Stocks for the long and short term portfolio
- Thread starter jamit_05
- Start date
A great question, which nobody in the thread as asked as yet... goes to show that you are a veteran trader.
How would I have managed exits?
That is a very tricky question. And the answer in long winding.
Primary reason for investing in stocks is to take benefit of the Long term capital gain taxation policy. Therefore, I will have to hold my stocks for at least a year from date of purchase. Therefore, having purchased in Sept to Dec 2008, there is no question of sale before say Jan 2010.
At which point, I will start looking for stocks that are expensive, as I am now interested in locking in some gains to submit progress report.
Underperformers will be trashed and performers will be held longer.
As an easy first step, stocks whose industry has still not picked up, EPS has not shown any growth, but stock price has sharply increased is seen as expensive (Case in point, BHEL, Hindalco, Tata steel, BoB, SBI etc). I expect these stocks to fall harder when Nifty corrects, and not rise as much.
There are others of Banking, IT, FMCG sectors whose EPS is on the up-and-up and so is stocks price. It is beyond my ability to know whether they are expensive. I do not trust (read: UNDERSTAND) various valuation models. So I will hold them longer.
In step 2: A game of PE-ratio:
I will study quarterlies to monitor company progress, get a strong understanding of the pulse of the company. There will be some stocks whose growth has slowed down, like Infy, then I will be interested in booking profit when its PE gets on the higher side. As I know fully well, that high PEs are not sustainable. Also, HuL, ACC.
And finally, if there is a monster move on the monthly esp after a sustained rally, I will surely sell every stock from my portfolio and lock in the bumper-gains.
Then Rinse-And-Repeat
How would I have managed exits?
That is a very tricky question. And the answer in long winding.
Primary reason for investing in stocks is to take benefit of the Long term capital gain taxation policy. Therefore, I will have to hold my stocks for at least a year from date of purchase. Therefore, having purchased in Sept to Dec 2008, there is no question of sale before say Jan 2010.
At which point, I will start looking for stocks that are expensive, as I am now interested in locking in some gains to submit progress report.
Underperformers will be trashed and performers will be held longer.
As an easy first step, stocks whose industry has still not picked up, EPS has not shown any growth, but stock price has sharply increased is seen as expensive (Case in point, BHEL, Hindalco, Tata steel, BoB, SBI etc). I expect these stocks to fall harder when Nifty corrects, and not rise as much.
There are others of Banking, IT, FMCG sectors whose EPS is on the up-and-up and so is stocks price. It is beyond my ability to know whether they are expensive. I do not trust (read: UNDERSTAND) various valuation models. So I will hold them longer.
In step 2: A game of PE-ratio:
I will study quarterlies to monitor company progress, get a strong understanding of the pulse of the company. There will be some stocks whose growth has slowed down, like Infy, then I will be interested in booking profit when its PE gets on the higher side. As I know fully well, that high PEs are not sustainable. Also, HuL, ACC.
And finally, if there is a monster move on the monthly esp after a sustained rally, I will surely sell every stock from my portfolio and lock in the bumper-gains.
Then Rinse-And-Repeat
A great question, which nobody in the thread as asked as yet... goes to show that you are a veteran trader.
How would I have managed exits?
There will be some stocks whose growth has slowed down, like Infy, then I will be interested in booking profit when its PE gets on the higher side. As I know fully well, that high PEs are not sustainable. Also, HuL, ACC.
How would I have managed exits?
There will be some stocks whose growth has slowed down, like Infy, then I will be interested in booking profit when its PE gets on the higher side. As I know fully well, that high PEs are not sustainable. Also, HuL, ACC.
Can you please guide in this respect?
Is a PE ratio a good indicator of an exit at market turning points?
It comes with its set of probabilities. If the bull run is mad, crazy and the stock has been advertised to do something fantastic then PEs can go really up. Infy has seen PEs go as high as 200 plus (but that was when it was a much smaller company). However, for larger (much larger) companies PEs can be fairly range bound.
So, yes, if the stock is of a large company then PE ratio helps in booking profit along with other research.
Got an important piece of advise from a well-wisher.
1) It is not entirely safe to keep long term stocks with an entity having less than a 5-star rating. Meaning, discount brokers do not qualify.
2) DO NOT keep long term stocks in demat accounts where Power of Attorney lies with the broker.
3) Large banks are the safest bets.
Hence, I think I will sign up with HDFC banks DEMAT account.
1) It is not entirely safe to keep long term stocks with an entity having less than a 5-star rating. Meaning, discount brokers do not qualify.
2) DO NOT keep long term stocks in demat accounts where Power of Attorney lies with the broker.
3) Large banks are the safest bets.
