Restoring Traders/Investors Faith into Investing

[hauler]

Lets have an intellectual conversation about a subject. Why do people sometimes forget that stocks, while traded are infact real companies with real assets and not just moving scrips on a screen. Everytime I open my laptop I look for a company I wanna buy not a stock or scrip. I havent made a buy in the last 1 year because I didnt find anything that caught my eye.

I believe that as investors we are the lifeblood of companies, the masters of business and we are the ones who actually give value to the rupees timid people hide in their FDs.

You have not made a buy because you are probably a big believer of buying at distress or better prices. Of course that works, but then there is example of colgate, gillete or nestle etc which even when bought at pe's of 50 still gave excellent returns.
Let me change the discussion a bit - can you provide some 10-bagger over 10 years stock or the stocks you strong believe in based on your investing strategies ?

 

[jamit_05]

Lets live in the "Now". Lets start at the present. And find companies which are currently good investments.

It would be wise to leave out the ones that are already popular and hence expensive. Buying into what is already discovered and by now is over expensive, is usually not such a fruitful thing.

One gentleman brought to light, Helios and Matheson. Looking at the company's statement I found that the company is making money for the past several quarters, has agreeable debt and is well based for a strong upside. Although the price has doubled, its PE is still agreeable. Most important part is that, this mid-sized company is here to stay. While one is invested, it may even make a good buck over the long term.

In the future, returns from Helios could be as good as that of Gruh or Page simply because it has growth on balance sheet and is still undiscovered by the junta as it has a low PE of 4; Whereas Gruh has PE of 45, Page 55!

 

[Mr.G]

You have not made a buy because you are probably a big believer of buying at distress or better prices. Of course that works, but then there is example of colgate, gillete or nestle etc which even when bought at pe's of 50 still gave excellent returns.
Let me change the discussion a bit - can you provide some 10-bagger over 10 years stock or the stocks you strong believe in based on your investing strategies ?

You are exactly right, The market is not my only source of living so I have the privilege to wait. Just like an army sniper waiting for that perfect shot on a 5-star general. :gunsmilie:

I am not a good stock picker my friend, I am too conservative for that. I am good at valuing stuff. If I had such a list don't you think I would have bought them myself yet? Don't sweat it too much, Just look for a 25% compounded growth every year and your set. Focus on getting good quality stocks at good prices.

People mistake and buy very high quality stocks at over prices. Then when the real price is realized they make a lose and blame the market.

The key to make good money is to buy below or at par value and then sell anywhere above it. Missing out on some mediocre opportunity or a situation where you dont understand it does not cost money. Betting on something you arent sure of or dont understand costs money.

Wait and wait till the market serves up the perfect dish for you. :thumb:

(I dont know why I'm teaching you all this as essentially im making you my competitor. I have an instinct to teach and preach what I know. LOL)

 

[Einstein]

@ Hauler, I term 'good companies' as 10 baggers, portfolio 2014 is consists of majority of 'good companies' you don't need to look anywhere else, I recommend most peoples to invest of stocks from that portfolio if one hold then for 10 years or more, then this will create more wealth then anyone can imagine.

@ Jamit, Investing in this era is very interesting as we don't no whats ahead of us, in 1988 stock market gurus of japan was so confident that they sold very long term puts to investors, now we know they are history. I believe we are now waiting for rainy day so we can bring out umbrella, but I could be a hurricane like we have never seen.

Phil Carret’s “12 Commandments of Investing”:

1. Never hold fewer than 10 different securities covering five different fields of business;
2. At least once every six months, reappraise every security held;
3. Keep at least half the total fund in income producing securities;
4. Consider (dividend) yield the least important factor in analyzing any stock;
5. Be quick to take losses and reluctant to take profits;
6. Never put more than 25% of a given fund into securities about which detailed information is not readily and regularly available;
7. Avoid inside information as you would the plague;
8. Seek facts diligently, advice never;
9. Ignore mechanical formulas for value in securities;
10. When stocks are high, money rates rising and business prosperous, at least half a given fund should be placed in short-term bonds;
11. Borrow money sparingly and only when stocks are low, money rates low and falling and business depressed;
12. Set aside a moderate proportion of available funds for the purchase of long-term options on stocks in promising companies whenever available.

