It is long back that I have not updated my blog, I was not getting enough time. We follow a lot of big investors reading their annual Letter so why not I should also write some annual letter even though I don't have enough knowledge, still learning but no harm in trying
Indian stock market has less than 1% quality stock where you can buy and forget. Another 99% of the stocks we need to understand their aukat (limit) I have always five known and proven quality stock. I give the weightage of 30% to those stock and rest 70% in small and Mid Caps.
I have added Bajaj finance to list a few months back. Other existing are
Eicher motors
Britannia Industries Ltd
Pidilite Industries Ltd
3M India Ltd.
HDFC Bank and Kotak Bank ( Both reduced after entering in Bajaj finance )
Rest 70% I will have around 25 stocks. So, I don't have a concentrated portfolio but these 25 stocks proportionate to conviction.
Top 5 holding might have 70% of 70 %.
Value investing can be divided into two parts.
1) Quality Value investing
2) Value trading
If a stock is from the first category then we don't need to churn it, just hold it till your earlier assumptions about quality, growth and business changes.
But if a stock from the second category then one needs to know aukat (limit) of that stock. And always be on toes. Continuously watch it and take appropriate action.
Since I am not a full-time investor and working in IT firm, even need to work sometimes on the weekend, it is difficult to keep the continuous eye on business or meet management. But, luckily I have two big exposure stocks (Intrasoft and Olympia) in my portfolio where I can sense business performance online.
You hate me or like me but I am one of the few who not only discusses buy calls but even sell calls. Mostly you will hear only buy call from others.No one knows when they sell.
Intrasoft buy call discussed around 45-47 range and disclosed sell call on around 500. Because I could sense online. Now it is below 300.
http://value2wealth.blogspot.com/2017/09/profit-booking-call.html
On Olympia also disclosed sell call around 300 (on Twitter), it is now below 50.
Everyone can understand from the just above screenshot, it is off track.
On another hand, I missed to sell TechnVission and it is now around 50. But it is concept stock instead of a value stock, I do see a lot of positive business news flow but the company is not able to convert into revenue.
But the company is not able to scale on their financials front.
FOMENTO RESORTS I am still waiting for the expansion to complete.
Apart from above-discussed type I also invest in nursery type stocks, it is just on gut feeling and symptoms. Allocation is very low and I don't track them closely.
Everyone suggest one should not time the market. Agree, But I believe one should try to time the market by allocation. One should increase and decrease allocation by sensing a market.
Only a few suggested to have some cash in 2017, one name I can remember is Rohit Chauhan (@rohitchauhan). Even, I suggested cautions in 2017 not because I am good at predicting but my fearful and balance approach during high valuation period.
I don't invest in mutual funds but over the last one year, I invested in four type funds.
Learned about debt funds burnt fingers in Gilt fund. When I invested in gilt fund never thought I can get even the negative return. But, later figure out Ultra Short-term funds are more suitable for my requirement. Still, need to learn a lot of nonsense of the debt market.
Franklin us opportunities fund so far has given me around 18% return in first half of this year. Reason for investing was two folds
1) Wanted exposure to worlds best companies.
2) Since small-cap valuation was very high and I was not able to find good value stock with a margin of safety. Even the US market was also trading high but I didn't want less than 50% exposure to equity (fearing missing out). So this fund was giving me an opportunity to remain in balance. My thinking was US market is trading at high if US market corrects 20% then the Indian large cap will correct by anywhere between 25-30% but the small cap will correct more than 40 %. If the Indian market is going to correct like this then currency will depreciate by around 10 %. So, actually, I will have loss of only 10% on my capital and I can invest that capital in small caps which have lost more than 40%.
If the market moves up then I will not miss-out the equity gain.
My prediction was half correct, US market and Sensex both touching an all-time high. But, most of the small-cap down beyond 25% and rupee also depreciated around 10 %. Luck was favorable this time for me, nothing to do with any kind of skill. Surely, luck will not favor me again during buying time, I have to be very cautious.
Still , small cap stocks are not very cheap but lot of opportunities are emerging . Hope, Soon , I may find some good pick .
Indian stock market has less than 1% quality stock where you can buy and forget. Another 99% of the stocks we need to understand their aukat (limit) I have always five known and proven quality stock. I give the weightage of 30% to those stock and rest 70% in small and Mid Caps.
