Stay away from such companies...
In this issue:
» Will India get junked soon?
» Infy to start off result reason tomorrow
» IMF ups its global projections
» Google's ambitious plan
» ...and more!!
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While it may not be easy to predict such developments, on the chance that there is even a whiff of bad management practices, investors would do well to stay away from such companies. And there are many of them out there...
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Chart of the day |
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01:10 |
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However, S&P has added that it expects its India outlook to stabilise at the current levels provided the country manages to reduce its deficit burden in the medium term. This is also keeping in mind that a faster than expected economic recovery would help India to achieve faster fiscal consolidation through higher revenue growth.
01:52 |
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The IMF, perhaps the most pessimistic of all the financial institutions on India so far, has finally decided to make amends. In its latest report, the global organization revised upwards India's 2009 growth projections by nearly 1%. It now expects the country to grow by 5.4% during the year as opposed to its earlier forecasts of 4.5%. And if the table sourced from Live Mint below is to be believed, growth range in the vicinity of 5%-6% seems to be a foregone conclusion. While this is by no means a bad number, the kind of havoc that the global financial crisis has wrecked on India could be gauged from the fact that between 2004 and 2008, when the world was awash with liquidity, India's growth rate averaged 8.8%. Secondly, the growth in recent times has been achieved by the government by taking on a significant amount of debt and since such a luxury is not going to be available to us every year, it will only take a significant level of global economic recovery and some big bang reforms to take us back to the heady days of 9% growth.
02:37 |
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Wind projects, which are located in open areas, usually end up being far away from the place of final consumption. This problem calls for robust transmission infrastructure to evacuate that power and take it to the final place for consumption. And if this is proving to be such a big a problem in a place like the US, it can only be imagined what kind of a bottle neck it could become for other lesser developed countries. Seems like the euphoric highs of investments the wind energy saw before the credit crisis will take a while before they come back.
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04:02 |
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As the pricing pressure continues to take a toll on the company's profits (which are already hit by sluggish growth in demand) one cannot expect extraordinary results.
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Today's investing mantra |
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10 Responses to "Stay away from such companies..."
abc
Jul 10, 2009Also thanks for not recommending buying Air India's stock. This company is also facing unusual circumstances. Employees had to let go salary for June and top management has been asked to forget even July's salary!
Interesting to read, in today's ET, Nusli Wadia's long due acceptance that "airlines is a bad business to enter into". Poor chap, he could have saved his money and pain by reading Buffet! Buffet also made similar mistake by buying airline's stocks although avoiding the same in his career earlier. But soon he accepted and corrected his mistake. Its worth reading his analysis on this matter.
Would be great if you dont quote Buffet wrongly to meant buying all such stocks facing problems like GoAir, Air India, Ranbaxy, Suzlon,....
dippak
Jul 10, 2009the mails recd.are interesting with high authenticity.useful to have birds eye update on macro developments across gobal markets.Thanks.
TKS RAGHAVAN
Jul 9, 2009A nice article indeed..... All the stocks whether one recommended or not rose to zenith in the post-election run up market irrational exuberance. I would appreciate if the team could sample the would be subscriber a few recommendations to find for himself how the stocks fared. My kudos to the entire team that is doing an extensive research and picking the stocks. RAGHAVAN
abc
Jul 9, 2009Your website published number of articles in last one week quoting Warren Buffet in grossly inappropriate way. Here is one such excerpts taken from your article:
"After all, as Warren Buffett would testify, great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause stocks to be misappraised."
So according to your earlier logic (based on entirely wrong interpretation of what Buffet meant), one should buy Ranbaxy now as it is facing unusual circumstances.
I would recommend you to read Warren Buffet again and quote the context also in which he had said those words. Else you will keep on mis guiding your readers!
Its good to see that common sense has prevailed and thankfully in first para of your today's wrap up you didn't recommend investors to buy Ranbaxy!
CP Arora
Jul 9, 2009I really enjoy "The 5 Mintue Wrapup" everyday. This along with subscription of stock select, midcap and hidden treasure has changed my perception on investing.My impression about stock market was to make quick money but that's not true. I have now started investing based on fundamentals and this is really working. Even though, market has gone down but still I am not losing money. Thanks and my salute to equity master for giving unbiased views. Cheers, CP Arora, Gurgaon
SudeshKumarDevgan
Jul 9, 2009Thanks for providing the valuable and informative articles/news in general and the impending problems that generally people face during the rally. Thanks again
Inayat Qureshi
Jul 9, 2009Thank you for informing to keep away from Ranbaxy due to governence issue and problems faced by the company in USA. Indeed this information is a great help to the readers of Equitymaster. If you list the names of other companies the investors should keep away will be appreicated. Thanks and kind regars,
gm vegad
Jul 9, 2009thanks for alerting us by your proper articles.pl
provide the sameline information regarding others.
thanks again.
with regards.
gmvegad
Gopinath Mavinkurve
Jul 9, 2009Thanks for informing about the governance issues at Ranbaxy. You have rightly advised us to keep away from such companies - you also state that there are many such companies out there....you owe it to us to let us know more such instances. So let us know about them please! Thanks again.
V S Gurumani
Jul 10, 2009I have been investing in companies from time to time. Ranbaxy has never figured in my list, though I have considered it many times. The reason, when I look back, is that when it came to actually putting my money, I did not feel that sense of trust seeing the faces of their CEOs and promoters. Something on their faces and in their body language communicated to me that they were not telling the whole truth. The lesson? Trust your instincts when it comes to your money, after all the analysis and listening to the smart advisers who come on the TV media!