Management, its strategies and shareholders Buffet gives great importance to the outstanding management team of the company. In his opinion, a great shareholder friendly management team can make average stock very profitable. Conversely an excellent business with a poor management team can be a losing investment. He observes how is management wise, when it comes to reinvesting (retaining) its earnings or returning profits to the shareholders as dividends.

Buffet also examines the management’s honesty with its shareholders. Does it disclose and admit its mistakes?

Lastly, buffet looks after what strategy company applies to run business profitably i.e durable competitive advantage.

Financial Measure Buffet focuses on return of equity rather than earnings per share as ROE can be distorted by leverages. He looks at the “owner’s earnings” which means cash flow available to the shareholders. Ultimately, with owners' earnings, Buffett looks at a company's ability to generate cash for shareholders, who are the residual owners.

There is also one more question which buffets ask, what is the market value of a dollar assigned to each dollar of retained earnings? Which is known as “one-dollar premise”.

20

Value As we know buffet follows value investing techniques. The basic concept of value investing is simple. By investing in stocks that are trading for less than they are truly worth, you have an inherent advantage as a longterm investor. and for that he estimates the intrinsic value of the company. He projects the future owner's earnings, then discounts them back to the present. He ignores short-term market volatility and focuses on longterm returns. He only acts on short term fluctuations when looking for a good deal. If a company looks good at $50 per share and drops to $40, do not be surprised to see him pick up additional shares at a discount. He Purchases stocks with a margin of safety below their intrinsic value which reduces risk where he can discount projected earnings at risk-free rate and provides an allowance for unforeseen negative events. Ultimately Buffett’s goal is to invest in good businesses: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

Warren Buffett's principles haven’t always been successful but they were well-thought. By keeping an eye out for new opportunities and sticking to a consistent strategy, Buffett and the textile company he acquired long ago are considered by many to be one of the most successful investing stories of all time. He says you don't have to be a genius "to invest successfully over a lifetime, what’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework."

21

FATHER OF VALUE INVESTING -BENJAMIN GRAHAM BY: SIMI Benjamin Graham - known as the father of value investing, the dean of Wall street, mentor of the world’s biggest business magnate Warren Buffett, he is known to have created several investing principles. He has authored two great books named “Security Analysis” (1934) and the “The Intelligent Investor “(1949).

Born in London in 1984 the story of Benjamin is an inspiration to many. he was a brilliant student and won a scholarship to Columbia university. he stood second in his graduation and also received an opportunity to teach, which he refused. In order to take care of his poor family, he decided to work for the firm of Newburger for $12/ week.

There he was assigned the task of being a runner, delivering securities & checks, writing descriptions of bond issues. He soon started analysing companies and at the age of 26 he was promoted to become a full partner.

In 1923 he set up his own partnership firm. It wouldn’t be surprising that by 1928 he started taking investment classes at Columbia. The lessons from these classes were coined into a world-renowned book called Security Analysis published in 1934. This book was sold over a million times.

He also authored second book which is more investment friendly The Intelligent Investor published in 1949 and is less than half the size of the earlier book. In 1950 a student enrolled in the graduate school of Columbia to study under Graham. He was none other than Warren Buffett. Graham was considered as the most influential person in his life after his father.

Now what is it that made the graham style so unique and special? let us try to analyse in detail.

Introducing Mr. Market as your business partner, he gives in the concept that Mr. Market is present to serve you and not to guide you. He can be pessimist at times and sometimes optimistic giving you a good return. It is important to keep your focus on the companies rather than focussing on his irrational behaviour. Emotions which drive you crazy are greed and fear which needs to be overcome by taking rational decisions. Invest in a stock only if you are comfortable His style included analysing the companies also keeping in mind it should yield in no risk or minimal risk at the same time giving high returns in the long run. Understanding the current situation of the firm always lies in interpreting the financial statements adequately. The key documents of the company i.e the profit & loss and the balance sheet plays an important role in determining the fundamental analysis. This would give a fair picture of how the market values the stock. Necessary research and analysis always help in a long term. The best investment according to graham is to educate yourselves before investing in markets.

