Smart Investing..

Couple of days back I met one of the fund managers of a big asset management company and we had an in-depth talk on the basics of investing. The basic and the most important part of investing as per the discussion is the FV formulae. FV = PV (1+r) ^t Where FV is the future value PV is the Present value r is the rate & t is the time. This formulae is very powerful and it suggests that if we are investing, the FV i.e. the future value is not in our hands as we might not get what is promised, the rate of return is also not in our hands as it depends on the product which we buy. The time (t) and the PV ie the present value or the present amount which we have to invest is in our hands as we can decide how much and how long to invest. These are the only two variables which will decide the fate of our investments. Lot of people try to time the markets by observing the markets and trying to invest when markets are at the bottom and to sell when it is at the top. What people don’t understan

This year we saw the first muhurat trading in the last seven years with a negative market breadth. Its more to do with the international market outlook due to the losses and write offs made by banks, financial institutions, broking and asset management companies there and the view that more such write offs are bound to happen. I had come up with an article on Sub prime in my blog in August 07 where I had a view that it’s just the beginning of the sub prime mess. (Check it out here.. I guess it’s just the beginning for the Sub prime crash & Market meltdown on US concerns ) The coming week we will find our markets in more red due to high oil prices, worries on rupee and dollar and the worry on more sub prime write off to happen in the US. U.S. stocks are poised for more weakness next week, after a complete wash out of the hopes that technology shares might pull the market out of the sub prime mess. Concern about credit problems is spreading throughout the economy take for example w