Having a bad day in the stock market ? Meet the forgotten Apple founder who missed out on $35 BILLION after selling his shares for $800 in 1976

The unluckiest man in the world: Meet the forgotten Apple founder who missed out on $35 BILLION after selling his shares for $800 in 1976

• Ron Wayne was one of the original founders of Apple
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• He sold his shares for $800 in 1976 - today they'd be worth $35 billion
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• Wayne left Apple because he found Jobs difficult to work with
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• He describes Jobs as stubborn, cold and argumentative

Ron Wayne was one of the three original founders of Apple in 1976, along with Steves Wozniak and Jobs. Forty-two at the time, Wayne provided much-needed adult supervision in a company of young creatives.

Wayne drew the first Apple logo, wrote the three men's original partnership agreement, and wrote the Apple I manual, but his name is virtually unknown, and in the Ashton Kutcher biopic of Steve Jobs, his role in the tech giant's past is glossed over. 

Wayne, 79, hopes Jobs will reveal that the late design genius' darker side - a side Wayne clashed with and which eventually resulted in him selling his share of Apple for $800.

Wayne founded Apple Computer alongside 21-year-old Jobs and 25-year old Steve Wozniak on April 1, 1976. The three worked together at Atari.

Not even two weeks later, Wayne relinquished his 10 per cent stock share of the company for just $800. Had he retained his company shares, they would be worth $35 billion today.

'I made a decision that allowed me to pursue my interest. I honestly don’t regret walking away at all,' Wayne said.

'I knew the Wozniak design for a personal computer was going to be a successful product. But who could have anticipated it would be what it is today?

'If I had stayed with Apple and accepted the limitations on my philosophy of life I could have well ended up the richest man in the cemetery. I was in my 40s, these kids were whirlwinds. It was like having a tiger by the tail.'

The face-value trap

Consider this: Suppose you are planning to invest in stocks and if you had to choose between shares of two equally good companies from a particular sector, one priced below Rs 100 and the other at Rs 500, which one would you pick? Common sense will dictate you opt for the first one simply because it’s cheap compared to the second one. There lies the pitfall: what looks cheap at first sight may not actually be so. The first company could well have a face value of just Re 1 compared to Rs 10 for the latter. Most investors end up getting the raw end of the deal simply because they do not bother to check the face value of their stock or simply take it to be Rs 10. Out of 5,228 listed stocks, 4,600 have a face value of Rs 10. In other words, one out of every 10 stocks has a face value of less than Rs 10. No surprise then, many small investors face the brunt of this simple miscalculation.

Lookalikes That Aren't
1. Two equally-priced stocks in the market can have very different face values, or vice versa
2. Retail investors often tend to ignore this fact when making price comparisons
3. Face value of your stock is mentioned in nearly all investing websites, including BSE
4. Experts, including those on SEBI panels, argue for making face value uniform across all stocks

Indeed, it’s a growing problem as more small investors warm up to investing in equities. Retail investors usually buy stocks in small quantities. Often, they compare the stock price a company to the price of its peers and make buying decisions. This can sometimes prove disastrous. Let’s take real examples now. Infosys Technologies, Tata Consultancy Services (TCS) and Wipro have different market values and are among the top-tier software companies. Investors would be tempted to compare their stock prices of Rs 1,212, Rs 2423, Rs 557 respectively (as on April 22) and conclude that TCS is more than four times expensive than Wipro, or that Infosys is the second-cheapest stock.

In reality, that’s just not the case. If you adjust the face value of these stocks to their market price, there’s a remarkable difference. Infosys’ adjusted stock price is just 2.1 times more than Wipro, and TCS, it turns out, is actually the most expensive stock. That’s because Infosys has a face value of Rs 5, TCS Re 1, while Wipro’s at Rs 2.

Although, investors should study other parameters like earnings per share and growth potential to arrive at an investing decision, retail investors usually make a price comparison first. At first glance, at its price of Rs 557, Wipro might appear to be more than 100 per cent cheaper than Infosys, but in reality Wipro is 10 per cent cheaper. Such confusion is rare at the institutional investors’ end. Experts like Prithvi Haldea, Chairman & Managing Director, Praxis Consulting, have been calling for a uniform face value for shares. “Face value is not an issue for well-informed investors and institutions. But it is for the small investor who buys at market price, and not at the real value. There should be a uniform face value so as not to confuse him,” he says.

