Changu Mangu The Bear - Portfolio


(Changu Mangu) #1

I am doing this as an academic exercise and as a experiment for myself to have to explain with typing out what I am doing, what I think and why. I hope I learn by logging what I was thinking, when I did something.

So I have recently created a portfolio for this purpose, and would like to see how it performs over time, with the logic I invent, as I go along. The investments are real, it is the brain that I suspect is unreal.

As I write, there is no blood on the streets; value investors are going bald fretting, fuming and cursing. Their wives are slowly moving back for the time being (looks like for a long time) to their parents houses, unable to find the their husbands amenable, considering the frustrated souls they have turned into, chasing a thing of the past unable to live in the present, trying to find value. There have been a few reports of burnings of copies of “The Intelligent Investor”.

On the other hand, momentum investors are buying ferraris, traveling to exotic destinations, partying with the jet set, and when they find spare time, from an exclusive cigar club secluded in some five star hotel, while nursing a chardonnay in one hand and a finely clipped cuban in another, not missing out on chest thumping on twitter. Yes, you have to set either the chardonnay or the cigar down when you tweet. Its just good manners.

Creating this portfolio:

So, I decided I should play some momentum in stocks I might like to, but simply otherwise don’t buy, waiting for bloodbaths of the past which don’t seem to come. It feels they are now “a thing” that used to happen a generation ago but now the issue has been resolved forever, and we should not expect them ever again. The new rule is is buy the dip. When it dips, buy the dip. Don’t talk, buy the dip. Value investing is dead. Long live momentum investing.

Right now, this is a momentum based play for me, but I may change my mind anytime. I am consistent about that at least, changing my mind all the time.

This is the first status report. Most investments (ahem…) made at the end of October with 2 stocks added in November 2017.

Disclosure - I am not SEBI registered, I am a novice investor with no real experience. None of the stocks are recommendations. In fact truth be told, I expect and hope for the invested part of my portfolio to drop at least by 40% and ideally by 50-70% (fingers crossed) sometime soon.


(rohan.imhere) #2

Interesting post and portfolio. Looks like you are sitting on a lot of cash and waiting for the bears.
I wonder how ‘The Intelligent Investor’ book has suddenly become so popular. Was it popular in Jan 2008 too?
Coming to your portfolio I didn’t understand the price of Lasa Supergenerics which listed on 22 Sept and was always above 120rs. How did u buy it so cheap?


(Devaki Nandan Tripathy) #3

How did you choose the stocks? Is the investment real or virtual? Lasa supergenerics purchase price seems to be incorrect.


(Changu Mangu) #4

I am the bear :wink:

I am guessing equally unpopular in 2007-2008 too…

It is the actual cost price I get it as part of holding OSCL pre demerger.


(Changu Mangu) #5

Real. But not advisable. All momentum. Expect it to fall 40 percent at least. Fingers crossed.


(Devaki Nandan Tripathy) #6

What parameter did you use to choose the bunch? How did you quantify momentum?


(Changu Mangu) #7

@devaki.tripathy I do my list building from many places. Momentum by default is just a style like value or growth investing. Momentum is basically betting you have a decent stock and it will go up since everything is going up. That is why calling momentum investing “investing” is a joke.

So if markets continue to rise, most of all decent stocks rise. But when they fall, everything falls.


(Devaki Nandan Tripathy) #8

That’s not momentum. That’s beta.

Momentum investing is a system of buying stocks or other securities that have had high returns over the past three to twelve months, and selling those that have had poor returns over the same period. Many stocks here like Exide or Gati can’t be called momentum stocks.


(Changu Mangu) #9

Let’s see if they turn out to be. I am not playing momentum on technicals. I am only willing to play it from some within my defined range of stocks. So it has to be purely from stocks I usually want to buy and not on some magical charts. Thus when the markets crack, I can add. This is momentum, value style :slight_smile:


(Devaki Nandan Tripathy) #10

And why no pharma, no finance and no large caps? Why is the portfolio skewed in favour of small and micro caps? I mean to say if it’s an academic exercise, the sample size should be large, diverse and broadly representative of the market, so that we all can learn from it about market behavior. :smirk:


(phreak) #11

This looks more like throwing darts in the dark. I would consider buying Chemical stocks couple of months back (Carbon stocks like HSCL, Rain, Graphite India, Thirumalai, BEPL), NBFCs like Motilal Oswal, Edelweiss or commodity stocks (Sugar few months back, Aluminium/Copper now) as playing momentum because these were/are hot stocks as they were posting good numbers or were expected to post good numbers (in case of commodities), were perpetually in the news cycle positively and the market was willing to ignore any and all semblance of valuation for them and technically these were trading above 20/50/100/200 DMA through the period and the only retracement were towards the 20 DMA which they took as support for another leg of the rally and so on as playing momentum (Ok that’s one super long sentence. James Joyce would be proud).

In physics momentum is mass x velocity. I consider the equivalent here as week-on-week/month-on-month price movement accompanied with a positive news cycle and good numbers.


(Changu Mangu) #12

Pharma can only be bought after everyone has lost hope on it. Sort of like infra is today. Else it is avoidable. We don’t have to buy everything.


(Changu Mangu) #13

You bet. Of course it is :wink:

There is no place for a value guy anymore.


