True or False?
Here is another list of True or False….answers you should find it yourself…my job is to confuse you..that I have done. I do not think Pattu has any calculator which will give you the answers…but cannot trust Pattu. He is capable of creating another 10 calculators to answer these T or F also!!
1. In the long run shares perform better than bonds especially if you do not mind some volatility during the journey.
2. Stock markets are now so safe that it is impossible that there would be great crashes like the 1929 depression, etc.
3. Doing a SIP in a mutual fund or in a bunch of equity shares has the same impact over a long period of say 20 years.
4. You should invest in companies with monopoly positions. They are always profitable.
5. You should invest in companies which make addicting products. They are always profitable.
6. A company with a good product and doing well is ALWAYS going to give the shareholders a good return.
7. EBIDTA is a far better indicator of what is happening than EPS.
8. During periods of high inflation interest rates are high, so equity returns are subdued.
9. The good returns from the stock market over the past 20 years is because of brilliant economic growth by good Indian businessmen and their growth, innovation, opening new markets, good management, and good skills.
10. Low P/E stocks are bargains because they are inexpensive to the market and the dividend yield ensures a good moat.
Answers should obviously be with explanation….
moronbuffett
LOL
there are no absolute truths and falsehoods.
Things that are deemed to be true at a given point of time may be false at a later point of time.
Like #1. An Indian and a Japanese will have opposite answers!
Chandra Singh
In the long run shares perform better than bonds especially if you do not mind some volatility during the journey. True, except if the entry is during a grossly overpriced market and if one defines 10 years as long.b 2. Stock markets are now so safe that it is impossible that there would be great crashes like the 1929 depression, etc. – False. But anyone who has understood the market’s moods will delight when such occurances occur by making additional investments, averaging down or shifting the holdings in large cap to mid and small caps.b 3. Doing a SIP in a mutual fund or in a bunch of equity shares has the same impact over a long period of say 20 years. – False. For one who has done a lot of home work and selecting the stocks, returns may be superior from select stocks but for one who wants to “sit tight”, Mutual fund returns will be better. 4. You should invest in companies with monopoly positions. They are always profitable. – False. Often their “goodness” is well factored in and any stock that has crashed was sometime at a higher price because everyone was convinced of their goodness. 5. You should invest in companies which make addicting products. They are always profitable. – False, not when the Government is making new regulations or if the promoter is squandering the share holder’s wealth, even if that is cricket! 6. A company with a good product and doing well is ALWAYS going to give the shareholders a good return. – false since there is a potential for crash whenever the quarterly earnings don’t meet the expectations of greedy traders. 7. EBIDTA is a far better indicator of what is happening than EPS. True but EPS is a good surrogate to valuations though application should be with care 8. During periods of high inflation interest rates are high, so equity returns are subdued. False. These are the times rate sensitives are available at a bargain, to give impressive returns. 9. The good returns from the stock market over the past 20 years is because of brilliant economic growth by good Indian businessmen and their growth, innovation, opening new markets, good management, and good skills. False – even with all this market can be static and it can grow even in the absence of any of these. 10. Low P/E stocks are bargains because they are inexpensive to the market and the dividend yield ensures a good moat. False – The rate of growth may be inferior to the high PE stocks.
dipankar
1. Neither true nor false. Empirical study reqd to prove either.
2. False. Another black swan cud cause a repeat of 1929. Are we aware where the next bubble is building up.
3. False. ROI wud depend on selection of fund and stocks.
4. False. Many examples present in the market. MOIL, NMDC, SCI etc
5. False. ITC, USL
9. Many other factors too…productivity gains, lower input costs, easy liquidity
10. Low pe is not equal to good bargain.
Mira D
1. In the long run shares perform better than bonds especially if you do not mind some volatility during the journey. True. But there have been decades when stocks were flat.
2. Stock markets are now so safe that it is impossible that there would be great crashes like the 1929 depression, etc. No. A random event that cannot be foreseen can still unsettle the system. One can only partly prepare for what is not foreseen and is random.
3. Doing a SIP in a mutual fund or in a bunch of equity shares has the same impact over a long period of say 20 years. No. What if you were doing a SIP in IVRCL or Montari or Mahendra Mills or the several hundred stocks that don’t trade? SIP in a decent rated, tracked MF will at least give you some modicum of safety.
4. You should invest in companies with monopoly positions. They are always profitable.
Nothing is a monopoly for ever. Govt can step in or more economic substitutes found. One of my textbooks from 1989 is covered with a stock market page newsprint. Very humbling.
5. You should invest in companies which make addicting products. They are always profitable. Ha ha ha… talk to an ITC investor please. Or an investor in any Mallya company.
6. A company with a good product and doing well is ALWAYS going to give the shareholders a good return. See 4 above.
Remember the saying, “ the road to hell is paced with good intentions”?
The term “Good” is relative and ever changing.
7. EBIDTA is a far better indicator of what is happening than EPS.
I prefer EPS, it factors in everything, tax is a cost too, isn’t it? Interest charge is a cost.
8. During periods of high inflation interest rates are high, so equity returns are subdued.
Even in the same high interest environment, for companies in the same industry why does one company do better than another. Equity returns can depend on several company specific factors.
9. The good returns from the stock market over the past 20 years is because of brilliant economic growth by good Indian businessmen and their growth, innovation, opening new markets, good management, and good skills.
Only very partially true. More a factor of luck and right place right time. We attracted FII inflows and this changed the scale for good companies with demand outpacing supply.
10. Low P/E stocks are bargains because they are inexpensive to the market and the dividend yield ensures a good moat.
No. they might be duds as well, and the market has factored this in.
Shankarnarayan K
1. In the long run shares perform better than bonds especially if you do not mind some volatility during the journey. – True.
2. Stock markets are now so safe that it is impossible that there would be great crashes like the 1929 depression, etc.- False. Black swan events can never be ruled out.
3. Doing a SIP in a mutual fund or in a bunch of equity shares has the same impact over a long period of say 20 years. False. Depends on what shares you buy.
4. You should invest in companies with monopoly positions. They are always profitable. False. There are 4 other Porter forces, apart from competition.
5. You should invest in companies which make addicting products. They are always profitable. False. Eg: Tata Coffee
6. A company with a good product and doing well is ALWAYS going to give the shareholders a good return. False. Depends on share valuations.
7. EBIDTA is a far better indicator of what is happening than EPS. True. EBIDTA is harder to manipulate than EPS.
8. During periods of high inflation interest rates are high, so equity returns are subdued. False. 2004-7, inflation was high, and so was equity returns
9. The good returns from the stock market over the past 20 years is because of brilliant economic growth by good Indian businessmen and their growth, innovation, opening new markets, good management, and good skills. False. Better understanding of the market, enhanced investor knowledge were the drivers behind the market returns.
10. Low P/E stocks are bargains because they are inexpensive to the market and the dividend yield ensures a good moat.- False. Eg : Tata steel.
See more at: http://www.subramoney.com/2015/04/true-or-false/#sthash.YPv3fUNV.dpuf
Karthikraja K
1. True based on Past history
2. False. Uncertainty is guaranteed
3. False. Cant compare One day cook vs professional cook
4. May not be in all occasions. but mostly yes.
5. May not be in all occasions.
6. False. it depends on entry point of share holders. otherwise average return only.
7. False. Need more indicator for proper deciphering
8. Probably yes
9. Plus there many other factors which are not spelled
10. Rarely