The Importance of Recognizing RetracementsIt is important to know how to distinguish a retracement from a reversal. There are several key differences between the two that you should take into account when classifying a price movement:
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Wednesday, December 23, 2015
Saturday, December 19, 2015
Retracement Or Reversal: Know The Difference
Courtesy : Investopedia
Most of us have wondered, at some point, whether a decline in the price of a stock we're holding is long term or a mere market hiccup. Some of us have sold our stock in such a situation, only to see it rise to new highs just days later. This is a frustrating and all too common scenario, but it can be avoided if you know how to identify and trade retracements properly.
What Are Retracements?Retracements are temporary price reversals that take place within a larger trend. The key here is that these price reversals are temporary, and do not indicate a change in the larger trend.
Most of us have wondered, at some point, whether a decline in the price of a stock we're holding is long term or a mere market hiccup. Some of us have sold our stock in such a situation, only to see it rise to new highs just days later. This is a frustrating and all too common scenario, but it can be avoided if you know how to identify and trade retracements properly.
What Are Retracements?Retracements are temporary price reversals that take place within a larger trend. The key here is that these price reversals are temporary, and do not indicate a change in the larger trend.
Sunday, December 13, 2015
Agriculture ministry set to control cotton seed prices....
Following news is relevant and important to the share holders of seed companies ,hence re-posting it here .
HYDERABAD: In what could prove a
major setback to the global hybrid seed giant Monsanto, India's agriculture
ministry has decided to control the prices of cotton seed, including the
genetically modified versions and their trait value.
The Ministry of Agriculture, Cooperation and Farmers Welfare on 7 December has firmed up the Cotton Seeds Price (Control) Order 2015, terming it as aimed at ensuring availability of cotton seeds to farmers at "fair, reasonable and affordable prices".
The Ministry of Agriculture, Cooperation and Farmers Welfare on 7 December has firmed up the Cotton Seeds Price (Control) Order 2015, terming it as aimed at ensuring availability of cotton seeds to farmers at "fair, reasonable and affordable prices".
The move of the ministry comes in
response to a series of representations made by the domestic hybrid seed
manufacturers, who sought the government's intervention to rein in the American
seed giant Monsanto on trait value of Bt cotton seed. A Mahyco
Monsanto Biotech (India) spokesperson said the company just received a copy of
the order and was in the process of reviewing. "We will be in a position
to comment only after we understand the order in its entirety," said the
spokesperson. ..
"As a leading player in India's
agriculture sector, Monsanto remains confident that the government will take
into account views of all stakeholders and will continue to encourage
innovation in Indian agriculture." The local seed makers moved the
agriculture ministry after the American hybrid seed giant Mahyco Monsanto
Biotech (MMB) refused to bring down the royalty payments and return the excess
royalties they paid from 2010.
The Indian hybrid seed producers appealed to Monsanto to reduce trait values weeks after certain state government began fixing caps both on royalty amounts the seed makers pay to obtain seed technologies and on selling prices of hybrid cotton seed to farmers.
The Indian hybrid seed producers appealed to Monsanto to reduce trait values weeks after certain state government began fixing caps both on royalty amounts the seed makers pay to obtain seed technologies and on selling prices of hybrid cotton seed to farmers.
This decision may negatively impact the business prospects of previously suggested companies - Kaveri Seed Company and Nath Biogene - from this sector.
HYDERABAD:
In what could prove a major setback to the global hybrid seed giant
Monsanto, India's agriculture ministry has decided to control the
prices of cotton seed, including the genetically modified versions and
their trait value.
The Ministry of Agriculture, Cooperation and Farmers Welfare on 7 December has firmed up the Cotton Seeds Price (Control) Order 2015, terming it as aimed at ensuring availability of cotton seeds to farmers at "fair, reasonable and affordable prices".
The Ministry of Agriculture, Cooperation and Farmers Welfare on 7 December has firmed up the Cotton Seeds Price (Control) Order 2015, terming it as aimed at ensuring availability of cotton seeds to farmers at "fair, reasonable and affordable prices".
HYDERABAD:
In what could prove a major setback to the global hybrid seed giant
Monsanto, India's agriculture ministry has decided to control the
prices of cotton seed, including the genetically modified versions and
their trait value.
The Ministry of Agriculture, Cooperation and Farmers Welfare on 7 December has firmed up the Cotton Seeds Price (Control) Order 2015, terming it as aimed at ensuring availability of cotton seeds to farmers at "fair, reasonable and affordable prices".
The Ministry of Agriculture, Cooperation and Farmers Welfare on 7 December has firmed up the Cotton Seeds Price (Control) Order 2015, terming it as aimed at ensuring availability of cotton seeds to farmers at "fair, reasonable and affordable prices".