It’s not as if no effort has been made at the policy level to address this issue. In the early ’80s, the Ministry of Finance came out with a guideline fixing the face value of shares in the denominations of Rs 10 and Rs 100 to sort the maze - the Tata Steel share then used to have a face value of Rs 75 while it was Rs 125 for many Ahmedabad-based companies. Since many companies then chose to have a face value of Rs 10, this stuck on most investors’ mindset.

In fact, in 1999, the Securities and Exchange Board of India (SEBI) briefly toyed with the idea of completely doing away with the concept of face value of shares, taking a leaf from the US where companies only have a specified number of shares that change in the event of bonus or rights issues. However, in June 1999, SEBI in a bid to broaden the investor base allowed companies to fix their own face value subject to a minimum of Re 1. Since then, companies have had varying face values. For instance, RPG Life Sciences has a face value of Rs 8, while it’s Rs 4 for IGate Global Solutions. This has led to further confusion at investors’ end.

Companies since then came out with initial public offerings at a face value of Re 1 and other denominations depending on the market conditions. Companies also split their shares to improve liquidity, increase demand of theirmosimage shares from the retail investor and improve the company’s valuations. Says Rajesh Krishnamurthy, Managing Director, iFast Financial, an integrated wealth-management solutions company: “The general reaction from the Indian investor has been to buy more if there is a split. So, a stock split most often leads to an upswing. But a stock split is akin to giving someone a Rs-100 note and asking for two Rs-50 notes. Investors tend to behave as if the two Rs-50 notes are more valuable than Rs 100. But it isn’t logical, is it?” A concomitant area of confusion for investors relates to dividends. Companies so far had been declaring dividends as a percentage of their face value. SEBI recently issued a notification that companies must declare dividends in rupees and not in percentage format. For example, assume company XYZ’s face value is Rs 10 and it declared a dividend of 1,000 per cent last year. From now on, if it maintains the same dividend rate, mosimageit should report dividend per share as Rs 100. This step will help investors know what is the actual dividend received in their hands. But Haldea contends that this will further confuse lay investors. For example, when a company declares a dividend of Rs 100 on a face value of Rs 100, it is the same thing as a dividend of Re 1 on a face value of Re 1. That’s where the confusion lies. “Small investors will not be able to distinguish between the face values and then compare the dividend per share. Further, it will mean more calculations to rework their percentage values,” says Haldea.

Financial advisors are all for having uniform face value (UFV), say, of Re 1, which used to be the case in the ’90s. Says Krishnamurthy: “I am all for UFV. It brings absolute clarity in determining returns and simplifies comparison of any scrip, any dividend declared.” But implementing the same might get a tad difficult. There are many stocks with a face value of Rs 10 that are trading at prices that are in single digits. Says Amar Pandit, a financial planner: “It’s good to have a standard face value, but I am not sure whether it can be practically implemented.” The world over, too many countries follow a standard practice to standardise comparison among companies.mosimage

In the complex world of financial products, it just does not get any simple for the retail investor. If all goes well and if the uniform face value becomes a reality, then things might get a little easier. For now, it’s always better to do your homework before buying a share, and the best place to start is by knowing your company’s face value and how it affects the finances of your company. Another area to focus on is to compare the dividends paid to the face value. This will determine what the company is paying to you. You can also compare it to the market price of the stock, to find your investment’s true dividend yield

True inspiring story of a physically challenged lady trader who made 6 lakh in a single day

Sujata Burla’s life took an ugly turn on June 9, 2001. On a pilgrimage to Shirdi, where the Sai Baba temple in Maharashtra is located, from Hyderabad, she met with an accident.

Four months later, the doctors and physiotherapists treating her told her she could not walk for the rest of her life. The accident had turned her into a paraplegic. It meant Sujata was immobile below the shoulders. She was just 21.

Soon people who she thought were her friends abandoned her and Sujata was left alone. Compounding her tragedy was her father’s death in March 2004. Not one to be easily cowed down by her circumstances, she started learning about the stock markets that year.

Now she trades like a pro and earns anywhere between Rs 200,000 and Rs 250,000 every month. On a day like Wednesday, September 19, 2007, when the Nifty was up 186 points, Sujata made a cool Rs 600,000 in a single day. She has still not sold her position.

“I expect the Nifty to touch 4800 in the next two, three trading days. I will sell my position then,” Sujata told this correspondent in a telephone conversation from her home in Hyderabad.

Sujata moves around in a wheelchair and does not regret this fact. Financial independence is what she strove for and that is exactly what she has got through sheer determination and discipline.

How do you cope with such a trauma?

Before, I could not even write or type. Now I have got used to it. I can easily type and trade on my computer and laptop.

