Securities Transaction Tax (STT)

STT is levied on the value of certain transactions. These transactions include the purchase and sale of equity shares, purchase and sale of units of an equity oriented fund, sale of a unit of an equity oriented fund to the mutual fund and sale of a derivative. The rates applicable on different transactions differ depending on the type of security that is traded and whether the transaction is delivery based or not. Further, in some cases the seller is required to pay the tax and in other cases the buyer has to pay (see table below).

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How To Survive In A Bear Market - A Warren Buffett Style

The market has corrected very sharply in the past few days, so I thought it would be useful to consider few ways to survive in a bear market and of course following the Warren Buffett style.

I’ve selected a few quotes by Warren Buffett which makes sense and if you follow that you can survive any bear market.

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If you have invested in the equity markets your investment needs to be continuously monitored. Even if you buy into equity with a long-term view, you still need to assess the performance of your portfolio on a regular basis. To assess the stock performance you need to monitor the performance of the company as well as the industry. You also need to keep in mind the economical, political and global factors affecting the firm. Therefore, take a closer look at the following factors while measuring the performance of stocks:

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Managing investments is a serious business. It can be a time-consuming task, because it requires intelligent planning, continuous monitoring and periodic adjustments. And it can be challenging, because it requires expert knowledge and experience. Equity investment does not provide you the luxury of sleeping over your investment just as would be possible in case of fixed income securities. Indian markets no longer work in isolation. You need to be very well aware of not only happenings of national interest but global issues which affect the future prosperity of your investment. Selecting stocks for one’s portfolio is only the beginning of the investment process. You need to review your valuation metrics to determine which stocks remain undervalued and which are approaching or have surpassed their fair value.

Top-down and bottom-up approaches

Before trying to understand the differences between top-down and bottom-up investing, remember that both of these approaches have the same goal - to find out great stocks. Top-down investing involves analyzing the ‘big picture’. Investors using this approach look at the economy and try to forecast which industry will generate the best returns. They then look for individual companies within the chosen industry and add the stock to their portfolios. For example, suppose you believe there will be a drop in interest rates. Using the top-down approach, you might determine that the home-building industry would benefit the most from the macroeconomic changes and then limit your search to the top companies in that industry.

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