Saturday, December 12, 2015
Common Clues Of Financial Statement Manipulation
Courtesy : Investopedia
Law enforcement has crime scene investigators to tell
them the significance of a bloody fingerprint or a half-smoked
cigarette, but investors are often left to their own devices when it
comes to trying to figure out whether an accounting crime has taken
place and where the fingerprint might be. Now more than ever, investors
have to become forensic accountants
themselves if they want to avoid being burned by unscrupulous
accounting in a company's financials. In this article we will look at
some common signs, both obvious and subtle, that a company is struggling
and trying to hide it.
Exaggerating the Facts.
With all the big baths that companies take, it's tempting to believe that Wall Street is the cleanest place on earth. The big bath refers to the swelling of corporate write-downs in the wake of poor quarters. When a company is going to take a loss anyway, they sometimes take the opportunity to write off everything they possibly can. This is often compared to spring cleaning; the company realizes losses from future periods and/or losses that were kept off the books in previous quarters. This makes poor results look even worse and artificially enhances the next earnings report. In this case, there is no actual crime taking place, but it is a deceptive accounting practice. However, the biggest problem with this practice is that once a company has taken a big bath, income manipulation is a step away.
A company taking a big bath isn't difficult to evaluate in comparison with other companies in its sector that haven't used deceptive accounting practices. Generally, the company has a very bad year followed by a "remarkable" rebound in which it begins to report profits again. The danger comes when companies make an excessive write down, such as claiming unsold inventory as a loss when it is probable that it will be sold in the future. In this case, when the inventory moves, the company would add the profits to their operational earnings. This type of income manipulation makes it hard to tell whether the company is actually rebounding or is merely enjoying the benefits of the items they "erroneously wrote off". This type of write off is similar to the difference between spring cleaning and burning down your house for the insurance money, so any company that rebounds quickly from a big bath should be viewed with suspicion.
Smoke and Mirrors.
One of the most prevalent approaches to corporate accounting is to omit the bad and exaggerate the good. There are a number of subjective figures in any financial report that accountants can tweak. For example, a company may choose to exclude costs unrelated to its core operations when figuring its operating cash basis - say an acquisition of another company or purchasing investments - but will still include the revenue from the unrelated ventures when calculating their quarterly earnings. Fortunately, companies have to break down the figures, thus dispersing the smoke and mirrors, but if you don't look beyond a few main figures in a company's financials you won't catch it.
Finding the Accomplice
There can be a number of accomplices to any accounting crime, but two popular suspects are special purpose entities (SPE) and sister companies. SPEs allowed Enron to move massive amounts of debt off its balance sheet and hide the fact that it was teetering at the edge of insolvency. Sister companies have also been used as a way to spin off debt as new business. For example, a pharmaceutical company could create a sister company and hire it to do its research and development (R&D) (pharmaceuticals' biggest expense). Instead of doing the work, the sister company hires the parent company to do their own R&D - thus the parent company's biggest expense is now in the income earned column and no one notices the perpetually debt-ridden sister company. Nobody, that is, except those who read the footnotes.
The footnotes list all financing related affiliates and financial partnerships. If there is no accompanying information disclosing how much the company owes to the affiliates or what contractual obligations there are, you have plenty of good reasons to be suspicious.
Elder Abuse
Sometimes when a company is struggling, it starts dipping into financial reserves that it hopes no one will notice. Target No.1 is usually the pension plan. Companies will optimistically predict the growth of the pension plan investments and cut back on contributions as a result, thereby cutting expenses. When the pensions start coming due, however, the company will have to top off the plans from current revenue - making it clear that putting off expenses doesn't make them go away. A healthy company pension plan has become critical as baby boomers near retirement.
Getting Rid of the BodyCompanies may try to hide an unsuccessful quarter by pushing unsold merchandise into the market, or into the distributors' storage rooms. This is usually called channel stuffing. This may save a company from a big quarterly loss, but the goods will return unsold eventually. Channel stuffing can be detected in two figures: the stated inventory levels and the cash meant to cover bad accounts. If inventory level suddenly drops or the money for bad accounts is drastically increased, channel stuffing may be taking place.
Fleeing Town
Because the Canadian and American markets are so intertwined, companies that trade on both exchanges can choose which country's accounting standards to use. If a company changes from the historical accounting standards for that firm, there had better be a good explanation. The two systems, while generally similar, account for income in different ways that may allow a wounded company to hide its weakness by switching sides. Any change in accounting standards is a huge red flag that should prompt investors to go over the books with a fine-toothed comb.
Guilty Tongues Slip.
Damning statements are often casually mentioned in a company's financials. For example, a "going concern" note in the financials means that you should get out your magnifying glass and pay close attention to the following lines. With the practice of overstating the positive and understating the negative, a company admitting to a "going concern" may actually be confiding that they are two steps from bankruptcy. Unexpectedly switching auditors or issuing a notice that the CEO is resigning to pursue "other interests" (most likely in the Cayman Islands) are also causes for concern.
