This is exactly what I’ve been telling everyone. Indexing is still lackluster in India.
Also, NIFTY 50 P/E is calculated by NSE on Standalone Profits. It used to be based on Consolidated numbers about a decade back (Or was it from SENSEX? I forget). The difference between Standalone P/E and Consolidated P/E in NIFTY is usually 25-30%
Dear @dineshssairam
We live and learn 
Yep, Sensex is Consol and Nifty is Standalone. Thank you for reminding me too of that. I had not thought that through.
So yes, the time seems quite all right to start digging our heels in. Rest, so much is not in our hands, and the cards can fall as they may…
Good tidings my friend.
There is a thread on NIFTY Overvaluation where I tried to justify the same thing and then gave up. Relying on a single metric which is not even 1% sample of market does not tell story. A 1% sample by count is 60% sample by market cap. So, what is the right basis of sample count or market cap? That leads to looking at multi variate analysis and having enough evidences with multiple proofs of correlation of public sentiment vs numbers and learn from history.
Providing one of metrics below which i think can give good indication but should not be considered as sole truth.
Below is a chart which is Difference between % of companies making 52 week high in a given month and % of companies making 52 week low in a given month for last 20 years. Look at the width of bullish/bearish environment and length of bullish/bearish environment. together , they set heatness of market. The below view is for all stocks though it is better to have separate analysis for small,mid a large caps (who defines what was mid cap in 2001 - again, there are no rules but our assumptions have to be realistic). One can see last 4-5 bottoms of bear market how they were formed and this could be one of significant variable to create a ML driven model if one creates a hypothesis - In a given month, what is the % of cash one would like to hold learning from history?
Now 2018 end has been a year when NIFTY has been making highs but this metric tells a different story learning from history. Which one we should buy? 
Note : These are part of set of personal data experiments and just an approach, view to do things in a more logical manner. I have all rights to be wrong . i would not be able to share data due to commercial and IP reasons but wanted to share thoughts on alternate ways of attacking a problem for data driven solution
Have you tried looking at P/B? That normalises for the TATA motors and SBIs of the world.
Take the small cap index for instance. Trading at about 2.03TTM. Despite a 30 percent fall from the peak, this is equivalent to long term averages. One can expect to make average returns from here (that said average long term equity returns are phenomenal). However, don’t forget that half of 2011, all of 2012, 2013 and half of 2014 - the index was trading more cheaply as compared to today. Before that it was cheaper in 2009 and before that in 2004. Seem history keeps repeating. While I believe our job is to pick individual stocks, one cannot simply trash the fact that the tide takes valuations of all companies up with it. I am not saying one cannot make an alpha. One can make an alpha even from jan 2018 by being really smart. I am simply saying that cheaper index valuations implies cheaper individual stock valuations even if those individual stocks present a great investment opportunity today.
One more thing - in the last 15 years, the returns have been made in equity when the retail investor is on the way out. 2009 were negative flows and 2013. Both excellent times to buy. Despite the correction, in the last 6 months - retail AUM has grown by 16 percent and in the last 12 months by more than 20 percent. Not sure when the last time was when a bear market coincided by retail investors increasing allocation towards equity. History they have not gotten it right.
I see you’ve CARE ratings in your pf which I have too. I’ve posted some thoughts on CARE on its thread as well.
I observe the stock doesn’t move for days together (literally 0% movement daily). Do you have a thought on what might be causing this - do you think mgmt is manipulating the stock?
I don’t understand why such a simple business doesn’t post out results sooner (the other 2 listed players have already done that). Combine that with high ESOPS and the story sounds fishy to me.
Would appreciate if you have any thoughts on the issues above…
Dear @AKGupta
I don’t think the management would manipulate the stock, but then who knows. Regarding stock movement, I don’t think it is a much loved stock at the moment so that might be reflecting there. Also don’t know why they don’t put out the results quicker. If you think something is fishy, the answer is always better to be out and watch, than in and regret.
Also, not to you but as a general note, I am currently back to not discussing stock specific for personal reasons, so not able to chat on individual stocks. In general I like my sanity of taking any call at any time and I cannot keep it updated here regularly so best if I don’t discuss what I own and what I sell When I do have an opinion on a stock, I do post my thoughts on the stock thread.
Update: As of today now 60 % Invested. #Bullish
Update: As of today 79% invested.
I am taking this call on valuations, as I mentioned in a post above, which seems reasonable if not cheap, and a few further calculations;
Private Capex and Financing has been at a standstill for nearly 5 years since the NPA’s became the priority. This has led to near zero growth in earnings over the better part of the last half decade. I feel that the large corporates must be pushing the powers that be to revive financing to spur growth of the economy.
The inflation is quite low, and the interest rates in relation are quite high, and this is an illogical scenario for it to continue for long. Maybe the interest rates were not tinkered with as the elections were impending, but now that that is out of the way, interest rates should come down dramatically. I would expect over the next 12-24 months big downward revisions in interest rates, which is what will revive interest in financing projects along with a friendly attitude from banks to lending to spur growth. The government will need to pay urgent attention to this as we have a huge percent of our young population which is looking for jobs and those jobs will not come out of thin air. They will need investments.
If interest rates come down, we can expect much higher flows into equity, moreover considering the valuations of most stocks (except a dozen or so favorites) are quite reasonable so it would be a no brainer that money will flow into equity.
On themes, we need large themes which can create millions upon millions of jobs. Just like in the past, IT was a theme which was able to scale up fast and create millions of jobs plus allow us to export and balance trade deficit, I think the only clear winner for the next big theme is Pharma where we can scale up fast, create millions of jobs and supply globally. We already seem like we are big in pharma, but actually we are quite small compared to the total global demand, and we should see not only the local generic players but also global players setting up plants in India to make here and export to their markets worldwide. Someday maybe; India; The Pharma Capital of the World.
