Stocks for the long and short term portfolio

[hauler]

Maheshji,

I intend to be the kind of investor that buys ONLY in sharp corrections, like we saw in 2008. In such times mid and small sized companies get hammered severely. No support is good enough. They freefall. Fundamentals take a back seat. That freefall is a good time to break FDs.

I too was of a similar opinion as yourself. But, after a seasoned investor with experience of a few decades told me to just wait and watch and let the "mandi" settle in. This was when BHEL was around 350 and I was eager to buy. And all valuation models gave a go ahead.

Who would have thought a Navratna like Bhel would break right through 2008 LOWS and then 2006 LOWS and reach RS.100.... I mean if BHEL can then Mahaseam should have no problem.

Rgds.

When do you see 2008 situation coming again ?

 

[saivenkat]

Re: Summary Of Stocks to Buy in correction.

Large Cos
---------
1. Bhel
2. IDFC
3. Hind Zinc
4. Acc
5. SBIN
6. HDFC
7. Axis Bank
8. Coal India
9. Petronet LNG
10. Gail

Mid and Small Cos
-----------------
1. Engineers India Limited
2. Cummins India
3. Greaves Cotton
4. Gruh Finance
5. Gujrat Gas

Speculative at super low prices
------------------------------
1. Balrampur
2. Sail
3. Nalco
4. Hind Copper
5. Union Bank
6. Maharashtra Seamless
7. Concor
8. NMDC


Commodities
-------------
1. HDFC Gold
2. SBIN Gold


Pricing is a part which I have left out.

Swaraj Engines added....to the list..

Amit bro.. could you please add the probable entry points in the list of the stocks ....

If i am to ask you top 10 picks among the list.. what would you suggest..?And do you prefer investing in equal proportions in them or of different ratios?...

And do you smell any kind of sharp correction around the corner?

 

[sridhar]

The first step is to look for good companies. Then it is a matter of price. So, I will ask you to agree or disagree about swaraj being a good stock. If you agree then most of the work is done! Then comes the issue of price.

So, lets reason a little.

2009 ended with EPS of 17 and now EPS is near 50, a three times growth.
2009 ended with Share price at around 100. Therefore, Rs.300 is now a fair price. My entry price is above 2010 lows, which is near-by.

Re correct price for entry into any shortlisted stocks- discussed the matter with my wife as she handles the actual exits & entries. She has worked out a system of analysing stocks on a daily/weekly time frame & identifying sideways zone and whether stock has bottomed out. Then she decides on a buy once the stock breaks out of the zone on the upside. Levels are entered into the software which alerts her once the breakout starts.

One may not get one's targeted/calculated lows but the advantage is that one's money is not locked up in languishing stocks.

 

[jamit_05]

When do you see 2008 situation coming again ?

Hard to say. But, it is expected to follow a period of unreasonable bullish sentiment.

 

[jamit_05]

Re: Summary Of Stocks to Buy in correction.

Swaraj Engines added....to the list..

Amit bro.. could you please add the probable entry points in the list of the stocks ....

If i am to ask you top 10 picks among the list.. what would you suggest..?And do you prefer investing in equal proportions in them or of different ratios?...

And do you smell any kind of sharp correction around the corner?

Some stocks from the list will gather real strong bearish momentum, as we are looking to purchase them in bad times. Therefore, lets just watch the price action. Nonetheless, I will be mentally prepared to make my first batch of purchase when nifty touches 5200, then 4500.

I'd consider the concept of diversification of sectors while deciding cash allocation. Putting one unit in Bhel and one in Siemens or greaves cotton would be overlapping.

Yes, I believe a sharp correction is due, but after elections next year.

 

[ptk]

@jamit , what are the main reasons ,that you assume for nifty to go to 5200-4500 area? the problem is again ,what if it didnt happen , whats the plan B

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

 

[ptk]

@ptk , your type guy should have bought tons of stocks in 2008-2009 , did you buy then?

Hello,

I have learnt this the very hard way, please check this post in which I have written it all about my wrong doings.

http://www.traderji.com/day-trading/72827-thoughts-day-swing-trading-part-2-a-45.html#post834579

 

[jamit_05]

@jamit , what are the main reasons ,that you assume for nifty to go to 5200-4500 area? the problem is again ,what if it didnt happen , whats the plan B

i am asking because i dont see nifty @5200 for long time to come

I mention these numbers to give a vague idea of the kind of correction I want, so that I am convinced enough that the downside is now limited.

Sure, 5200 may not happen... and market may continue upwards make 7000 and even 8000. Then, I guess, 6200 would be my low risk area of purchase.

The idea is to buy these very good stocks and low rates... not at MRP, but during ALL-CLEARANCE-SALE....

Numbers are just a way to say it, I want you to grasp the idea: Buy Good, Buy Cheap.

 

[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

Your 2 cents will become full Dollars. My best wishes.

Waiting is tough. The ego doesn't like it. It feels insecure... and raises many "What ifs". The companies and their chamchas on TV play this weakness of ours. For ex. They publish a report showing improved earnings, like in case of Tata Steel, and convince our Sitting-On-Hands investor that the only way it will now go is "Up". The worse is now behind, and with this increased production capacity ATH is the next destination.

 

[jamit_05]

@ptk , your type guy should have bought tons of stocks in 2008-2009 , did you buy then?

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