Tuesday, April 04, 2006

Good advice

1. The recent bull run is a fantastic opportunity for you to sell-off stocks which have not given good profits (and in the future, have a greater probability of not giving you desired returns). So if you haven't done that yet, please use this to it's fullest.

2. Further investment in stocks should always be on the basis of good investment principles. Some ideas -
> Profit for the yr should be no less than 30 crs with a min of 6 crs per quarter
> Exhibit increased sales and profit growth over last three years
> Sales and profit growth for last 4 qtrs vis-a-vis LY quarters
> Price/BV less than 3
> P/E should be less than 66% of industry P/E (mostly fwdP/E < 12)

3. Always see the charting of the stock. www.bseindia.com and www.nseindia.com have the best charting features i've come across. Note, the support and resistance levels over the last one year.

4. Always have a stop loss for any stock you purchase. (and sell when the stop loss is breached; some Buffett-wanabes may think otherwise)

12 Comments:

Blogger Amol said...

Shankar,
I did not get a chance to view your blog, as was on leave in between.
Your Aftek script is doing well. I did not get a chance to buy it, but its doing really well.
-Amol.

11:06 AM  
Blogger Shankar said...

True Amol, even the Helios and Matheson has gone really up. It's reached 218 rupees. Had bought it at 183 rupees a week back.

Explore the GNFC opportunity. I have just purchased shares of NCPL instead of GNFC. Want to try if there are any advantages to the same.

- Shankar

PS: The king is back. Sanjay Bakshi has started to post at http://fundooprofessor.blogspot.com

11:10 AM  
Blogger Amol said...

Shankar,

Regarding selling of stocks, I have entered pricol at a wrong price i.e. 55. Did not do any analysis on it that time. It went down to 38 ... Now its at 42. Still theres a considerable loss. Do you think I should book losses in this bull run for pricol.

-Amol.

11:11 AM  
Blogger Shankar said...

Hi Amol,

Pricol is down because of a lower qtr results. The fwd PE comes to 12.38. Fundamentally, there is nothing wrong in the stock. Pls chk similar reports of peer stocks (of Pricol). If they are improving and Pricol is declining on numbers ... then there is a problem. I guess, that the best way to analyse now.

- Shankar

11:17 AM  
Blogger Rakesh said...

Shankar,

Movement in market is turning out to be too much for me to handle. Planning to exit the market completely (irrespecive of P/E value and profit of the company) by the time sensex moves to 12000. It may prove to be a bad decision but don't want to lose my hard earned money.

-Rakesh

11:27 AM  
Anonymous amit said...

Hey shankar,

Yaar bhagyanagar metals is almost 12% up from its previous close,I think now this stock may gain momentum,it was dormant from a long long time.
In between have you observed the way in which the the new listee gallantt has moved up.From rs 10 to rs 17 in no time,man I do not understand it, it is a sort of greenfield project,how can it rise like that, it got subscribed only a couple of time.What do u expect in future for this stock.
Also do u think that helios an mattheson is still a buy.If yes then also mention the stop losss.Gallantt analysis will be most welcomed.Thanks for aftek.

Best Regards,
Amit.

11:31 AM  
Blogger Shankar said...

Update -
1. Donot buy Abbott. Margins are getting lower. It is at cost price .. so kindly off-load (that experiment may not work)
2. Helios & Matheson is not a confident buy at these levels. Sub 190 would again spark buying interests
3. Hold onto Aftek
4. Bhagyanagar Metals is crazily undervalued. At an NCAV of 18 rupees (purchase at 30) and a fwdPE of 3.86 !!!. It will go up.
5. Explore GNFC

Rakesh - if 12k reaps a fright, then whats next? property? cash? the ABN Amro 8% short term deposit?

Warm regards
Shankar

12:10 PM  
Blogger Prasanth said...

Shankar,

Ha ha - ABN Amro Short Term deposit indeed!!
Yes - I'm staying away from the market for now. I cannot find good stocks at the right price.

Regards,

Prasanth

12:30 PM  
Blogger Rakesh said...

