CONTENTS
LETTER
ISSUE CONTENTS
13 December 2012
FROM THE
EDITOR
Corporate Data: Designed To Fail?; Corporate Governance: Foreign Corruption Law; Money Laundering: HSBC Revelations
A Slice of the Pie
S
tocks are often pitched as something you buy and sell, your gains (or losses) coming from the difference in the prices of the two. But did you know that 50% or more of long-term returns of stocks come from dividends? If so, how does one go about buying stocks which offer high dividends and simultaneously, avoid the losses that come from price declines? That is the topic of our Cover Story which I am sure you will find different from others on the same topic. Apart from dividend investing, in our Fund Pointer section, we look at the concept of closet investing (a form of passive investing), where mutual funds buy mostly the same stocks as are present in their benchmark index in order to outperform it. Is that a bad thing? Find out for yourself. If there’s one thing you should avoid like the plague, it is MLMs or multi-level-marketing schemes. These schemes are operating in India, right under the nose of regulators and even flourishing! In her Different Strokes section, Sucheta writes, again, in detail about how politicians and regulators turn a blind eye to these schemes even as millions of investors are being conned daily. In Crosshairs, Sucheta talks about the revelations brought up by IAC against HSBC regarding Swiss Bank accounts; yet, nothing has been done. Moneylife has constantly highlighted the shocking cases committed by HSBC in India, including looting of Suchita Krishnamoorthy, a well-known celebrity. Sucheta also laments SEBI’s shoddy surveillance systems and corporate filing which has made it easier for companies, like HSBC, to get away with blue murder. Our petition for awarding the prestigious Bharat Ratna to late Dr Verghese Kurien, ‘milkman of India’, who revolutionised cooperatives and provided livelihoods to millions of farmers, has received terrific response of over 10,000 signatures from all over India. We thank all those who signed the petition. Our twin RTI workshops conducted by Shailesh Gandhi, in November, received fantastic response as well. Two more are scheduled for December. Do take the opportunity to learn from the best. Debashis Basu MONEYLIFE | 13 December 2012 | 10
18 DIFFERENT STROKES
28 Cover Story
15 Stocks with High Dividend Yield
36 Value Picks
13
Mutual funds: Investors continue to flee equity funds, MFs levy more charges, Equity NFOs, Banking: IDBI loses title deeds; penalised; Net payment: Boom Continues; SEBI: SEBI to access call data; RBI: RBI bans banks from lending for gold
16 Current Account Want To Win a Nobel? Eat Chocolate
17 Loose Change Moneylife Quiz; Sound Bites: S Gurumurthy, RSS ideologue; Christopher Fordyce, Regional Commercial Manager (South Asia) British Airways; Surjya Kanta Mishra, West Bengal Opposition leader; Anurag Basu, film maker 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.
RBI has laid down what you can expect from banks, in great detail. Utilise the rules
MUTUAL FUNDS POINTERS
Why do the portfolios of many top schemes have Sensex and Nifty stocks? Are these fund managers closet indexers? If so, should you be worried? Jason Monteiro analyses
– Jammu & Kashmir Bank – Foseco India
14 Your Money
Private sector banks are expensive and State-controlled banks are weighed down by bad loans
Thanks to supportive politicians and shirking regulators, MLMs continue to con millions with impunity
Investing in high dividend yield stocks is a traditional way to make money on the stock market. Here is a screened list of high dividend yield companies which you could consider adding to your portfolio. Analysis by Jason Monteiro & Pratibha Kamath
Draconian IT Act; Godrej Boyce Penalised; Stock Exchange Arbitration; Apollo Munich Charged
Your 55 Know Banking Rights
24 Piggybacking the Index
xSTOCKS
38 Street Beat STOCK PERFORMANCE: Our Report Card
42 Which Way Are market indices reflecting corporate India’s strength?
INSURANCE
Mess Media
44 Medium Term Atul Auto rocketed 14%, Kajaria Ceramics went up 11%, while Shree Cement tanked 3%
Shriram City Union Finance went up 9%, Bajaj Finance moved up 1%, while UltraTech Cement tanked 6%
56 False Information Global Learning – Be Happy, Earn More! – Behavioural bias of regulators!
EVENTS
58 Moneylife Foundation Events
– Life Insurance: IndiaFirst Life Simple Benefit – Life Insurance: Married Woman Protection Act – Extended Warranty: Bajaj Allianz Extended Warranty Plan – Fine Print
– From the advanced RTI Workshop, participants got useful insights for filing RTI appeals
AUTO
48 Discounts Galore Should you buy now or wait till next year?
– Moneylife Foundation members were given a detailed analysis whether gold offers good returns and the safer options for investing in gold
50 Limitations of Science Science is completely dependent on evidence but absence of evidence is not evidence of absence – Pulse Beat: Medical developments from around the world TRAVEL
45 Long Term
EARNING CURVE
46 Insurance Trends
HEALTH
43 Popular Picks
LEGALLY SPEAKING
22 Valuing Bank Stocks
20 Con Quest
Taking Stock
Your Interest
SMART MONEY
for 52 Money Your Foreign Trip You may be going abroad for studies, medical reasons or just for fun. How much money can you carry? Here are the rules, explained in simple terms, by Gurpur
BEYOND MONEY
66 Skin Protection Sunday Friends established a first of its kind ‘skin bank’ to save the lives of victims of burns, diabetics and trauma finds Aditya Govindaraj
DEPARTMENTS Letters............................. 4 Book Review.....................60 Money Facts.....................63