TWITTER- GOOD OR BAD EXPERIENCE ?

Here’s the argument – the only argument, really – for paying more than $40 for Twitter. The global advertising market in 2013 is worth a bit over $500bn, according to ZenithOptimedia and various other industry observers, and it is growing at a mid-single digit rate annually. Advertising at the biggest western social networking companies – Facebook, Twitter, and LinkedIn – total a bit under $7bn during the past 12 months. So these companies, which have a billion-and-a-half active users between them, collect about $1 out of every $100 spent on advertising. That’s nothing.

So let’s try and imagine the world in, say, five years. If these three companies by then are collecting just $5 out of every hundred dollars, they will have captured a revenue pool of $29bn. If you suppose that Twitter gets just a fifth of that (supposing, that is to say, that it takes some share from Facebook) it will have annual revenues of $6bn. Now, Twitter’s variable costs are very low. So at that size, half the money that comes in the door could turn into cash profits. In that kind of a future, the company could be worth $60bn. So valuing it today at $30bn or so – what a $40+ price implies – makes sense. Right?

Maybe. Consider three objections:

How much advertising inventory can a social network – however large – carry? Facebook has said that it does no plan to increase the volume of ads in its users “news feeds,” or running ticker of updates from friends, from where it is now.

Advertising takes many forms, but all of them (whatever ad sellers might say) create friction for users. When imagining $7bn turning into $29bn, think on this.

Second, will advertisers decide the best way to deploy social networks is by buying ads from them? Coca-Cola has 2m followers on Twitter. The company pays nothing for this.

Finally, do ads on social networks work? Facebook’s astonishing results in the past few quarters show that advertisers are piling in – especially on mobile devices. But advertisers are, in essence, in the midst of an experiment that has been running for only a year or two. At some point they, and investors, will pause to assess whether it is working.

POSITIVE & NEGATIVES OF THE WEEK

Positives:

BLS said the US economy created 204k net jobs in October, 212k of which came from the private sector

2. Dow Industrials made an all-time closing high.

3. GDP grew at a 2.8% annualized pace in Q3 v expectations of 2%.
4. Twitter successfully became the second largest internet IPO, w/o incidents similar to a company who shall not be named. ( * cough FACEBOOK cough * )
5. The ECB unexpectedly (lol) cut rates, because we haven’t had enough central bank rate cuts yet.
6. October US ISM non-manufacturing PMI comes in at 55.4 v expectations of 54
7. U.S. initial jobless claims fell 9k last week.
8. UK service sector PMI came in at 62.5, the best reading since 1997.
9. The European Commission said the economy is expected to grow by 0.5% in the second half of the year, and will be flat for the whole year (glass half-full, sue me).
10. German September factory orders came in at 3.3%, crushing expectations for a .5% gain.

Negatives:

1. Strong economic numbers this week led to fear of tapering. Thursdays candle on the S&P 500 engulfed the previous 9 days, here we go again.
2. Investors Intelligence sentiment data is hitting extremely low numbers of bears (Contrarian bearish). Spread between Bulls & Bears is highest since April 2011 which was the high tick in the S&P 500, leading to ~20% correction.
4. Thursday’s breadth in the S&P 500 was the worst since the Summer, internals look susceptible to further downside action.
3. Initial Jobless Claims total 336k, in line but last week’s revised up by 5k to 345k. 2 clean reports average most since July.
5. U.S. MBA mortgage application index fell 7% last week.
6. German IP in September falls .9% m/o/m vs the estimate of no change and French IP falls for the 4th month in the past 5.
7. Toronto’s mayor admits to smoking crack.

FUTURE OF INDIAN ECONOMY

INDIA is likely to become the third largest economy by 2030 behind China and the USA, a Standard Chartered report said while projecting that the world is in the midst of an economic "super-cycle".

A super-cycle is a period of historically high global growth, lasting a generation or more, driven by opening up of new markets, increasing trade, high rates of investment, urbanization and technological innovation

India is likely to be the third largest economy with a GDP size of USD 15 trillion by 2030, says Standard Chartered's Super-Cycle Report. China with a GDP of USD 53.8 trillion is projected as the biggest economy, followed by the US at USD 38.5 trillion.

