Stocks for the long and short term portfolio

[jamit_05]

Hello Toocool,

There is no plan B. We are convinced that buying in a crash ONLY is the only way to go forward. Once that happens and till the market remains in the buy range and you have exhausted all your funds, you keep doing a SIP in stocks till the buying favours. a point will come when no more buying is allowed where you stop doing the SIP in stocks and start buying FDs.

To sum it up

1. Check market valuations.
2. If market is expensive keep doing FDs every month.
3. When buying favours, buy the short listed stocks from the money that is allocated in FDs at various intervals as per the valuations. This typically happens in nifty PE range 10-12
4. When the entire pool of money is invested in stocks and still buying favours, to SIP with that portion of the money you earn every month from salary which you will allocate to stocks. SIP can be done till nifty PE is under 15.
5. When the PE goes above 15, stop the SIP and start the FDs.
6. When the valuations reach unbelieveable levels (typically above nifty PE of 25) sell the portfolio at various levels and park the entire money in FDs and wait for the next crash.
7. You will not know when the next crash will come, you just know that it will come. Till that time, you earn FD returns instead of savings returns which are peanuts.
8. Just like Amit, I have been waiting for the past 4 years to enter stocks and the FD amount is growing but I am not bothered.

my 2 cents
Regards,
ptk

I am convinced with the PE ratio approach. It gives a good idea of its oversold/bought status.

However, if one has purchased correct stocks, then even while Index looks overbought some of your stocks will continue their upward journey, due to their ever growing EPS, Free cash flow (owners earnings) etc. Knowing the qualify of each stock in ones portfolio becomes important.

 

[ptk]

I am convinced with the PE ratio approach. It gives a good idea of its oversold/bought status.

However, if one has purchased correct stocks, then even while Index looks overbought some of your stocks will continue their upward journey, due to their ever growing EPS, Free cash flow (owners earnings) etc. Knowing the qualify of each stock in ones portfolio becomes important.

You are absolutely right. I have reached the stage that I know when to buy based on nifty PE. But I had no idea what to buy. This is where your thread has helped me immensely. It also gave me confidence that this is certainly the way to go about investing in stocks.

I discussed about this with many friends but it doesnt seem to click them. To this date, I dont have any friend with whom I share this thought and we are together in the same boat types...this is where you have helped me immensely.

Many thanks Amit!!

Regards,
ptk

 

[jamit_05]

You are absolutely right. I have reached the stage that I know when to buy based on nifty PE. But I had no idea what to buy. This is where your thread has helped me immensely. It also gave me confidence that this is certainly the way to go about investing in stocks.

I discussed about this with many friends but it doesnt seem to click them. To this date, I dont have any friend with whom I share this thought and we are together in the same boat types...this is where you have helped me immensely.

Many thanks Amit!!

Regards,
ptk

I am glad that this thread is able to help. I make important posts only after decent amount of research and confirmation from other like minded investors.

About the PE-type investment, I think you will thrive if you purchased Niftybees. This type of index investing will definitely beat the benchmark indices. But, that will be like eating only half the pie.

 

[ptk]

I am glad that this thread is able to help. I make important posts only after decent amount of research and confirmation from other like minded investors.

About the PE-type investment, I think you will thrive if you purchased Niftybees. This type of index investing will definitely beat the benchmark indices. But, that will be like eating only half the pie.

Yes, initially I had thought that I will buy 50% niftybees and the remaining 50% stocks I will buy form the index. But in this way I will not be able to beat the index. I have seen many stocks have a higher beta than nifty (rise and fall more).

Hence the search was on to find stocks which will be good investments in good times. I had figured out the timing part but not the "which stocks" part. But now with this thread of yours I will be all in when the timing arrives and I am sure you will always be there to help.

Regards
ptk

 

[sridhar]

I will admit, it is tough. Really really very tough to go all in in times such as 2008 crash. It is theoretically easy, but better said than done.

I have never before been as prepared as I am now. I intend to grab my once-in-a-decade kind of opportunity to be Financially liberated, with both hands and a heart full of courage.

rgds

Basically 2008-2009 was an abberation. It was due to panic selling by FIIs as their parent firms in the west were literally fighting for survival & needed any cash they could lay their hands on. Also a lot of European & Japanese funds had entered the market in the last months of 2007/ start of 2008 & they burnt their fingers doubly. First their purchase price was too high & they suffered due to rupee value cracking in 2008.

We had started selling from the point sensex crossed 18000 sensex that year. Interestingly at the peak we noticed very thin volumes. So the last 2-3K sensex was just MayaJal. Did not sell all that we should have liked to' based on tax considerations - that was a mistake I agree. Did not gather the courage to buy at the absolute bottom but did start buying again at 9000 sensex.

A lot of our purchases of that time are languishing now but we hope to turn a profit in the years to come.

Another point- 100Rs. price of 2008 low is equal to at least 130-140 Rs. price today considering inflation. So all of you need to factor that into calculations of entry prices.

My wife has observed a lot of good buying in scrips at 5200 levels during Sept 2013. Non index stocks are still down but we are noticing some life & buying interest patterns in many good scrips.

So possibly the best stratergy is to accumulate at every dip with a 5-7 year view.

And most important - if you go wrong BOOK YOUR LOSSES RUTHLESSLY

 

[MAHESH468]

Hi Jamit,

You sure are very optimistic, and am glad for you.

Could you do a study on Trident (INE064C01014) Textiles CMP: 16.90
and share with us.

Would really appreciate the same.

Thanks so much,

Mahesh Asrani.

 

[jamit_05]

Hi Jamit,

You sure are very optimistic, and am glad for you.

Could you do a study on Trident (INE064C01014) Textiles CMP: 16.90
and share with us.

Would really appreciate the same.

Thanks so much,

Mahesh Asrani.

Could not find thorough data, appears to be a small/micro cap.

 

[AFORASTRO]

sir could you please tell me how come the TATA ELXSI became hot cake in short time......it made low of 156 in august and again 406 high of 52 weeks on 27 dec 2013.

 

[Mr.G]

Could not find thorough data, appears to be a small/micro cap.

Trident seems to be management focused cos, from my view. Dont try to invest. Such cos usually have no shareholder accountability.

 

[jamit_05]

sir could you please tell me how come the TATA ELXSI became hot cake in short time......it made low of 156 in august and again 406 high of 52 weeks on 27 dec 2013.

I hv learned to see Investment as a "Survivor's Game". Where, one has to invest in good companies and eliminate chances of Capital Loss. Instead of investing in just normal companies and trying his odds. The percentage of survivors is much high in the former approach.

With that said, there is nothing special about Tata Elxsi. It's EPS is consistently falling since the last 5 years, without any equity dilution. Yet it has scaled to its ATH. Why? No one can tell. Could one hv known before hand that this would happen? No! Such a technology does not exist.

Its Net Profit Margin (NPM) doubled from 5% to 10%. Hence, its EPS has also doubled y-to-y. This is all funny business to trap the investor. Sharp jumps are repulsive, consistent growth is what one seeks.