The famous quote of Benjamin graham “In the short run, the market is a voting machine but in the long run, it is a weighing machine” signifies the company’s fundamental matters in the long run and not the investor’s fickle minded decision which is taken in the short run. In the long run, when the companies perform, the market share will speak the value. The market would reward those companies which have a strong fundamental and those who have a high return on capital employed.

“An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. operations not meeting these requirements are speculative”. There is huge difference between investing and speculation. An investor prefers to take a rational decision by calculating different ratios, net worth of the company, parameters needed to know about technical and fundamentals of the company. Speculation is more about gambling or betting to see if the stock prices would move according to your actions. Rightly put by Graham “Investors judge the market price by established standards of value, while speculators base their standards of value upon the market price”.

22

Company

ABC Ltd

EPS

6.70

P/E

7

Growth rate

15.17%

Corporate Bond Yield

4.4

AAA Bond yield

2.46%

Margin of Safety is an investing principle wherein the investor invests in the securities only when the market price is below the calculated intrinsic value. This difference acts as a cushion in case something goes wrong in the future. This difference can vary according to individual’s risk preference, risk taking ability, capital etc.

Warren Buffet prefers to discount as high as 50% on intrinsic value of a stock. He has designed a bridge analogy on this basis, which states that when you build a bridge across a river, you being a rational person would make it strong enough to carry a weight of 30 tonnes despite the fact that the current scenario requires will be 10 tonnes. Higher Margin of Safety would try to make your investment risk free as possible.

23

How to calculate the intrinsic value using Graham Formula??

It is difficult for retail investors to calculate whether the stock price is undervalued, overvalued or if it is fairly priced. Here is a simple formula by Graham,

Let us understand using an example

Formula = Intrinsic value = EPS*(P/E +(1*g)) *(Corporate yield) AAA Bond yield

Current market price

Intrinsic value

Decision

195.45

256.67

BUY

Since intrinsic value of the company is much higher than that of the current market price, it is recommended to buy the stock. This formula can be applied to other sectors and industries, but would require few adjustments.

Graham makes it very clear for the investors that it is not the IQ or intelligence which determines your acumen.

There should be careful planning and discipline in the amount of efforts to harness the skills required in the stock market. Sir Isaac Newton who could calculate the motions of heavenly bodies, but not the madness of people. It only takes meticulous learning to ace the investment strategy.

24

ANALYZING HIS WAY TO THE TOP- DENNIS GARTMAN BY: SANDRA The journey of Dennis Gartman began in August 1974 from which he was involved in the capital market. During the 1970's he was working in a cotton textile industry where he was analyzing cotton demand and supply in the U.S. textile industry. As a steppingstone, he worked in NCNB National bank in Charlotte, North Carolina where foreign exchange and money market instruments were traded. By gaining knowledge in this he was equipped to be an analyst and became the Chief Financial Futures analyst for A.G. Becker & Company in Chicago, Illinois. Until 1984 he was an independent member of the Chicago Board of Trade with trading in treasury bond, treasury note, and GNMA (Government National Mortgage Association) future contracts. He moved to Virginia in 1984 to deal with the futures brokerage operation for the Sovran Bank.

In 1987 he started the production of The Gartman Letter.

GARTMAN LETTER!!!

Dennis Gartman started this letter production in 1987 which is like a newspaper subscription available in the U.S. and showcase daily happenings in global capital markets. The letter also highlights political, economic, and technical trends from both long-term as well as short-term, perspectives. The major subscribers include leading banks, brokerage firms, hedge funds, mutual funds, and energy and grain trading firms.

In 2019 Gartman announced to cease the publishing of newsletter due to problems with his right hand and tax implications along with regulations. Although along with this announcement he made another one that he will continue to provide commentary via bulletins, podcasts, television, radio, and print interviews.