Though slowdown in some major emerging economies is a concern, a modest set of reforms could trigger a growth revival in several large emerging economies, including China, India, Indonesia, Nigeria and Brazil, it said.

Indian policy makers appear to be responding to the concerns, with monetary policy now firmly signalling an anti-inflation stance and measures being taken to address the funding of the large current account deficit, the report said.

"We also remain optimistic that the focus on reforms will pick up speed once the election cycle is out of the way," it added. General elections are due in May, 2014.

Stating that "the super-cycle is transforming the world economy," the report said the share of emerging market economies could rise to 63 per cent of world GDP by 2030 from 38 per cent today.

Economies with growth rates of over four per cent - primarily emerging economies - now account for 37 per cent of the world GDP, up from 20 per cent in 1980. Their share is set to reach 56 per cent by 2030, Standard Chartered said, adding that Asia (excluding Japan) is likely to account for two-fifths of global GDP by 2030.

"World trade could quadruple in value terms to USD 75 trillion by 2030. Urbanization and the growth of the middle classes, especially in Asia, are the driving forces," it said.

"We expect global growth to pick up in 2014-17 as emerging markets implement reforms and developed markets finish restoring balance sheets. Global growth is set to average 3.5 per cent for 2000-30, well above the 3 per cent rate for 1973-2000," it said.

TEN GOLDEN RULES FOR STOCK MARKET

1. Markets tend to return to the mean over time

2. Excesses in one direction will lead to an opposite excess in the other direction

3. There are no new eras — excesses are never permanent

4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways

5. The public buys the most at the top and the least at the bottom

6. Fear and greed are stronger than long-term resolve

7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names

8. Bear markets have three stages — sharp down, reflexive rebound and a drawn-out fundamental downtrend

9. When all the experts and forecasts agree — something else is going to happen

10. Bull markets are more fun than bear markets.

TRADING LEVELS FOR NIFTY AND SENSEX FOR THE WEEK STARTING 28TH OCTOBER 2013

The short term trend deciding level is 20371. One can buy on declines

As long as 20370 holds. The sensex can attempt to move higher to

21300, and 22540. The short term outlook will turn negative if the

Index closes below 20000. The medium term outlook for the index

turned positive when the index reversed from low of 17449. We will

Stick to the target of 21300 & 22540 till 19950 holds.

The NIFTY recorded an intra week high of 6252. Key support for the

Week is 6045.  The support below 6045 are placed at 5980 & 5917.

The short term trend will reverse lower only on a close below 5917.

If the nifty manages to hold 6045 next week then it can rally up to

6252, 6340, & 6385. The medium term trend will not be threatened

till NIFTY goes below 5800.

COMMITMENT

Becoming a successful investor/trader requires hard work. You must get to know yourself intimately because you are the source of your trading performance. You must develop a business plan to guide your trading. You must develop and test three or four strategies that fit within the big picture (as you see it) and then become part of your business plan. You must do your homework every evening. You must follow certain disciplines during the day that we call the ten tasks of trading. And all of this requires a lot of time and energy. And in my experience, it is only the people who are really committed who will put in the work necessary to 

GOLDEN ONE LINERS FOR STOCK TRADERS

1. Train with deadly seriousness.

2. Educate yourself.

3. Be vigilant.

4. Take away emotion.

5. Be your sternest critic.

6. Feel your way to a win.

7. Be Patient.

8. Don’t be afraid to lose.

9. Know your strengths and weaknesses.

10. Lead a healthy life and diet.

11. Get good sleep.

12. Have a good breakfast.

13. Know your opponent’s strengths and weaknesses.

14. Give no quarter.

15. Choose a favorable battle ground.

16. Play to win, and don’t be content with a draw.

17. Master deception.

18. Know all the tools in your arsenal.

19. Clear your mind from distractions.

20. Don’t talk during a game, but do walk before.

21. Play the type of game you are suited for.

22. Beware of doing the same thing often.

23. Attack the weakest points.

24. Don’t be too eager to break the tension.

25. Centralize your forces.

26. Be wary of taking small gifts that distract you from the main chance.

27. Never say die.

28. Don’t hurry.

29. Give yourself flexibility so that you can win in two ways.