Revealed: The world's cheapest stock markets

Source: Telegraph UK
Hat tip: Barry Ritholtz

Cape ratio - P/E ratio with a twist. Instead of using earnings over 12 months, this valuation measure takes the average earnings figure over the previous 10 years. In doing so the Cape ratio strips out short-term anomalies. 

Click on the chart for bigger version.

Weekly Market Commentary - June 2, 2014 - June 6, 2014

Another week of record highs on Indian bourses. Sensex and Nifty are moving up as bears struggle to find any negative catalyst to put a brake on upward journey.

Modi govt has taken the complete charge of New Delhi and is urgently seeking to reboot the economy. It has initiated and publicly announced its intentions to completely overhaul the existing structure of subsidies and doles and get fiscal house in order.

All eyes on budget session now; which will begin in first week of July.

Sensex ended this week up by 4.9% while Nifty was up by 4.9% and Midcap up by 8.0%

Monday - Sensex up by 1.9%, Nifty up by 1.8%, Midcap up by 2.2%
Sensex and Nifty gained as PSU banks rallied on hopes the govt will rationalize the shareholding structure by selling some of its holdings. Investors seems to have shrugged off release of another sub-5% GDP growth numbers as they keenly await RBI’s policy review meeting on Tuesday.

Tuesday - Sensex up by 0.7%, Nifty up by 0.7%, Midcap up by 0.9%
Key benchmark indices gained as RBI held rates steady and toned down its hawkish stance hinting at a rate cut in coming review meeting. RBI also allowed more funds into the system for lending by cutting down on SLR by 50bps. Sugar stocks rallied on expectations that govt might push blending ethanol in petrol and increase the import duty to support local prices.

Wednesday - Sensex down by 0.2%, Nifty down by 0.2%, Midcap up by 1.6%
Sensex and Nifty retreated from their record closing highs as IT companies fell on concerns of stronger rupee. Rupee has gained around 4% so far this year and is among the best performers among the Asian currencies. Fertilizer stocks rallied on hopes that the govt will soon clear outstanding subsidy payments. Insurance companies also some rally on the expectations that govt will raise FDI limit to 49% from 26%.

Thursday - Sensex up by 0.9%, Nifty up by 1.0%, Midcap up by 1.4%
Sensex and Nifty made another record closing high as resource stocks led by Sesa Sterlite gained on positive momentum based on revival of Indian economy.

Friday - Sensex up by 1.5%, Nifty up by 1.5%, Midcap up by 1.7%
Another day of record close high of both Sensex and Nifty. Investors continued to stay bullish over the policy reforms (about to be) initiated by govt. FIIs continue to invest heavily in Indian markets with total purchase so far being $8.3bn this year.

A Diversified Fund

Hat tip: Alpha ideas

Madhav Marbles - Part II

"I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime." - Jim Rogers in Street Smart

There is no doubt that Jim Rogers is one of the best minds on investing we know as of today. He has authored several books sharing his investment philosophy with millions of readers worldwide. He is there on top of my people-whose-advice-I-follow list, right on top with Warren Buffet and Seth Klarman.

What Jim Rogers is essentially saying is what Warren calls "waiting for a sweet pitch" or time "when you can buy a dollar for forty cents". Seth has elaborated on this concept in his book Margin of Safety. He advices his readers to be patient and wait when Mr. Market throws you a deal too hard to resist. And when it does, you go all in.

"The greater the undervaluation, the greater the margin of safety to investors" - Seth Klarman

I intended to write just an update to my earlier blog post on Madhav Marbles. I attribute this pick (too early?) to Peter Cundill's successful strategy of balance sheet investing and ideas and teachings of legendary investors mentioned above.

Mr. Market in its all glory and excitement sometimes throws up a company which is trading way below its liquidation value. You can easily buy the company, sell off the assets at a discount, pay off all the liabilities in full and still have lot of cash to spare.

Madhav Marbles is one such stock in my view. A stock that is so clearly undervalued in the current market - it is neat money just lying there in the corner to be picked up.

I am attaching the updated tables for FY14 results for my readers to see. It is obvious that the stock - though has gained 50% in last four months, is still trading below its liquidation value.

You can read the first part of the post here: Madhav Marbles - Value Buy or Value Trap

Disclaimer: Invest at your own risk, you can lose money on a misprint :)