Hence, I think I will sign up with HDFC banks DEMAT account.
A great question, which nobody in the thread as asked as yet... goes to show that you are a veteran trader.
How would I have managed exits?
That is a very tricky question. And the answer in long winding.
Primary reason for investing in stocks is to take benefit of the Long term capital gain taxation policy. Therefore, I will have to hold my stocks for at least a year from date of purchase. Therefore, having purchased in Sept to Dec 2008, there is no question of sale before say Jan 2010.
At which point, I will start looking for stocks that are expensive, as I am now interested in locking in some gains to submit progress report.
Underperformers will be trashed and performers will be held longer.
As an easy first step, stocks whose industry has still not picked up, EPS has not shown any growth, but stock price has sharply increased is seen as expensive (Case in point, BHEL, Hindalco, Tata steel, BoB, SBI etc). I expect these stocks to fall harder when Nifty corrects, and not rise as much.
There are others of Banking, IT, FMCG sectors whose EPS is on the up-and-up and so is stocks price. It is beyond my ability to know whether they are expensive. I do not trust (read: UNDERSTAND) various valuation models. So I will hold them longer.
In step 2: A game of PE-ratio:
I will study quarterlies to monitor company progress, get a strong understanding of the pulse of the company. There will be some stocks whose growth has slowed down, like Infy, then I will be interested in booking profit when its PE gets on the higher side. As I know fully well, that high PEs are not sustainable. Also, HuL, ACC.
And finally, if there is a monster move on the monthly esp after a sustained rally, I will surely sell every stock from my portfolio and lock in the bumper-gains.
Then Rinse-And-Repeat
How would I have managed exits?
That is a very tricky question. And the answer in long winding.
Primary reason for investing in stocks is to take benefit of the Long term capital gain taxation policy. Therefore, I will have to hold my stocks for at least a year from date of purchase. Therefore, having purchased in Sept to Dec 2008, there is no question of sale before say Jan 2010.
At which point, I will start looking for stocks that are expensive, as I am now interested in locking in some gains to submit progress report.
Underperformers will be trashed and performers will be held longer.
As an easy first step, stocks whose industry has still not picked up, EPS has not shown any growth, but stock price has sharply increased is seen as expensive (Case in point, BHEL, Hindalco, Tata steel, BoB, SBI etc). I expect these stocks to fall harder when Nifty corrects, and not rise as much.
There are others of Banking, IT, FMCG sectors whose EPS is on the up-and-up and so is stocks price. It is beyond my ability to know whether they are expensive. I do not trust (read: UNDERSTAND) various valuation models. So I will hold them longer.
In step 2: A game of PE-ratio:
I will study quarterlies to monitor company progress, get a strong understanding of the pulse of the company. There will be some stocks whose growth has slowed down, like Infy, then I will be interested in booking profit when its PE gets on the higher side. As I know fully well, that high PEs are not sustainable. Also, HuL, ACC.
And finally, if there is a monster move on the monthly esp after a sustained rally, I will surely sell every stock from my portfolio and lock in the bumper-gains.
Then Rinse-And-Repeat
day trading does give me more opportunity to learn, something a higher tf trader learns in a week we as a shorter tf trader can learn in a day..actually was thinking few days back doesnt higher tf trading limits learning opportunity ? but there are advantages and disadvantages of everything and that would lead to another discussion.
Plan your trades, trade your plan..thats how it should be, you have your trade plans ready so thats great. One more thing i would ask is that you have said that after entry you wont exit for one year atleast, imo you should be also ready for any losses so have stop losses based on monitory loss or price levels.
Also take into account that if there are losses over a limit then brokers may liquidate your positions.
Yes, I agree. When a trader is starting out he must trade smaller tf with smaller qty. Good practice in less time.
For long term investments, I will be buying in cash and taking delivery. No stop loss or targets or planning a trade. It will also be done in different accounts to ensure that there is no ifs and buts when it comes to filing for Long term Capital Gains. Here, the only planning will be which company to buy when.
For long term investments, I will be buying in cash and taking delivery. No stop loss or targets or planning a trade. It will also be done in different accounts to ensure that there is no ifs and buts when it comes to filing for Long term Capital Gains. Here, the only planning will be which company to buy when.
We have to ensure two things about our investment:
1. Safety of capital
2. Price appreciation
Best way to do that is to think in terms of portfolio, as opposed to wholly relying on a single stock. I would not recommend you put your life savings entirely in a single stock, regardless of how solid the stock may appear.
1. Safety of capital
2. Price appreciation
Best way to do that is to think in terms of portfolio, as opposed to wholly relying on a single stock. I would not recommend you put your life savings entirely in a single stock, regardless of how solid the stock may appear.
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