(Devaki Nandan Tripathy) #14

No. In personal portfolio you can buy anything you like and avoid anything you want. But in an academic exercise, you can not choose because changing sample size or components would contaminate the result.:smiley:


(Arun S G) #15

Now in all honesty we can say @valuestudent’s Value system is lost :stuck_out_tongue: So the question I have is, what is the expected holding period? Do you plan to cut the weeds and water the flowers in this portfolio over time? Also, why not instead buy any mutual fund that has a diversified portfolio and might mirror the same return?

Importantly for learning purposes of the readers - did you construct this portfolio for any meaningful return, or more from a psychological necessity to be active, even if it may risk a loss of real money?

Of course, bloodbaths and depressions belong in the past and will not happen now simply because this time its different. :ok_hand:t6:


(Devaki Nandan Tripathy) #16

This has happened to me multiple times. Please don’t take it personally but more as an academic exercise.

This kind of investment is not called Momentum Investment Strategy. Its called Fear of Being Left Out Investment Strategy. I wait for years, hunt and find grossly undervalued securities, buy them and wait for it to mature for years. Sooner or later market finds true value of my investment and my investment grows multiple times. Then the market becomes hotter and the investment seems highly overvalued. I feel I am lucky to cash out and sale everything. But contrary to my conclusion, my sold securities start to hit upper circuit. People who know neither about EPS nor about technical things like support, resistance and breakout make tons of money. That makes me question my judgment.

I think the market has become irrational. So I try to beat the market by becoming irrational myself. I think that’s the way to beat the market consistently.

Disc. : The story, all names, characters, and incidents portrayed in this story are fictitious. No identification with actual persons (living or deceased), places, buildings, and products is intended or should be inferred. :grin:


(Changu Mangu) #17

Yes Sir. It is not just lost. It is dead.

I don’t have any clear idea on until when I will hold. This is an experiment. I may water the flowers but considering the markets are now expected to never go down meaningfully, the opportunity may never again arrive.

Sir, now I am not investing. I am in a casino. This is for entertainment. So no point of a mutual fund.

Purely to be active even though I know I will lose money right now.

That is the final truth. We just have to live with it :slight_smile:


(Changu Mangu) #18

But I am admitting it. It is right there in my first post. That value investing is dead and long live momentum investing.

Plus I am also letting you know that it is a casino now and when in a casino you can only gamble.

That is exactly the strategy.

Lol on the fictional character.


(Changu Mangu) #19

Ok, so now that all the jokes are done, I will type out what I thought should be my strategy.

First, I have found I do not want to mix stock investing with any other investment including FD’s etc. Better to keep them separate. So the portfolio allocated for stocks can either have cash or equivalent or stocks. Now where it reaches in 20 years, I will find out.

For the last few months I had a lot of struggle as the markets kept rising and rising and kept wondering what should I do and kept moving more and more into cash. Finally I came around to the realization where I realized that neither can I predict not can I time, but I can prepare. and leaving the markets fully was not a good idea.

So a part of that internal struggle process was finding out what am I willing to lose in capital. With a lot of internal dialogue and some in and out, I finally found a percentage that if lost (50% of the current invested) I would not be bothered. So I left that much invested and the rest was changed to cash and equivalents.

Also, if I kept running away from the markets every time they peaked I would be going senseless as before if I tried to become 100% out of my investments. So I decided I will use my head a little lesser but not stop using it completely.

I would also because the markets become elevated keep missing chances to strike at some opportunities that may be short or medium term in nature… like Sintex Plastic which I did take a strike at… looked like it had fallen a lot, if I just keep staring at the Nifty PE I would not strike. I have left so many in the last few months.

Which stocks or what is momentum is not worthy of discussion because honestly that is not investing and it was just a joke since only momentum investors seem to be having fun. It is not a strategy. There is no such thing as momentum investing. Everyone should buy what they think is a good long term investment and my stocks are based on the advise I choose to take. What is the meaning of momentum is also quite irrelevant. In truth all momentum (however the conclusion is reached, with charts or otherwise) it is an expectation that stocks will go up in the short term and is not long term. Currently I find investing based on study is not possible. By the time you finish study the stock is up -10-20% :slight_smile: so simply invest a small amount and watch.

I first agreed with myself that ok, I will buy small stakes in stocks that I would surely buy in a deep correction and not be scared out of my positions.

Now it is not possible to predict which of these will offer the best opportunity when the time comes. When it does, then the allocation for further investment can be decided at that time for incrementing positions. Maybe I will give just one stock the full amount from the currently available funds or maybe to 10 stocks. That I will know in time.

So this is the real thinking.

  1. Keep something invested just not too much right now.

  2. Keep invested on the stock advise you can live with.

  3. Be ready to strike at whichever from the above offers opportunity that makes sense.


(kartiks) #20

Hi @valuestudent

This is interesting style of sharing Portfolio.

PF has 25% + stocks which are Dolly K , Pabrai’s favorites.

Also the GST / De-mon theme well covered.

Can this PF be seen Infra overweight ?

I have none of these 25 in my PF, being Technology heavy (25%)

Thanks for sharing the list, I am picking Smart-link as watch-list from here.

thanks.