Stocks for the long and short term portfolio
- Thread starter jamit_05
- Start date
The importance of Sector-Rotation.
Just re-read a sound and a simple concept which is well described in Joel Greenblatt's.
It talks about buying stocks that are good and cheap. It is an approved concept. It also gives a formula to do so (and calls it the "Magic Formula").
However, to pick stocks in the Indian markets one has to have quite a bit of other knowledge also.
What makes this book better is that it also offers a way to book profits. If done correctly, then it would boil down to the idea of Sector-Rotation.
Sector-Rotation is selling stocks whose future looks not as bright as the others, which you buy.
Coming back to current times and practical application of Joel's teachings: A value investor should now start looking for cues to book profit in
FMCG, IT and pharma (in a planned and a gradual manner) and shift the capital to Cap Goods, Bank Ex, Sugar and a couple of years down the line into Shipping and Metals.
If one sells little of TCS and Buys BHEL then for sometime he will feel double pain of TCS rising further and BHEL falling further... but there is no magic bullet; no way of timing the transition.
Sector Rotation is very important to do for sustained growth of portfolio cuz no stock or sector can be relied on to go up one sided forever. There will be ups and downs.
The onus is on the investor to refine the concept of Sector Rotation to best suit his mentality.
Just re-read a sound and a simple concept which is well described in Joel Greenblatt's.
It talks about buying stocks that are good and cheap. It is an approved concept. It also gives a formula to do so (and calls it the "Magic Formula").
However, to pick stocks in the Indian markets one has to have quite a bit of other knowledge also.
What makes this book better is that it also offers a way to book profits. If done correctly, then it would boil down to the idea of Sector-Rotation.
Sector-Rotation is selling stocks whose future looks not as bright as the others, which you buy.
Coming back to current times and practical application of Joel's teachings: A value investor should now start looking for cues to book profit in
FMCG, IT and pharma (in a planned and a gradual manner) and shift the capital to Cap Goods, Bank Ex, Sugar and a couple of years down the line into Shipping and Metals.
If one sells little of TCS and Buys BHEL then for sometime he will feel double pain of TCS rising further and BHEL falling further... but there is no magic bullet; no way of timing the transition.
Sector Rotation is very important to do for sustained growth of portfolio cuz no stock or sector can be relied on to go up one sided forever. There will be ups and downs.
The onus is on the investor to refine the concept of Sector Rotation to best suit his mentality.
Re: Banking Stocks
Had bought SBIN at 1800;
CMP 1600;
MtoM loss of Rs.200 ! So, its time to walk the talk.
Logic of purchase was that:
There is ZERO doubt that SBI is a gem. And I had analysed the price to be attractive. Had also resolved that if it goes lower I will buy more to max at 5%. The next level of purchase is much lower so no action.
I had purchased the stock for long term hence will not sell it till something drastic changes in the fundamentals. Which has not happened since most PSEs are falling. The business is still the same.
Now that I have assimilate and subscribed to the logic of Value Investing, this is an opportunity to get into the practice of applying it real time.
"Only those investors deserve to enjoy the highs, who have endured the lows"
--Myself
Had bought SBIN at 1800;
CMP 1600;
MtoM loss of Rs.200 ! So, its time to walk the talk.
Logic of purchase was that:
There is ZERO doubt that SBI is a gem. And I had analysed the price to be attractive. Had also resolved that if it goes lower I will buy more to max at 5%. The next level of purchase is much lower so no action.
I had purchased the stock for long term hence will not sell it till something drastic changes in the fundamentals. Which has not happened since most PSEs are falling. The business is still the same.
Now that I have assimilate and subscribed to the logic of Value Investing, this is an opportunity to get into the practice of applying it real time.
"Only those investors deserve to enjoy the highs, who have endured the lows"
--Myself
Well-being of Infra stocks depends on the GOI's focus on growth. So, you are right that it will take a while for such sectors to take-off.
Unitech is not as reliable as a few others in the category.
