Capitulation is happening … In another 10 / 15 days interesting bargains will be visible across sectors . Ensure your cash is there to do bargain hunting . It is now time to be BIG BULL IN BEAR MARKET
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Staggered buying over the next six months should fetch good returns in two to three years. Quality mid/small caps should be bought in the capitulation phase.
What is Good Quality is big debate … so I think one should stick to business one understands and have experienced in last few years . Don’t try to experiment with new Angels…
Lets say for your own existing stocks you have seen irrational price decline but business fundamentals has not deteriorated then look to buy them …
I know it will be painful to see further price declines , but this pain needs to be endured for bigger gains .
Are we in capitulation phase in small and mid caps? Most shares are closing at day’s low and hardly any pull back intraday. The temptation to nibble is overwhelming but holding back to an extent though small quantities of Vaibav Global, Multibase, Butterfly and Mangalam organics were added today. On radar, Shaily Engineering, SIS, Prataap Snacks, Radico Khaitan. The dilemma is whether to add now or wait. Can any TA throw some light ? Moderators may delete the post if inappropriate.
No we are not in capitualation phase for all Small and Mid caps ..
I will like to take two of your quoted stocks as example
Vaibhav Global - In 2011 -12 when it used report profits of Rs 60 odd crores its share price was around Rs 30 / Rs 40 , Now its profit is 2X ie 120 odd crores in March 2018 . but share price is Rs 609 ie 15 X
Radico Khaitan : For almost 5 odd years from 2011 to 2017 its profit was around 80 crores and share price then was around Rs 80 , Now its profit is around Rs 180 crores ( under optimistic sceanrio , these OPM can reduce ) ie 2.2 X from its low but share price is near Rs 400 ie 5X
So we are still in bull phase in many mid cap stocks , in some we have seen correction ,and those can be worthy a look …
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Thank you for the feedback. Shall stagger my purchases over the next two years rather than exhausting my money in short term. If 8500 on the Nifty is on the cards as predicted by some TAs, should not be found without some cash to tuck into the above companies and some others.
There are two kinds of forecasters : those who don’t know, and those who don’t know they don’t know — John Kenneth Galbraith
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Level of Nifty is 8500 or 12000 matters only for overall equity asset allocation .
However for stock purchases you need to look at both absolute and relative valuation .
You need to plan various actions when prices reaches different levels . It may or may not reach that level , but if your plan is in place conviction to act on the same increases … otherwise if mind is not mentally ready one may get shocked & may not act appropriately when extreme price levels are reached …
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As per UBS, RBI may cut rates by 75-100 bps in next fy. Not difficult to see in this low inflation scenario.
It will
- Help cos. Having debt by lowering the interest costs.
- Help banks by lowering NPAs and with higher demand for loans.
- Overall market valuations, as earnings yield of equity market is continuously compared to earnings yield of fixed income.
Right now the problem is not Repo rates or CRR , but transmission of rate to people who need it .
Currently liquidity is still tight for people who not considered AAA or AA .
So that throws lot of opportunity for companies who have cash ie Large caps with AAA … Their ability to drive up market share , leverage suppliers to hoard up cheaper raw material , get better discounts on freights etc …
Now few of non AA may survive through this crisis and these will be value buys in hindsight … but one needs to have lion heart to bet on these … but gains can be multifold …
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It is important to know benchmark returns so that you can set your expectation Right
These are REAL returns from equity and bonds …
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Thanks for this data. One interesting point I noted is maximum return years of 1933 and 1975 followed immediately after minimum return years of 1931 and 1974. Though 2008-2009 are not part of this, something similar happened then too.
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How to play BULL in Bear Market across business Cycle …
Where is India currently in the global business cycle as of Sept 2018
How is Real annualised Return ( post accounting for inflation ) and downside risk across cycle …
This can help one to work on long term all weather portfolio which is part of core portfolio and some tactical 1 - 5 year non core portfolio
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Sir what is source of above , can you please reco book or site. ?
Thanks, just curious where will PPF and EPF figure in case of tax adjusted returns when compared with bonds in Indian context.
@pradeepgoswami90 … You can go to Fidelity site and look for understanding business cycle investing … You will get most of the above gyan . But key is how you can leverage it both in understanding its impact on stocks and having patience to wait till it play out …
@Investor_No_1 --> PPF and EPF are great Fixed income instruments in spite of lack of liquidity – But the issue is you can invest limited amount in the same …
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How Automation will affect jobs and industry that service them …
Now spot opportunities and threats
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Back from Holidays …
Market is giving great opportunities . I feel this will be last leg of panic selling .
Now there are bargains in markets in many sectors some @ 2013 valuations
I planning to reduce my cash position and take equity allocation to near 85% from current 78% .
This is in spite of the fact the index is not giving me signs to increase equity allocation … Hope I am not wrong … Only time will tell
Asset allocation depending on your net worth - Interesting perspective
In current times when liquidity is tight bargains are available in many asset class … one need to prioritise goals depending upon their own life stage and level of net worth
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Can u please give the net worth data of middle, upper middle and ultra rich category based on your interpretation.