In the first four months after my accident I did not even know I would never be able to walk again. I went into a depression feeling that this was the end of life for me.

Does your condition make you dependent on others?

I am the kind of person who doesn’t like to depend on anybody — whether financially, physically or mentally. So, it was very tough for me to physically depend on somebody. I soon realized that financial independence could get me much more freedom in life.

So I started thinking how I could earn money. I worked with my sister, who is a fashion designer, and learned a bit about it. I soon started a textile workshop where I employed 10 people. However, the workers took undue advantage of my physical disability leading to losses. I closed my workshop and moved towards stock market trading.

How did you get into the stock markets?

I realized that if at all I have to succeed in life I would have to do something for which I don’t have to depend on anybody. Through a friend of mine I came to know about the stock markets in 2004. It took me almost a year to understand the various nuances of the stock market and it was in 2005 that I actually started trading.

What was your first trading/investment experience like?

My first investment was in blue chip companies like Reliance Industries, Hero Honda, ACC and IDBI. However, the Rs 100,000 that I invested did not earn me any returns. It was my first investment and I did not know when to sell or the right time to sell my stocks. That learning experience helped me to hone my skills in the stock markets.

How much do you make from trading in stocks now?

My turnover for a month is over Rs 3 crore. But my actual investment is only Rs 15 lakhs. I make anywhere between 10 to 15 per cent per of this investment per month. It is like I earn 20 to 30 per cent sometimes and lose 10 per cent at other times. This takes my average monthly return to 10 to 15 per cent every month of my total investment of Rs 15 lakhs.

Could you share your success mantras for our readers?

* Read all the advice that you get from various business television channels, newspapers, friends who understand the stock markets but be extremely cautious and disciplined when you act on this advice.
* Never extend your trading bets beyond your means. I speak to my friends; get investment and trading ideas from my brokerages (she is registered for online trading with Reliance Money, Indiabulls and Kotak Securities).

How would you identify yourself as a stock market player?

I am a short-term trader; I am surely not a long-term investor.

Do you trade intra-day?

Well, if my bets appreciate considerably then I take home my profits on the same day. Otherwise, I wait for my investments to bear at least 7 to 8 per cent returns before I actually sell it.

Intra-day trading, though, is very risky as most traders tend to burn their fingers trying to time the market. And I have lost quite a bit of money trading intra-day in the cash market, believe me.

How much have you deposited with all these brokerage companies?

As I told you earlier, my total deposit with all the three brokers is Rs 15 lakhs. Using this amount I buy Call Options within my overall limits. There is no concept of margin money in options. Whatever money I have earned till now is only through Option trading. You can do risk-less trading in Options using a small amount.

As a safe strategy I never write a Put Option. Put Options are very risky. That way I am a very safe trader. In Puts I can even make 50 per cent a month on my investments; but then I can lose the same amount too. My principle is if I make money I make it; I shouldn’t lose money at all.

I usually write a Call Option on the Nifty. I am always long (buying first and then selling at a higher price to make profit) on the markets and whenever the market is too overbought I wait for the markets to cool down.

The last two days turned out to be very good for the stock markets. How much did you make in these two days?

Actually, it is celebration time for me. I made 80 per cent returns today (September 19, the Nifty was up 186 points or 4.09 per cent). Most of the Nifty Calls went up by 80 per cent today. However, I did not invest the entire Rs 15 lakhs because I am sitting on a bit of cash as the markets have run up too fast in the recent past. I invested only 50 per cent of Rs 15 lakhs on which I made an 80 per cent return (Editor’s note: That’s a cool Rs 600,000; don’t rub your eyes in disbelief; you read it right!).

However, there are times when I lose a big amount of money in trading. Such gains happen only once in a lifetime. The losses that I make during the year sort of offsets such gains.

But remember that these things don’t happen every other day. I have still not booked my profits. I am still holding on my positions. I plan to sell them after a day or two because I feel that the markets can still go up — at least for the next two, three days — based on the strong momentum. I am expecting the Nifty to go up to 4800 at least.

Actually, the target given by one of my brokerage houses is 4900 but I am going to book profits at 4800 levels. Too much greed is also not good, is it?

Moreover, it is the festive season and Diwali is just round the corner. Normally, the markets go up during Diwali. There will be some profit booking (a situation when a trader sells her/his stocks at a profit) tomorrow and the day after that but the general mood is likely to remain bullish till Diwali. I don’t expect a market crash or correction till Diwali.

Do you stay with your family?