LT is a great stock to have for the long term as it is an awesome brand, diversified business and very good corporate culture. But the sector is beaten down. LT is showing negative cash flows for some quarters now. That is never good.
I have it on my buy list, along with Siemens, but in a different time and at a better rate.
Unitech is not as reliable as a few others in the category.
LT is a great stock to have for the long term as it is an awesome brand, diversified business and very good corporate culture. But the sector is beaten down. LT is showing negative cash flows for some quarters now. That is never good.
I have it on my buy list, along with Siemens, but in a different time and at a better rate.
Tata Steel posted increased Net Profit... but that is a hoax. Its net sales dipped by 3% and that is a noteworthy. Demand for steel is still dull and inventory pile is increasing. If one is holding Tata Steel, then take little out at each rise. You will get much lower price to get back in.
Safe Zone for Tata Chemical has started. However, its June quarter posted a big drop of around 30% in profits. That is not reassuring. The down fall of the price caught a strong momentum as it lost Rs.60 in 6 six days. It would be best to see where this momentum settles.
If one does not follow price momentum and wants to invest laid back, then putting a little in Tata Chemical is fine.
Safe Zone for Tata Chemical has started. However, its June quarter posted a big drop of around 30% in profits. That is not reassuring. The down fall of the price caught a strong momentum as it lost Rs.60 in 6 six days. It would be best to see where this momentum settles.
If one does not follow price momentum and wants to invest laid back, then putting a little in Tata Chemical is fine.
I want to share a worrisome perspective on the state of the national index: NSE
I was reading essays of a renowned value investor. He asserts the importance of the model of the business being conducive.
Does the model of Indian Business/Economy appear conducive to growth? No, by far not! So, we should expect a humble growth rate, due to slow growth in Infra and slow policy making.
But the current Index is riding near all time highs and in contrast economy is showing clear signs of slowdown. IIP is -2.2% !
In conclusion, the Investor must decide for himself:
a) Either the economy will catch up to the Index or
b) The Index will come down.
I favor the (b). And it is also reflected strongly in the Higher Time Frame Chart of Nifty.
The following is the monthly Nifty Chart.
It shows TRIPLE TOP in 6200 Levels. Nifty has been trying to break 6200 for the past 5 years!
Bad news (really bad news) is that, in the process, Nifty has made a converging pattern which has a history of violent breaks.
Such a pattern can break on either side: Up or Down. But, the current state of affairs are giving me ZERO hope of an upward break.
In conclusion, when I combine the current economic scenario and this powerful pattern a dismal picture is formed! If this break indeed happens on the downside, then Friends, there will be BLOOD on Dalal Street.
If feel that The CRASH is imminent. One which will find no respite till Nifty 4500. Therefore, make very limited investments till six months after the General Elections are over in May 2014;
I was reading essays of a renowned value investor. He asserts the importance of the model of the business being conducive.
Does the model of Indian Business/Economy appear conducive to growth? No, by far not! So, we should expect a humble growth rate, due to slow growth in Infra and slow policy making.
But the current Index is riding near all time highs and in contrast economy is showing clear signs of slowdown. IIP is -2.2% !
In conclusion, the Investor must decide for himself:
a) Either the economy will catch up to the Index or
b) The Index will come down.
I favor the (b). And it is also reflected strongly in the Higher Time Frame Chart of Nifty.
The following is the monthly Nifty Chart.
It shows TRIPLE TOP in 6200 Levels. Nifty has been trying to break 6200 for the past 5 years!
Bad news (really bad news) is that, in the process, Nifty has made a converging pattern which has a history of violent breaks.
Such a pattern can break on either side: Up or Down. But, the current state of affairs are giving me ZERO hope of an upward break.
In conclusion, when I combine the current economic scenario and this powerful pattern a dismal picture is formed! If this break indeed happens on the downside, then Friends, there will be BLOOD on Dalal Street.
If feel that The CRASH is imminent. One which will find no respite till Nifty 4500. Therefore, make very limited investments till six months after the General Elections are over in May 2014;
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