I have added Bajaj finance to list a few months back. Other existing are
Eicher motors
Britannia Industries Ltd
Pidilite Industries Ltd
3M India Ltd.
HDFC Bank and Kotak Bank ( Both reduced after entering in Bajaj finance )
Rest 70% I will have around 25 stocks. So, I don't have a concentrated portfolio but these 25 stocks proportionate to conviction.
Top 5 holding might have 70% of 70 %.
Value investing can be divided into two parts.
1) Quality Value investing
2) Value trading
If a stock is from the first category then we don't need to churn it, just hold it till your earlier assumptions about quality, growth and business changes.
But if a stock from the second category then one needs to know aukat (limit) of that stock. And always be on toes. Continuously watch it and take appropriate action.
Since I am not a full-time investor and working in IT firm, even need to work sometimes on the weekend, it is difficult to keep the continuous eye on business or meet management. But, luckily I have two big exposure stocks (Intrasoft and Olympia) in my portfolio where I can sense business performance online.
You hate me or like me but I am one of the few who not only discusses buy calls but even sell calls. Mostly you will hear only buy call from others.No one knows when they sell.
Intrasoft buy call discussed around 45-47 range and disclosed sell call on around 500. Because I could sense online. Now it is below 300.
http://value2wealth.blogspot.com/2017/09/profit-booking-call.html
On Olympia also disclosed sell call around 300 (on Twitter), it is now below 50.
Everyone can understand from the just above screenshot, it is off track.
On another hand, I missed to sell TechnVission and it is now around 50. But it is concept stock instead of a value stock, I do see a lot of positive business news flow but the company is not able to convert into revenue.
- A lot of research report are predicting huge growth in next 5 years where Solix and Imagia subsidiaries of TechnVission are operating.
- Huge EU GDPR opportunity and similar opportunities in India and worldwide
- Veena Gundavelli, Honored as the Innovator of the Year at 2018 Women in IT Awards USA
- The launch of Artificial Intelligence device Gia which is similar to Amazon's Alexa
- The launch of Solix Big Data solution for Data-driven Healthcare.
- any many more
But the company is not able to scale on their financials front.
FOMENTO RESORTS I am still waiting for the expansion to complete.
Apart from above-discussed type I also invest in nursery type stocks, it is just on gut feeling and symptoms. Allocation is very low and I don't track them closely.
Everyone suggest one should not time the market. Agree, But I believe one should try to time the market by allocation. One should increase and decrease allocation by sensing a market.
Only a few suggested to have some cash in 2017, one name I can remember is Rohit Chauhan (@rohitchauhan). Even, I suggested cautions in 2017 not because I am good at predicting but my fearful and balance approach during high valuation period.
I don't invest in mutual funds but over the last one year, I invested in four type funds.
- Liquid Fund (debt)
- Ultra Short term fund (Debt)
- Gilt funds (Debt)
- Overseas Fund (Franklin us opportunities fund)
Learned about debt funds burnt fingers in Gilt fund. When I invested in gilt fund never thought I can get even the negative return. But, later figure out Ultra Short-term funds are more suitable for my requirement. Still, need to learn a lot of nonsense of the debt market.
Franklin us opportunities fund so far has given me around 18% return in first half of this year. Reason for investing was two folds
1) Wanted exposure to worlds best companies.
2) Since small-cap valuation was very high and I was not able to find good value stock with a margin of safety. Even the US market was also trading high but I didn't want less than 50% exposure to equity (fearing missing out). So this fund was giving me an opportunity to remain in balance. My thinking was US market is trading at high if US market corrects 20% then the Indian large cap will correct by anywhere between 25-30% but the small cap will correct more than 40 %. If the Indian market is going to correct like this then currency will depreciate by around 10 %. So, actually, I will have loss of only 10% on my capital and I can invest that capital in small caps which have lost more than 40%.
If the market moves up then I will not miss-out the equity gain.
My prediction was half correct, US market and Sensex both touching an all-time high. But, most of the small-cap down beyond 25% and rupee also depreciated around 10 %. Luck was favorable this time for me, nothing to do with any kind of skill. Surely, luck will not favor me again during buying time, I have to be very cautious.
Still , small cap stocks are not very cheap but lot of opportunities are emerging . Hope, Soon , I may find some good pick .
nice summary of a year, agree with you on the cautious approach and keep some money always and balancing b/w options
ReplyDeletethanks for the helpful writeup
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