I stay with my mother and cousin Priya. My father passed away on March 20, 2004. I have a sister and two brothers but they are all married and lead separate lives.

Do you have friends?

Before the accident I had many friends but they all ran away after my accident. They were all false friends. People like this go where there is money, success and happiness. People like these don’t chase failures.

After my accident I have a different set of friends. I have a few friends now but they are my true friends. They have been with me through my bad times. They really care for me.

Panama Papers explained

Panama Papers explained

When you get a quarter you put it in the piggy bank. The piggy bank is on a shelf in your closet. Your mom knows this and she checks on it every once in a while, so she knows when you put more money in or spend it.

Now one day, you might decide "I don't want mom to look at my money." So you go over to Johnny's house with an extra piggy bank that you're going to keep in his room. You write your name on it and put it in his closet. Johnny's mom is always very busy, so she never has time to check on his piggy bank. So you can keep yours there and it will stay a secret.

Now all the kids in the neighborhood think this is a good idea, and everyone goes to Johnny's house with extra piggy banks. Now Johnny's closet is full of piggy banks from everyone in the neighborhood.

One day, Johnny's mom comes home and sees all the piggy banks. She gets very mad and calls everyone's parents to let them know.

Now not everyone did this for a bad reason. Eric's older brother always steals from his piggy bank, so he just wanted a better hiding spot. Timmy wanted to save up to buy his mom a birthday present without her knowing. Sammy just did it because he thought it was fun. But many kids did do it for a bad reason. Jacob was stealing people's lunch money and didn't want his parents to figure it out. Michael was stealing money from his mom's purse. Fat Bobby's parents put him on a diet, and didn't want them to figure out when he was buying candy.

Now in real life, many very important people were just caught hiding their piggy banks at Johnny's house in Panama. Today their moms all found out. Pretty soon, we'll know more about which of these important people were doing it for bad reasons and which were doing it for good reasons. But almost everyone is in trouble.

What if, you dropped the plan on buying ‘Royal Enfield” in 2001?

What if, you dropped the plan on buying ‘Royal Enfield” in 2001? See the below calculation, you will be surprised to see what your multibagger pick makes you, if you spot them at right time and hold it tight!!

On September 2001 :

Share Price of Eicher Motors on September 2001 = Rs. 17.50

Price of Royal Enfield bike in 2001 was Rs.55000/- . You would have bought 3143 shares of Eicher Motors : (Rs. 55000/ Rs 17.50 (share Price) = 3143 Shares)

On 19-Jun-2015:

Eicher Motor’s Share Price as on 19th Jun 2015 is ~Rs. 19,400 (Just for 1 share)
Total value as on 19th Jun 2015 = 3143 x 19,400=  ~6 Crores

Siddhartha Lal  The Bulletproof man

The twin credit for building a rugged bike as well as enormous value for shareholders goes to Siddhartha Lal, MD and CEO, Eicher Motors. In some ways, it all came to one big decision Lal took based on his love for Enfield. It was 2004. Lal was 30 and had just taken over as COO of Eicher group. The group had a diverse spread of about 15 businesses including tractors, trucks, motorcycles, components, footwear and garments, but none was a market leader.

Lal undertook an intense portfolio analysis and took a hard call. He decided to divest 13 businesses and put all money and focus behind Royal Enfield and trucks, two businesses where he believed the group had a genuine shot at leadership. "In my mind the basic question was this: do we want to be a mediocre player in 15 small businesses or just be good in one or two businesses," recalls Lal.

"That's why we sold 13 out of the 15 businesses, the big one being tractors to TAFE. We removed the clutter and focussed on two promising businesses." Back then, conglomerates viewed businesses as family jewels. It was a cardinal sin to sell anything. But Lal sold almost everything. "Many did think Eicher was going out of business," recalls Lal. "Motorcycles was the joker in the pack," says Lal, referring to the portfolio of businesses he inherited. It was also his pet business. "I did the mathematics, projections and all we needed was to get the motorcycle business to the next level (in terms of sales)."

Decision made, Lal put his full weight behind Royal Enfield and the trucks business. A decade later, Eicher Motors earns over Rs 8,738 crore in revenues and makes a net profit of Rs 702 crore (FY14). Royal Enfield brings in about 80% of these profits.

This is a case of passion leading to profits. "Siddhartha Lal is Royal Enfield's biggest asset," says RL Ravichandran, who was CEO of Royal Enfield for five years from 2005 and continued on the board of Eicher Motors till December 2014. "He is an authority on British bikes of the post-World War era as a historian, a follower and a hands-on rider," he adds.