SUCCESS STORY Dennis Gartman believes the success of him as an analyst started with the account, he created for trading purposes and give trade recommendations with the money and risk he has with his account. He was doing this for 35 years and started as a foreign trader on the stock of body trade. He writes a note to himself stating if this happens why do not that happens, and he started sharing what he writes. He was consistent in publishing his newsletter and missed for 3 business days. When it comes to the time frame of recommendation, he had done gold trade for 5 years which is a huge world record. When he had done a trade in the foreign exchange market where he was falling short of time for a week & half and he gave himself 5 minutes time frame if it goes against him 1% or 2% he is out of the market. The time frame holds a great part in his strategy where he thinks that he is the trade for 5 years and not 3 or 5 weeks. The mantra which he follows is “Markets are very simple to do more than what is working, try less what is not working�. If something moves against him by 2%, the market is telling him that he is wrong but it's not telling him that he is terribly wrong or wrong enough to get them out of the entire trade rather it is saying to reduce the size of the trade. What separates from really great traders and not so great traders is understanding the actual market. According to him, the bachelor's degree is when you are ready to take losses, the master's degree is when you take losses and hang on to profit and you get a PhD when you get stopped out of something and know that it is the right thing to do by realizing the market started to come in our favour and buy back all shares at a price higher than which you bought before.

2020

25

PREDICTIONS OF FOREIGN MARKET A smart person could pick up some gold for about a dollar per ounce, but things have changed. According to Gartman, buying gold in euros can be more stable in the market than dollars. According to past graphic movements of dollars and gold, gold has moved from left to right corner whereas dollar has moved from right to left corner. Gold is often held as a hedge against inflation, but some investors are against this based on the idea as protection against rising prices. Gold prices are up about 6.6% this year. Even though the euro has appreciated as an analyst Gartman says its trouble for Europe.

Gartman has lectured on capital market creation to central banks and finance ministries around the world and has taught classes for the Federal Reserve Bank’s School for Bank Examiners on derivatives. Gartman served a two-year term as an outside Director of the Kansas City Board of Trade from 2006-2008. He is the Chairman of the Akron University and is a member of the Suffolk Industrial Development Authority. Gartman appears often in financial media discussing commodities and the capital markets and speaks before various associations and trade groups around the world.

“It all started when you are willing to take the risk and accept the losses.

26

THE "ARABIAN WARREN BUFFET"- AL-WALEED BY: NITHIN Born in the line of royal family, being rich isn't of many surprises. But building a business empire worth $20 billion around the world within a short span of 20 years can't just be accounted on the royalty grounds.

Being referred to as the Warren Buffet of middle east comes with a reason and that's not just about money. It requires the knack to hit the business opportunities in the bull's eye at the right time and that's not everyone's cup of tea.

The story of this business tycoon from Saudi Arabia started in the early 1950s. Al-Waleed Bin Talal Bin Abdulaziz Al Saud was born in the royal line of the Kingdom of Saudi Arabia and is one of the most prominent businessmen cum investor of the country. His business empire covers investments in financial services, tourism and hospitality, mass media, entertainment, retail, petrochemicals, agriculture, technology, aviation and real-estate sectors. Starting his business venture at an age of 24, Al-Waleed then would not have expected Forbes to mention his name as the 4th richest man in the world in the coming years.

Business Life Al-Waleed is the founder, CEO and 95% stake owner of the Kingdom Holding Company established in the year 1980. He started this venture with a $30,000 loan by his cousin Prince Talal followed by a loan from Saudi American Bank of $300,000. When other legal intermediaries claimed commissions, Al-Waleed insisted on getting stakes in the projects which reaped benefits for him in the coming years. This strategy of Al-Waleed enabled him to get a very high level of net worth from stakes in Four Seasons Hotel Group, Canary Wharf, and News Corporation.

Banking Sector: In the early years of business, Al-Waleed invested in the banking sectors primarily Chase Manhattan, Citigroup, Manufacturers Hanover, and Chemical Bank. He spends a considerable amount of time analyzing the growth of these institutions after which he sold off his stakes in other banks except Citigroup. The highlight was that among all, Citigroup was the worst functioning bank at that point. But doing business as we all know isn't for the short-sighted ones. Al-Waleed saw the enormous potential this particular banking network had if grown in the right direction. And that's how he invested $797 million acquiring 15% of this US financial institution. Even now Al-Waleed remains the largest shareholder of the company which eventually became one of the largest US banks in the world. In Africa, he invested $50 million acquiring 10 per cent of Sonatel, 13.7 per cent of United Bank for Africa, 10 per cent of Ecobank and 14 per cent of CAL Bank.