Shankar/Prashanth,

I am seriously thinking about ABN-AMRO option. Only catch is the interest amount will be taxable, which will reduce the gain to approx 5.5% only.
Other option is to have cash. I am not going for property as it requires large amount of money and brings lot of problems along with it.
-Rakesh

1:58 PM  
Anonymous Anonymous said...

Tips For Trading(mostly intra-day)

1. Do not try to outsmart the market. contrarian is fashionable but not necessarily profitable

2. Always trade with a stop-loss. Which maybe a technically determined. Or use your own affordability stop-loss. i.e if technicals point to a 280 SL on a 290 stock, but you may put a SL of
285, because you maynot want to lose 10 bucks. One Caveat is that it should not be a whipsaw effect. which is the case when the stock is inherently volatile.
3. Do not panic when in loss. By this you subsidize people who do not panic.
4. Set target returns. There is a difference between book profit and booked profits.
5. Profit is what you book.


6. It is a crime to be wrong twice
7. Averaging is the cardinal sin. It tends to create bias and distorts your portfolio and increases exposure.
8. Always trade based on a rule.
9. Do not chose broker based on brokerage. Look for value-added services. (Maybe he was pitching for his firm :) )
10. If something is too good to be true it probably isn't.


11.Do not buy the compounding story. That means one day return of say 5% does not translate in annual returns of say 7000% or more. Because on some days you will lose that 5%.
12. Never hesitate to kick yourself.
13. There are opportunities at all times
14. There is no GodPlayer i.e. one who is almost everytime right. Even the best have an average of no more than 65% right calls.
15. Trading is best learnt with your own money. Then you understand the psychology much better.


16. Trade on news before it sinks in
17. Better to be wrong earlier in your trading career, otherwise the seduction of winning trades can be harmful later.
18. Keep questioning assumptions.
19. Have a risk return benchmark, i.e. never enter a position where risk -return trade-off is less than 1:2.5
20. And finally go with your gut

Tips For Investing (Long Term: 2 years and more)

1. Cash Flows are the king. Always look for the expected cash flows of the company in the future.

2. If you want your money back in a year then forget investment.

3. History never made anyone rich. Therefore do not go much with past performances.

4. Trend is enemy. Do not follow it if you want to invest. For trading it is fine.

5. Cheap crap is crap anyways. Beware of penny stocks.

6. A great company need not be a great investment.

7. Ride your winners long, dump your losses. Generally people do the reverse. They will sell a profitable stock, after getting 20%-30% return, though there may exist significant upside. whereas they will persist in loss makers, till they recoup. Such thinking imposes high opportunity costs.

8. Diversification is a fool's paradise. Have only a few stocks in investment portfolio. Similar to Warren buffet, who bet big on Coke and Gillette.

9. No broker made anyone rich (Strong words for a man who works in a broking firm)

10. Scrap the Sensex ticker. Do not get the Heebie-jeebies if the sensex does gyrations. You need to just see your own stocks, and believe in them. Periodic up and downs should not perturb you.

6:14 PM  
Anonymous amit said...

hELLO AlL,

aS U ALL are quoting that the sensex is overvalued and the earnings for fiscal 2008 is also discounted,i will say may be, but then in this situation if u decide to be away from the stock market i do not find it to be right,when market was at 8000 levels in october last year, many people withdrew from the markets saying that the market is overvalued and after that it was a history waiting to be made.

Come be a part of the history.Choose fundamentally strong stocks,keep invested in them ,hold them and forget them.

Some of the picks which i find interesting are ONGC, BHEL, BEML, ITC,HINDALCO,RELIANCE,RELIANCE COMM.,BHARTI TELEVENTURES.

My analysis says that markets will be around 15000 levels by january 2009 and these stocks will give not less than 20% annualized profits.

Bharti is going to foray into retail and agro-farming sector and when sunil mittal says that he spents his 75% time on this new plan then there is something into it.Also IPO of hutch will be coming in near future and that will boost the prizes for the teleco shares.(for the short term)

This is what i feel.
Regards
Amit.

6:55 PM  
Anonymous Anonymous said...

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10:29 AM  

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