Saturday, August 12, 2017

What Stocks to Buy in August 2017?

Three Bright Youngsters Celebrating Youth Day and Eager to Know What Stocks to Buy in August

Investors are curious to know at the beginning of every month what stocks to buy. They are looking to experts for credible stock tips/ stock recommendations. Stock News is filled with innumerable stock tips whose credibility is suspect. In order to quench the genuine thirst of the investors to know what stocks to buy, every month I communicate the best stock picks for the month, in which I have personally invested, companies which have a sustainable business model

This month we have liberalized the rules for buying stocks a bit.


The market is sizzling and making stocks highly expensive across the board, and if we don’t loosen a bit we will not be able to:
  1. Buy anything
  2. Do justice to some of the good stocks that had suffered price hammering in the global commodity markets.
We have set a liberalised yet strict rules such that besides being a member of our ‘Portfolio 2K15’, the stocks shall satisfy the three criteria prescribed below:

  1. The Price to Book Value (P2BV) Ratio shall be less than 1.50. This means we will allocate money to a stock under this rule to only those stocks that are available at or at a discount to the price to book value ratio of 1.50. This is liberalization from a stringent 1.00 earlier.
  2. The Price to Earnings (PE) Ratio shall be below 15. This is again liberalization from the tough hurdle of 10 earlier.
  3. The product/ combination of PE*P2BV shall be less than 22.50 (1.5*15)
  4. The Dividend Yield shall be more than 0%. However, a mere good dividend yield is not sufficient. In addition, the stock must have passed at least one of the three previous tests. Meaning if the share proves expensive under the P2BV, PE and PE*P2BVcriteria, it is ineligible for allocation merely on the grounds of an attractive dividend yield.

The total investable sum is taken as multiples of 10,000, that is Rs.20,000, 40,000 or 120,000 and so on, depending on the investible surplus available with the investor.

The basic unit of 10,000 is equally distributed among the four criteria at Rs.2,500 each or multiples thereof.

Summary of Stocks to Buy

This August 2017 all the stocks constituting our Portfolio 2K15 qualified, however MOIL Ltd., though managed to qualify after many months, could not earn enough allocation even to buy a single share!

Table of Stocks to Buy in August 2017 Final List

Stock Analysis Based on Price to Book Value Ratio

Let us examine the eligible candidates separately under each of the three criteria in detail Price to Book Value (P2BV) Ratio:

Table of Stocks to Buy in August 2017 Price to Book Value Ratio List

Stock Analysis Based on Price to Earnings Ratio

Table of Stocks to Buy in August 2017 Price to Earnings Ratio List

Stock Recommendation Based on PE x P2BV Criterion

Table of Stocks to Buy in August 2017 PE x P2BV Ratio List

Stock Pick Based on Dividend Yield Criterion

Table of Stocks to Buy in August 2017 Dividend Yield Based List


In conclusion the answer to the question what stocks to buy this August 2017 is that the above described 13 stocks constitute the credible stock recommendations from my side that can be bought in the month of August 2017. MOIL Ltd., though qualified could not muster enough allocation even for buying a single share.

Second Income

Investor Riding a Currency Note, happy with second income or extra income

Meaning of Second Income

Second income means the extra income or additional income that complements one's primary source of income. It could be an active income or a passive income

It is quite possible that a man who has a 9 am to 5 pm job may take up a second or part-time job as a shop assistant from 7 to 10 pm to augment his main and regular pay.

However in the context of attaining financial freedom - the situation which all of us invariably crave, whereby we do not have to work for a living - the meaning of second income always denotes passive income or residual income.

In this article henceforth I use the expression second income only to mean the passive income.

Examples of Second Income

Examples os Second Income: Share with Dividend; House with Rental Income; Bond and Interest Income
  • Interest - from savings and fixed deposits and bonds
  • Dividend from stocks, shares and mutual funds
  • Royalty on sale of a book or a music album
  • Rent from immovable properties

Importance of Second Income

A second income is beneficial in innumerable ways, including:
  • It supplements the primary/ regular/ main source of income
  • It helps to take an extra vacation without a feeling guilt
  • It boosts the capacity for savings and investment
  • If reinvested, the second income helps generate further second income, setting in motion a perpetual cycle of income, investment and more income, accelerating the path to financial freedom and getting rich and wealthy

flowchart of perpetual second income cycle

  • Usually passive second incomes accrue while you are sleeping/ resting
  • In case a person becomes incapacitated to keep-up the main job passive second income springs to the rescue
  • Only second incomes lead to financial freedom and eventually wealth and riches

Second Income Accrues When you are Asleep

Invariably passive second incomes accrue even while the individual is resting or sleeping. Interest accrues 24 hours of the day, irrespective of whether you are working, holidaying, sleeping or resting. 

Similarly if you have written a book or cut a music album a copy could be sold in any part of the world even while you are sleeping.

Rent too accrues based on time and not based on use.

investor's exuberance at 24x7 rain of second income

But the income from your regular day job will accrue only when you are able to work/ exert. If you become incapacitated to work, you will loose the job and your regular/ main stream of income. Thats why people should invest money in stocks and bonds which work for you 24 hours of the day.

Therefore it is smart to explore second income opportunities. Those who are talented - authors, musicians, actors, etc., should target royalty income. Others should maintain a simple lifestyle, save, invest and generate second incomes in the form of interest and dividends.

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Second Income/ Extra Income/ Passive Income/ Residual Income is vitally important for every person who is aspiring for a life where he or she is not bound to work for a living. Talented individuals should explore generating royalty kind of second income while for the others prudent and well considered investments is the only option. Rich and wealth have perfected the art of reinvesting second incomes for further generation of more passive incomes.