Hospitality Sector: Al-Waleed's business empire didn't saturate with banking investments alone. His major share of investments was in the hospitality sector concentrating more on US and UK based firms. In 1994 Al-Waleed acquired 50 percent stakes of Fairmont group and 22 percent stakes in Four seasons. Economic downturns during the early 2000s brought Four Seasons on the verge of collapsing and as a part of recovery plan the company agreed for a buyout. Similar to the strategy he implemented in acquiring Citigroup of hitting the target at the most vulnerable position, Al-Waleed agreed to the deal and acquired 47.5% of the shares for $1.9 billion. Another significant investment in this sector was the buying of George V group of hotels. Holding a heritage from the 1920s this hotel had a special mention during World War II which attracted tourists throughout the season. Al Waleed bought this hotel with an investment of $185 million and carried out a renovation process of $120 million on it. This hotel is currently under the management of Four Seasons group and the ownership of Kingdom Holding Company. In 1997, Al-Waleed bought 27 percent of Mรถvenpick Hotels & Resorts, which he increased to 33 percent in 2003. In 2006, Kingdom Holding company acquired Fairmont hotels and resorts 27

(which he had 50% stakes in 1994) completely with a deal closing with $3.9 billion.

Communication and Media sector: In the 90's itself, Al-Waleed saw the potential of Telecommunication industry and started off with a 30 percent investment in Arab Radio and Television Network. This was followed by acquiring a 2.3% share in Mediaset, the largest commercial broadcaster in Italy in 1997. In the same year, he closed a deal with Netscape for $146 million acquiring a 5 percent share of the firm. He was also one of the major shareholders of the AOL-Time Warner with an investment of $540 million. In the following years, he increased his share percentage in these firms again making him the highest shareholder of this New York-based Online service and media-based firm.

Al-Waleed was the third largest shareholder of News Corporation, American multinational mass media company. He owned 7% of the company's stakes with an investment of $3 billion. In 2002, he bought 100 percent shares of Rotana Media group which is the Arab World's largest entertainment company and is presently the CEO of the firm. In 2003 with an investment of $300 million, Al-Waleed purchased a 3% share of the world's leading microblogging service Twitter. He also owned a 49% share of Lebanese Broadcasting corporation international.

Few investments of Al-Waleed which turned out to be a failure in the telecommunication sector include WorldCom, Priceline, Teledesic and KirchMedia.

Technology Sector: In 1997, Al-Waleed acquired a 5% stake in Apple which at that period made him the largest shareholder of the company. In the same year, he purchased a 1 percent share of Motorola for $287 million. His other tech firm investments were in Kodak and TWA (Trans World Airlines).

Automobile Sector: The age of the oil boom (1974-1985) witnessed the rise of major automobile companies around the world. It was the time when fossil fuel engines were revolutionizing the business world. Al-Waleed seeing the potential of this industry did significant investments in various major players of the period. He had an investment of $2 billion in Ford Motor Company. In Asia, he had 18 percent shares in Daewoo which he bought with an investment of $100 million. He also bought Hyundai Motor Company bonds worth $50 million in the same period.

Apart from the extravagant life of a very successful businessman cum investor, Al-Waleed Bin Talal is a profound philanthropist. He is very much involved in charity activities around the world and plays a major role in the upliftment of women in the middle east. He was one of the prominent people behind the female emancipation process in Saudi Arabia in recent years.

Thus, scanning through the life of Prince Al-Waleed Bin Talal, provides one great lesson in the chapter of business management and that is to never put your eggs in one basket. The investments in his timeline showed the exploratory nature the investor within him got. Therefore, if you plan to be an investor, that one word which you always need to keep on the check is DIVERSIFY.

28

CONCLUSION By: Priyanka A business magazine geared towards investment and investors should have a clear to the point method to invest.

Where the various thoughts and organizations are canvassed in various methodology.

