Ganesh at rescue..

HSE - was a bad idea. It seems functionally dead.. But this doesn't stop me from learning.. I left for Ganesh's house.

Telling abt Ganesh, i have worked under this GK Guru (a cool manager to work under). There are hardly any topics under the sun for which he has less to talk. At his residence, we had 2 rounds of long discussions on stock market. Here let me share with you the knowledge i gained..

What is Sensex?

>BSE(Bombay stock exchange) sensex

>NSE(National stock exchage) sensex

BSE sensex is all abt index calculated from 30 largest stocks(eg Reliance, SBI, ITC..)

This means when sensex crosses 20k pts or goes down to 8k, it is being talked abt these big shots.. as they determine India's market situation for that perticular time.

What's diff btw Share and Stake?

Mr X has 1000 shares of company Y.

Mr X has 15% stake of company Y.

A stake is a share of ownership of a company.

Some terms:

Share > preference share: returns will not depend upon company's performance

> equity share: returns vary according to company's performance

Profit > Gross profit

> Net profit

net profit = (gross profit - (tax, payroll..))

Growth > Organic: gradual; step by step

> Inorganic: fast; eg a software firm acquiring another firm

Rigging: Engineering faulty methods to rise the stock value.. eg Harshad Mehta rising BSE stocks in 1992 and fooling the public..

SEBI: (securities and exchange board of india) regulatory body..

Satyam forgery?

Ramalinga Raju showed inflated cash reserves which never existed. As he himself brought this out, when recalculated the satyam shares crashed.. 'Cash reserves' held by a company comes under those assets that could be used in future for expansion activities etc.. Coming to know, this never existed, confidence upon satyam as a company slashed---> shares slashed...

Some parameters used to calculate share value:

EPS - earnings per share

P/E - Profit/EPS

Book value - as per books of the company

American economic slow-down?

Started with subprime mortgage crisis, i.e. taking loan keeping house as collateral. House prices declined in US to that extend and went much below the loan amt. Borrowers took advantage of it by non-repayment of instalments that they were entitled to. This pressed the lenders to seize borrower’s house that had a present value much lesser than the loan taken by the borrower. This put the investment bankers in trouble... economic slow-down...