Conclusion
Although there are many interesting numbers in a company's financials that allow you to make a quick decision about a company's health, you can't get the full story that way. Due diligence means rolling up your sleeves and scouring the sheets until you are sure that those main figures are real. The best place to start looking for bloody fingerprints is in the footnotes. Reading the footnotes will provide you with the clues you'll need to track down the truth.
Exaggerating the Facts.
With all the big baths that companies take, it's tempting to believe that Wall Street is the cleanest place on earth. The big bath refers to the swelling of corporate write-downs in the wake of poor quarters. When a company is going to take a loss anyway, they sometimes take the opportunity to write off everything they possibly can. This is often compared to spring cleaning; the company realizes losses from future periods and/or losses that were kept off the books in previous quarters. This makes poor results look even worse and artificially enhances the next earnings report. In this case, there is no actual crime taking place, but it is a deceptive accounting practice. However, the biggest problem with this practice is that once a company has taken a big bath, income manipulation is a step away.
A company taking a big bath isn't difficult to evaluate in comparison with other companies in its sector that haven't used deceptive accounting practices. Generally, the company has a very bad year followed by a "remarkable" rebound in which it begins to report profits again. The danger comes when companies make an excessive write down, such as claiming unsold inventory as a loss when it is probable that it will be sold in the future. In this case, when the inventory moves, the company would add the profits to their operational earnings. This type of income manipulation makes it hard to tell whether the company is actually rebounding or is merely enjoying the benefits of the items they "erroneously wrote off". This type of write off is similar to the difference between spring cleaning and burning down your house for the insurance money, so any company that rebounds quickly from a big bath should be viewed with suspicion.
Smoke and Mirrors.
One of the most prevalent approaches to corporate accounting is to omit the bad and exaggerate the good. There are a number of subjective figures in any financial report that accountants can tweak. For example, a company may choose to exclude costs unrelated to its core operations when figuring its operating cash basis - say an acquisition of another company or purchasing investments - but will still include the revenue from the unrelated ventures when calculating their quarterly earnings. Fortunately, companies have to break down the figures, thus dispersing the smoke and mirrors, but if you don't look beyond a few main figures in a company's financials you won't catch it.
There can be a number of accomplices to any accounting crime, but two popular suspects are special purpose entities (SPE) and sister companies. SPEs allowed Enron to move massive amounts of debt off its balance sheet and hide the fact that it was teetering at the edge of insolvency. Sister companies have also been used as a way to spin off debt as new business. For example, a pharmaceutical company could create a sister company and hire it to do its research and development (R&D) (pharmaceuticals' biggest expense). Instead of doing the work, the sister company hires the parent company to do their own R&D - thus the parent company's biggest expense is now in the income earned column and no one notices the perpetually debt-ridden sister company. Nobody, that is, except those who read the footnotes.
The footnotes list all financing related affiliates and financial partnerships. If there is no accompanying information disclosing how much the company owes to the affiliates or what contractual obligations there are, you have plenty of good reasons to be suspicious.
Elder Abuse
Sometimes when a company is struggling, it starts dipping into financial reserves that it hopes no one will notice. Target No.1 is usually the pension plan. Companies will optimistically predict the growth of the pension plan investments and cut back on contributions as a result, thereby cutting expenses. When the pensions start coming due, however, the company will have to top off the plans from current revenue - making it clear that putting off expenses doesn't make them go away. A healthy company pension plan has become critical as baby boomers near retirement.
Getting Rid of the BodyCompanies may try to hide an unsuccessful quarter by pushing unsold merchandise into the market, or into the distributors' storage rooms. This is usually called channel stuffing. This may save a company from a big quarterly loss, but the goods will return unsold eventually. Channel stuffing can be detected in two figures: the stated inventory levels and the cash meant to cover bad accounts. If inventory level suddenly drops or the money for bad accounts is drastically increased, channel stuffing may be taking place.
Fleeing Town
Because the Canadian and American markets are so intertwined, companies that trade on both exchanges can choose which country's accounting standards to use. If a company changes from the historical accounting standards for that firm, there had better be a good explanation. The two systems, while generally similar, account for income in different ways that may allow a wounded company to hide its weakness by switching sides. Any change in accounting standards is a huge red flag that should prompt investors to go over the books with a fine-toothed comb.
Guilty Tongues Slip.
Damning statements are often casually mentioned in a company's financials. For example, a "going concern" note in the financials means that you should get out your magnifying glass and pay close attention to the following lines. With the practice of overstating the positive and understating the negative, a company admitting to a "going concern" may actually be confiding that they are two steps from bankruptcy. Unexpectedly switching auditors or issuing a notice that the CEO is resigning to pursue "other interests" (most likely in the Cayman Islands) are also causes for concern.
Conclusion
Although there are many interesting numbers in a company's financials that allow you to make a quick decision about a company's health, you can't get the full story that way. Due diligence means rolling up your sleeves and scouring the sheets until you are sure that those main figures are real. The best place to start looking for bloody fingerprints is in the footnotes. Reading the footnotes will provide you with the clues you'll need to track down the truth.
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