Here is something in common with all the investors described above. it's important to have an accurate understanding of stocks and trading rather than blindly accepting common myths. Here are five of those myths and the truth behind them.

1. Putting resources into Stocks Equates to Gambling This thinking makes numerous individuals avoid the financial exchange. To comprehend why putting resources into stocks is innately not the same as betting, we have to survey buying stocks. A portion of normal stock speaks to proprietorship in an organization. It qualifies the holder for a case on resources just as a small amount of the benefits that the organization produces. Time and again, financial specialists consider shares essentially an exchanging vehicle, and they overlook that stock speaks to proprietorship.

2. The Stock Market Is an Exclusive Club For Brokers and Rich People Many market counselors guarantee to have the option to call the business all sectors' turns. In any case, pretty much every examination done on this theme has refuted that these cases are. Most market prognosticators are famously mistaken; moreover, the web has made the market substantially more open to people in general than at any other time. The information and exploration devices beforehand accessible just to businesses are currently accessible for people to utilize. Additionally, rebate financiers and robo-guides permit speculators to get to the market with negligible venture.

3. Fallen stocks Will Go Back Up, Eventually Whatever the purpose behind this present fantasy's intrigue, nothing is more dangerous to beginner speculators than feeling that a stock exchanging close to a 52-week low is a decent purchase. Think about this regarding the Wall Street aphorism, "The individuals who attempt to get a falling blade just get injured."

4. Stocks That Go Up Must Come Down The laws of material science don't have any significant bearing to the securities exchange, and there is no gravitational power to pull stocks back to even.

5. A Little Knowledge Is Better Than None Realizing something is commonly superior to nothing, yet it is pivotal in the securities exchange that singular financial specialists have an away from of what they are doing with their cash. Financial specialists who get their work done are the ones that succeed.

A financial specialist who does not have an opportunity to do broad examination ought to consider utilizing the administrations of a counsel. The expense of putting resources into something that isn't completely comprehended far exceeds the expense of utilizing a speculation counsel.

With simply legitimate technique and strategies a â‚š5000 worth portfolio venture can be made as large as â‚š2 billion worth portfolio.

The above explanation may appear to be unfathomable, however individuals like Warren Buffet, Bill Ackman, , Carl Icahn and numerous others have really switched things around and have made marvelous fortunes from the market.

29

As seen above both the well-known investors have different style financial specialists ought to comprehend the less appetite and his/her own horizon for investment. On the off chance that one has constrained with a relative lesser risk one can turn to esteem investment.

Development style fits best with the mid cap and top, returns are bigger however the dangers included are on the higher side.

Subsequently, for new financial specialists mix style could be the best fit. Where one can contribute the larger part on esteem and a littler extent of development stocks. Step by step moving asset fixation according to the presentation of the stocks.

There is no mischief if there is a style float, which is moving of style from an incentive to development or the other way around, in one's portfolio. The speculation reasoning, to put it plainly, could likewise be style-free.

Additionally, one needs to diminish their predispositions towards these financial specialists, as is commonly said, purchase right and hold on.

30

FINANCIAL TRIVIA

MONEY FOR THOUGHT: The supers like Mr. Mukesh Ambani, Mr. Ajim Premji and Mr. Adani are hit hard by Coronavirus, it definitely gives the retailers heebie-jeebies. We are baffled and even are afraid of going through the news channels. The all-time greatest investors might throw some light during this turbulence. The statements from Bill Ackman who had reportedly made a bet of 2.5 billion on the revival of US economic and continued investing on Starbucks, Agilent etc., and Warren Buffet who said “we don’t want people left behind" fetch us the ray of hope. The mantras from these legends will help us prepare a rule book of do's and don’ts while investing in a stock even during the pandemic.

.

The IBS TIMES

The IBS Times is an academic print and is not for any commercial sale. Reliability and responsibility for sources of data for the article’s vests with the respective authors. Please feel free to drop any suggestions or any feedback at editor.ibstimes@gmail.com IBS Times- FinStreet, the official capital markets club of IBS Hyderabad All rights reserved Visit us at www.finstreetibshyd.in

31