Monday, December 10, 2012

Narrow Range Day suggests big move coming

Monday, December 10, say extremely narrow range daily bars for the Nifty, as well as the Bank Nifty. the Nifty moved in a range of just 30 points, calculated from High to Low.

Today was part of a series of contracting days that started from last week.It appears that the Nifty may be ready for a big move - expansion comes after contraction.

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Hedge Funds reduce equity exposure - this item from Pragmatic Capitalism talks about fixed income overtaking equity. It says:

Hedge funds are reducing exposure to equities as the industry tries to adapt to the increasingly competitive investment landscape:
“Investors have fallen so far out of love with stocks that assets in fixed income hedge funds are poised to overtake those in equity trading strategies for the first time in the history of the $2tn industry.

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Bunting's Laws of Investing - from The Big Picture

The post refers to the recent passing of Dan Bunting, a man who “successfully managed money on behalf of private individuals and institutions for nearly 40 years.”
Over the years, Bunting had developed a series of rules that governed his investing strategies.

Here are some of the points:

 1. Sell stocks of companies that announce huge acquisitions, that overdiversify, or that spend a fortune on a lavish new headquarters.

4. “Run a mile” from all stocks in an industry going through a huge investment boom: Massive overcapacity and consequent collapse is inevitable.

5. Steer clear of investing in manufacturing companies. Their industries are usually plagued with extreme cycles of boom and bust, overcapacity and slumps.

6. Pay little attention to economists or market gurus.

7. Mistrust all mathematical trading formulas as well — they invariably fail just when you most need them to work.

9. Look for companies generating a lot of cash — a great sign of sustained outperformance.

10. Look for companies which have monopolies (or near monopolies), and those which manage to take out their main competitors
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11. Remember you are buying businesses, not just stocks. Pay close attention to the quality of the business, and especially the quality of the management.

12. Look for companies which have earned the trust of consumers, and which have very strong brand names.

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