Only five IPOs at stock market in 2006

Posted on 12.28.06 by StockPK Team @ 3:00 pm    

Despite the continuation of investor-friendly policies and a decent growth in corporate earnings, the local capital market remained slow in terms of attracting new listings compared with the previous year.

The calendar year 2006 was a depressing year in terms of Initial Public Offerings (IPOs). While the performance of the market is primarily examined by the index change, the growth of capital market can be determined by looking at the fresh issues brought into the market through IPOs.

With 2006 approaching its end, we are presenting an analysis of the stock offerings that took place during 2006.

Widow And Orphan Stocks: Do They Still Exist

Posted on 12.28.06 by StockPK Team @ 1:46 pm    

In the past, the term “widows and orphans” was used to describe stocks with a relatively high degree of safety and dividend income. Because they had relatively minimal risk and provided income to feed the family, these kinds of stocks were literally thought to be the only investments suitable for widows and orphans. The term is noteworthy because it was generally used during market bottoms, but today it means something different.
A widow-and-orphan stock was the blue chip stock of its day: the stock of a large well-known firm that was thought to have an unassailable market leadership position and that paid a “good” dividend. This term was generally applied to utility stocks (electric, gas and telephones). Utilities are often referred to as widow-and-orphan stocks because of their monopoly (or, if you prefer, government-mandated market leadership) and dividend yield. Banks were excluded from this class as the result of their involvement in the bubble and crash of 1929. It was not until several years after the government-instituted regulations like the Glass-Steagall Act, which separated investment banking and “regular” commercial banking, that “widows and orphans” was again applied to commercial banks. Depending on the business cycle, the term was also applied to railroad and auto stocks.

SBP suggests complete removal of badla financing

Posted on 12.28.06 by StockPK Team @ 12:56 pm    

State Bank of Pakistan on Wednesday suggested to policy makers that badla financing in share markets be completely “removed with better risk management tools”.

It further said, “few (stock) brokers can still manoeuvre the market.”

Releasing its annual review of performance of financial markets-2006, the central bank said the March 2005 crisis hints towards market manipulation.

Though number of investors has grown tremendously over the years few big brokers can still manoeuvre the market.

The SBP said another factor instilling instability in equity markets is the presence of badla or CFS financing which it said, “Supports speculative activities without proper exposure.”

Theme Investing: Mega-Trends And Market Psychology

Posted on 12.27.06 by poster @ 9:28 am    

Investing has always been a little like surfing. Successful investors spot key investment themes (waves) and ride them to profits. Sometimes the waves are shorter and smaller than we had expected. Other times the wave takes on a mind of its own and falls under its own weight. The hardest but most profitable thing to do is to be the lone rider of a wave that others have abandoned for the “next best thing”, and then wait for them to catch up. The key is to know when to get on and when to get off. Previous examples of trend investing include defense stocks during the second World War, oil stocks in the ’70s, and of course, the dotcoms.

Margin of Safety

Posted on 12.25.06 by StockPK Team @ 8:29 am    

One of the tenets of Benjamin Graham, the father of value investing and Warren Buffett’s mentor, was “margin of safety”. Conditions may arise in the market place where the price of a security may be purchased at a price less than even a cautious estimate of it’s intrinsic value. The greater this disparity becomes then the greater the “margin of safety”.

The price to book ratio measures the latest price of the company’s shares relative to the current shareholder’s equity. If the price to book ratio is less than 1, this implies that one is getting more than $1 of assets for every $1 invested. All things being equal it is implied that a stock with a lower book ratio should have a greater “margin of safety”

Cooking the Books 101

Posted on 12.23.06 by StockPK Team @ 10:43 pm    

Every company games the numbers to a certain extent to achieve budget and get bonuses. This is nothing new. But two things make the here and now different for us. First, our money is the issue (history is always about other people’s money). Second, these are BIG numbers.

Enron, Aldelphia and WorldCom are extreme examples. They are the few bad apples that get all the headlines. I believe that people with better ethics run the majority of companies. They may bend the rules, but few take the process to the extremes of Enron or WorldCom. If this weren’t true, we’d all be investing in government bonds

The Short And Distort - Stock Manipulation In A Bear Market

Posted on 12.23.06 by StockPK Team @ 7:29 am    

There is nothing inherently wrong with short selling, which is permissible under the regulations of the Securities & Exchange Commission (SEC). But the short-and-distort type of short seller uses misinformation and a bear market to manipulate stocks. Short and distort is as illegal as the pump and dump, but is mainly used in a bear market. It is important for investors to be aware of the dangers and to know how to protect themselves.

Capitulation Defined

Posted on 12.22.06 by StockPK Team @ 10:43 pm    

There tends to be a lot of talk about “investor capitulation” when stocks continue to tank. But what is meant by capitulation in Wall Street terms and what does it mean for future stock trends? This article will discuss both.

Capitulation is defined in the American Heritage Dictionary as the following:

capitulation (n)

1. The act of surrendering or giving up. Surrender.
2. A document containing the terms of surrender.

Stock Basics: The Bulls, The Bears and The Farm

Posted on 12.21.06 by StockPK Team @ 4:29 pm    

In the Stock Market, the bulls and bears are in a constant struggle. If you haven’t heard of these terms already, you undoubtedly will as you begin to invest.

The Bulls
A bull market is when everything in the economy is great, people are finding jobs, GDP is growing, and stocks are rising. Things are just plain rosy! Picking stocks during a bull market is easier because everything is going up. Bull markets cannot last forever though, and sometimes they can lead to dangerous situations if stocks become overvalued. If a person is optimistic, believing that stocks will go up, he or she is called a “bull” and said to have a “bullish outlook.”

SECP to present March 2005 stock crash report to National Assembly

Posted on 12.21.06 by StockPK Team @ 1:18 pm    

Chairman Securities and Exchange Commission of Pakistan Razi-ur-Rehman has said that reinvestigation report against top five brokers would be presented before the National Assembly Standing Committee on Finance by the end of this month.

Talking to media men at SECP’s regional office here on Wednesday, he said that investigation against 88 brokers has been reinitiated which would be presented before NA Standing Committee within next two months.

He clarified media reports regarding retention and perseverance of data pertaining to March 2005 stock market crash and said that news reports contained a number of serious factual errors and hence warrant a correction of record by the SECP.