CONTENTS
LETTER
ISSUE CONTENTS
29 November 2012
FROM THE
EDITOR
Investor Protection: Positive Actions on the IPO Front, Stock Depository Rules: Making Them Investor-friendly, Multi-level Marketing: Some Action in the Offing?
Seeking Alpha
S
tock picking is tough. A lot of analysis is required which only a few can afford and are trained for. You could buy top-performing mutual fund (MF) schemes. But, with our strong equity research strength, we have often come across well-run schemes that either have too many stocks in their portfolio or stocks that will not give great returns and have been chosen only to ensure that the performance does not stray too far off the benchmark’s. This gave rise to a question: What if you could buy the best quality stocks in the portfolio of the best performing equity mutual fund schemes and ignore the rest? Would you have a better portfolio than those of these schemes? We have analysed stocks that constitute 75% of the portfolio of the top MF schemes and shortlisted the ones we think will do well. Check out another unique Cover Story on page 26. On a related note, we also review the performance of MF schemes which use fancy names as a guise for attracting hapless investors. Most of these schemes have been gross underperformers. Check page 24 to see which schemes to avoid. If there’s one thing that you must know while picking stocks, it is that you should have the ability to smell the faintest whiff of misgovernance. Our columnist R Balakrishnan explains how companies indulge in corrupt practices and how you can detect these. Sucheta Dalal comments in her article on how people with vested interests are trying to defend Rajat Gupta, indicted for insider trading in the US, by pointing out some stray names in the US that got away. Well, looking at the long list of people that got away here, India has a lot to prove before Indians can point a finger at the US justice system. Moneylife Foundation held the first of the many seminars announced on RTI Act addressed by Shailesh Gandhi on 5th November, to a packed house. Many of our members want to learn how to file an RTI application to empower themselves. So overwhelming was the response that even our event on 3rd December has been fully booked! We hope that each one of you had a fantastic and safe Diwali! Debashis Basu MONEYLIFE | 29 November 2012 | 10
18
SMART MONEY
Shades 22 Many of Grey
Warranty Has 54 Car Its Limitations
The kinds of corruption that investors need to know about
There’s more to warranty than meets the eye. It’s complicated
MUTUAL FUNDS POINTERS DIFFERENT STROKES
the Victim after 20 Playing Getting Caught Indians are eager to defend Rajat Gupta because we are too used to the powerful always getting away in India. Take a look at a short list
26 Cover Story
Super Stocks Portfolio What if you applied the Moneylife method to identify the best stocks in the portfolio of the best performing equity fund schemes? Jason Monteiro explains what that portfolio would look like
13 Your Interest
STOCKS
32 Value Picks Shuffle the Deck
36 Street Beat – Venus Remedies – Atul Auto Limited
Negligent doctor in the dock; SpiceJet to pay Rs22,000 to handicapped man; Claim unclaimed FD: Karnataka High Court; Medical body to end insurance woes?
STOCK PERFORMANCE: Our Report Card
14 Your Money
40 Which Way
Bullion: BullionIndia gold and silver trading; Loans: Expect changes in gold loan norms soon, Federal Bank launches housewarming Loan; e-Payment: Mobile Money; Mutual Funds: Mutual fund distributor registration fees slashed; SEBI: RBI, SEBI propose changes in RGESS investment norms for MFs; Currency: RBI to review banks’ mechanism to detect fake notes in November
16 Current Account Behavioural Science: Is loneliness a state of mind?
17
Loose Change
Moneylife Quiz; Sound Bites: Arvind Kejriwal, NR Narayana Murthy, Nitin Gadkari, Vijay Mallya Disclaimer: Moneylife has a policy of not allowing its editorial staff to buy and sell stocks that are written about in the magazine. All personal transactions in individual stocks are subjected to internal disclosure rules.
Liquidity is pushing the Indian markets up; are we too complacent?
41 Popular Picks
Funds, Below 24 Fancy Average Returns An analysis of how schemes with trendy names have performed by Jason Monteiro INSURANCE
46 Insurance Trends – Life Insurance: Return of Premium Term Plans – Interview: “Best health insurance policy would be the one which covers 80% of the bill and has 20% as co-pay” – Fine Print BORROWING
48
6 Tips To Get Your Loan Approved
Jammu & Kashmir Bank surged 18%, Atul Auto rocketed 17%, while Ajanta Pharma tanked 10%
Amara Raja Batteries went up 12%, Madras Cements rocketed 12%, while Hindustan Unilever tanked 3%
during 55 Flying Winter Winters mean unscheduled cancellations, delayed landings and haywire schedules. Avoid! EARNING CURVE
56 Investment Strategy SIP Vs Lump Sum – Global Learning – Investment success EVENTS
60 Moneylife Foundation Events – How beginners can use the RTI Act effectively
AUTO
of 50 Importance Rear Seat Belts – “Online term plans can be deceptive”
The difference between life & death is a seat belt, even for rear-seat passengers HEALTH
45 Long Term
AIR TRAVEL
Banks look at your loan application from the point of view of how risky it is to lend money to you and whether or not you will pay back. Give the bank reasons to lend to you
Bad Education
44 Medium Term
LEGALLY SPEAKING
Pressure Drugs 52 Blood for the Wrong Reasons Don’t rush to take medicines to control moderate hypertension – Pulse Beat: Medical developments from around the world
BEYOND MONEY
66 Challenge Extraordinary Dr Nita Mukherjee visits a different kind of workshop
DEPARTMENTS Letters............................. 4 Book Review.....................58 Money Facts.....................63