Eicher Motors' stock prices have shot up from Rs 224 in 2006 to Rs 15,612 now.

"The stock price rise is fully justified by fundamentals. The company has no debt and it redeploys money into further expansion and product innovation," says Raamdeo Agrawal, joint managing director of Motilal Oswal Securities. Adds Ambrish Mishra, director (research), JM Financial Institutional Securities: "Performance has consistently surpassed analyst expectations over the past five years.

Royal Enfield has successfully capitalised on growing customer preference for leisure biking through product differentiation, strong brand positioning, capacity buildup and rapid network expansion."

The long climb up

In 2005, the company was selling only about 25,000 bikes every year. "I was clear that it would be an amazingly profitable business," recalls Lal. But the company needed manufacturing scale. Fixed cost had to be spread around 100,000 bikes. "This set the building blocks for the next decade," says Lal.

He focussed on Enfield first, leaving trucks for later. Lal engineered and improved Enfield bikes by riding hundreds of kilometres himself. He also initiated a motorcycling culture in the team. Ravichandran says Lal always leads from the front. "He is both passionate and practical and has a deep sense of understanding of what separates Royal Enfield from the other brands," he adds.

Under Lal, as quality improved, sales grew too. By 2010, the company was selling 50,000 bikes, but on three platforms. That was when Lal decided to build all Enfield bikes on a single platform to maximise economies of scale. The Enfield Classic, launched from this single platform, caught the fancy of customers. Sales shot up six times in half a decade from 50,000 units in CY10 to 300,000 in CY14. Now, the target is 4,50,000 units in CY15.

"By becoming smaller (selling businesses and one engine platform) we have become bigger," says Lal. Now, Lal is ready to shift gears and drive into international markets. The company exports a mere 6,000 bikes annually, but Lal believes Royal Enfield can be a sizeable player in international markets a decade from now. He is already doing some strategic hiring with this goal in mind.

Rod Copes, a former Harley Davidson manager has been hired as president of North America (based in US); Pierre Terblanche, head of the industrial design team was snagged from Ducati; James Young, head — engines has worked in Triumph, and was hired in UK. Simon Warburton, head — product planning and strategy (new projects) also comes from Triumph. Mark Wells, head — programme (new projects) and Ian Wride, worked on Enfield's Classic and Continental GT models while they were with the design firm 'Xenophya.' Both have now joined Royal Enfield at its UK tech centre. Lal also realises that good marketing is as important as fine engineering. Which is why he recently hired Rudratej Singh from consumer business giant Unilever. Singh joined as president in January 2015.

Lal draws inspiration from global brands. Two of the most studied examples are the Mini Cooper and Porsche, both of which are very focussed and conscious about not diluting core DNA.

When Lal was a student in the 1990s in the UK, small cars were poorly designed when compared to the mid-size and larger cars. Then came the Mini, which changed the paradigm and made small cars really fun to drive. "That's what I want from Royal Enfield — to make mid-weight motorcycles fun to drive, yet retain its DNA," he says. "Royal Enfield is not bought for pure acceleration nor for fuel efficiency, but it has a stature and legacy," says former CEO Ravichandran. "There are no bells and whistles associated with it, but there is purity and purpose built into it."

From bikes to trucks

Lal turned his attention to trucks in 2006 after turning around Royal Enfield. The group pushed hard for a breakthrough in the truck business. The ambition wasn't to be a good No. 3, but challenge No. 1. "We figured that we had the brand, but didn't have financial muscle, technology and the distribution. It was an uphill task." He struck an alliance with Volvo, which also brought in equity.

"As Eicher plus Volvo, we can do much more than what Eicher could do alone," he says. "I would rather have half of a much larger pie." Eicher and Volvo hold 54.4% and 45.6% respectively in the joint venture VE Commercial Vehicles (VECV). This alliance too has led to shareholder value creation.

"VECV too managed to create a world class portfolio in medium and heavy trucks through the pro-series range. This will contribute to the overall growth in the next few years," says Mishra of JM Financial Institutional Securities. Market experts also believe that Volvo will have to pay a substantial premium if it wants control of the business, resulting in windfall gains for shareholders of Eicher Motors. "This is reflected in the stock price of Eicher Motors," one analyst says.

Lal says share price is an animal he does not understand. "What could be a flavour of the day, may not be tomorrow. We need to do well and maintain fundamentals," he says. Shareholders won't complain. As long as Lal takes care of the bikes, share prices will take care of themselves.