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Basics of value investing

Jun 14, 2013

Here is today's recommended reading list from Equitymaster...

Why the US Fed may not want to raise interest rates?
What is the amount of money that the US banks have deposited with the Fed? As per Fortune, the number has just crossed a trillion dollars! The Fed has been paying interest on these deposits to the banks. If the Fed were to decide to raise interest rates, it would have to increase what it pays the banks on those deposits, which means funneling more government money into the hands of the banks. So while the markets may expect the US Fed to stop the QE and raise interest rates, it may be a long time before the US central bank decides to do so. Read more... ( Cable News Network)

Basics of value investing
Basically investment style can be classified in two types. One is value and other is growth. While tradition Graham-style value style focuses on buying cheap stocks, growth style focuses on chasing earnings. Now whichever strategy an investor adopts his ultimate goal is to beat the benchmark. However, anecdotal evidence suggests that value typically outperforms growth over the long run. This article states the reasons as to why. It also talks about various value screeners and the risks involved with value investing like value trap. Read on this interesting piece to enrich your knowledge on value investing. (ValueWalk)

S&P upgrades outlook on US - Right or Wrong?
During the week, ratings agency Standard and Poor's (S&P) upgraded the outlook for the US credit rating from "negative" to "stable". The article argues whether the reasons stated by S&P for upgrading the rating are really valid? Is the US done with its fiscal risks? Is growth on cards for the US economy or is there another wave of recession in the offing? Read this interesting piece to know more... (Money Map Press)

Does China need to adopt a new growth model?
It is a well known fact that the Chinese growth model has relied more on investments rather than consumption to promote GDP growth. That has indeed helped in pulling almost 500 million people out of poverty in the last thirty years and State Owned Enterprises played a substantial role towards this. However, the situation in China has been changing gradually. Between 1997 and now, corporate margins have dwindled from the early 30's to approximately 10% currently while corporate leverage has increased by 33% and Return on Equity has dropped by almost 35%. So, does China need to adopt a new growth model? Read on to find out... (Forbes)

India versus Asian peers- Who stands weaker?
While fear of rising US rates and the fall in the rupee have already led to shivers in Indian markets, India, it seems, is proving to be the weakest link amongst the Asian markets. Whether it is GDP growth or foreign reserves, debt or deficit. So, where does the Indian economy stand in terms of macroeconomic indicators vis-a-vis its Asian counterparts? Are other Asian economies also experiencing similar macroeconomic headwinds? Will the vulnerability translate into crisis for Asian economies? Read on to find out more... (Thomson Reuters)

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