Housing bubble 2.0

 

[jamit_05]

@ Hauler, I term 'good companies' as 10 baggers, portfolio 2014 is consists of majority of 'good companies' you don't need to look anywhere else, I recommend most peoples to invest of stocks from that portfolio if one hold then for 10 years or more, then this will create more wealth then anyone can imagine.

@ Jamit, Investing in this era is very interesting as we don't no whats ahead of us, in 1988 stock market gurus of japan was so confident that they sold very long term puts to investors, now we know they are history. I believe we are now waiting for rainy day so we can bring out umbrella, but I could be a hurricane like we have never seen.

Phil Carret’s “12 Commandments of Investing”:

1. Never hold fewer than 10 different securities covering five different fields of business;
2. At least once every six months, reappraise every security held;
3. Keep at least half the total fund in income producing securities;
4. Consider (dividend) yield the least important factor in analyzing any stock;
5. Be quick to take losses and reluctant to take profits;
6. Never put more than 25% of a given fund into securities about which detailed information is not readily and regularly available;
7. Avoid inside information as you would the plague;
8. Seek facts diligently, advice never;
9. Ignore mechanical formulas for value in securities;
10. When stocks are high, money rates rising and business prosperous, at least half a given fund should be placed in short-term bonds;
11. Borrow money sparingly and only when stocks are low, money rates low and falling and business depressed;
12. Set aside a moderate proportion of available funds for the purchase of long-term options on stocks in promising companies whenever available.

Nice and an informative post.

The comment to hauler, particularly interesting. It shows the author as someone who has taken risk. Market gives respect only to them. Good confidence. Pls post your most recent portfolio. TIA.

I suppose you are right. No one can ever surely tell the direction or the intensity of the move on any timeframe.

"Naav toa kya beh jaye kinara, badi tej hai samay ki yeh dhara.... tujko chalna hoga."

I don't know who Phil Carret’s is, but could 100% relate to his 12 commandments. Particularly the one which means, take your profit out after big moves and put them in safer avenues.

Nice post on your thread after a long time.

 

[Snip3r]

Have you tried the Gordon variation, We must assume that it is practically impossible for a firm to grow constantly at the same rate, but growing at 0% is also not practical and only possible in theory.

We must assume a constant change either positive or negative depending on the business stage.

I think its safe to assume 0% growth. When a company is fully established the profits may take a dip but it is safe to assume that it will increase again to the original something like a sine wave. This is just my perception. what do you think?

 

[Mr.G]

I think its safe to assume 0% growth. When a company is fully established the profits may take a dip but it is safe to assume that it will increase again to the original something like a sine wave. This is just my perception. what do you think?

See the chart above profits behave just like it. :thumb:

 

[Einstein]

As the Nifty hits a new high, it’s useful to see Nifty adjusted for inflation - that is, despite the fact that the Nifty has hit the highest ever value, what does it mean for you once adjusted for inflation?

For this, we look at purchasing power of the money you have today. We have two inflation indexes - the Wholesale Price Index (WPI) since 2000, and the Consumer Price Index (CPI) for Industrial Workers since the same date.

Take an investment in the Nifty in the year 2000, and then “adjust” it for each of these indexes. If the index was 100 in 2000, and it’s now 180, that means prices are up 80% since then. So a Rs. 10,000 today will not buy you what Rs. 10,000 would buy you in the year 2000 - it would buy you, in 2000 terms, things worth Rs. 10,000 * (100/180) = Rs. 5,556. So effectively, you had to grow your money 80% just to stay in the same place.

Let’s look at a Rs. 10,000 investment in the year 2,000. If it was invested in the Nifty, then it would be worth Rs. 50,496 today - a 5x increase!

Yet, in 2000 terms, using the WPI, it is only up to Rs. 21,715 - a 100% increase in 13 years, which is substantially lower than you would have thought. And if we use the CPI, the return is below Rs. 20,000.

What this also highlights is that the inflation adjusted Nifty must go up 50% in order to make a “real” new high.

(Some assumptions - since we don’t know the CPI and WPI for November and December are, I’ve assumed the October index numbers will up by 10% and 7% per year, respectively)

Some of you invested three years ago in tax-saving Equity Linked Mutual Funds. Most of these are just about turning a positive return now!

source- capitalmind

 

[Einstein]

Whitney Tilson on shorting Telsa.

https://www.youtube.com/watch?v=CZQSSDg73pA#t=121

 

[Einstein]

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