Disc - I am not SEBI registered. These as usual are my musings and I am not an economist. Actually I am 12th standard pass and not even a graduate. So please at best read, and hopefully you enjoy it, but please don’t make any investment decisions based on my silly posts.
Dis. 2 - I have actively been investing all my money via mutual funds now, as I believe this cycle is for professional and experienced investors and not for novice investors like me to directly pick stocks.
#Bullish
I have followed you from the beginning. You seem to evolve over a period of time. Its not the fancy MBA’s in posh colleges matters in investing, So dont bother whether you have graduate degree or not. Its the common sense and understanding of the company and valuation matters the most.
On top of that you are an entrepreneur who knows how to run a business and you seems to be learning how to evaluate as well.
I agree to most of the following in your above post. Hope you post your thoughts in this thread. All the best for your investing journey 
Two interviews of Manish Chokhani over past one week. Please do hear them. He come rarely on TV and has a great mind for Macros.
Folks, me think these are directly linked with and make a continuity with Changu Mangu post but feel free to remove should you think otherwise.
This is a personal big one for me but I was traveling so pardon a few days late to update.
I am after a 2 year wait from June 2017 now finally 100% Invested.
From here on, I can simply ride the ship with everything it brings.
I am very grateful to have found ValuePickr, to which I owe nearly all my learning of the equity markets. Also grateful for the knowledge, banter and friendship shared by hundreds of contributors which is humbling and greatly rewarding.
A big thank you to the guys who manage VP. I have learnt so much because you undertook the initiative to form this forum, and followed up with immense effort to maintain this “University of Equity”.
Hi,
Could you please throw some light as where (I mean in which MF) did you find opportunities to invest.
Regards
Dear @jayesh265,
I have had this conversation with a few friends on email and PM’s on VP.
It’s good that you raised the question here. Thanks. Someone I was on PM with also mentioned that although we discuss stocks here a lot, we don’t have much discussion on mutual funds. I think it’s best I post the message here with some minor edits to remove personal comments during a conversation. Please find it below, and feel free to ask for any clarifications.
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My favorite is Parag Parikh Long Term Equity - amc.ppfas.com (75% of my corpus) and the second spot goes to Quantum Long Term Equity Value Fund - quantumamc.com (25% of my corpus)
I am doing direct plan in both the funds.
"I am predominantly deploying with PPFAS. Simple reason, they have a few key mandates that most MF’s do not have…
a. They invest upto 35% in US equities and 65ish plus in Indian equities. So, I am able to participate in the growth of two economies. This was one of the key things that John Templeton advocated. Diversify across markets, don’t have a home market bias. All good economies and their stock markets will go up over time, not only one stock market 
.
b. PPFAS have a mandate to go up to 85% in cash if they don’t find suitable investments. This is a key mandate as most MF managers always know that money comes at the top but they have no choice but to deploy it, since their mandate does not allow them to hold a lot of cash.
c. PPFAS does a lot of arbitrage plays and keeps using money they do not want to invest for long term in short term opportunities.
d. They also hedge currency and have consistently over many years generated around 5 percent return purely from that.
e. They always focus more on capital preservation more than returns (currently they hold more than 20% cash)
f. I have a natural currency hedge with US equity exposure just in case the rupee goes into a tailspin at-least a 35% chunk of my investments are in USD so I will not be battered (like what is happening with a certain neighboring countries currency right now)."
So that’s my take. I have made my life peaceful with not having to take stock calls all the time and earned back many hours in a day.
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I can add a little more; the fund manager (I can personally vouch for this as I have spoken to the fund manager), although I cannot disclose numbers, he has much of his total cash net worth invested in the fund. The disclosures of the investments of the fund managers are public on their website. Also, insiders hold over a 100 crore of the total 1800 crore corpus. They clearly as they advertise have skin in the game and are invested alongside me.
I don’t think I can personally invest better than a well experienced fund manager and cannot find someone better than a person who is willing to bet the quality of his and his family’s retirement alongside me. He is around mid forties so also has a long runway before he retires.
For those who may not know, PPFAS was a PMS and only in 2013 they converted it into a mutual fund but It is still run the same way; So while their public record is not very old, they have been around for quite a long time.
Wish you the best for your investing journey.
Adding few additional points, for which PPFAS is lauded for:
PS: I’m invested in PPFAS LTE, looking forward for their ELSS which they are gonna launch in July.
PPFAS has some very good points going for it like skin in the game, low churn in stock positions, ability to invest in other countries, no pressure to continue investing when markets are hot, good frequent investor communication through youtube videos, bias towards value investing and not rushing after the next big thing following Late Parag Parikh’s philosophy. I hope other mutual fund houses also follow these.
But what troubles me is the so called experience of their analysts. In one AGM youtube video, they introduced them in the end and all looked very very young. Fund manager does have maturity and market experience. But then we are depending on him 100% taking into account all his biases. So there is a huge keyman risk here. I hope the fund does well but if I were a MF investor, I would put some part and not all of my funds into this fund. Maybe we can argue that keyman risk is there for all good fund managers. So maybe it makes sense to diversify across fund houses / across fund managers.
The MF continued with their earlier PMS positions like Noida Toll, Maharashtra Scooters. Noida Toll turned out to be a dud which is ok since some positions will. But what bothers me is they continued holding onto it and justifying their position till the end. Same with Mahindra Holidays. I did not know about IBM position and timing of it but looks like they tried to clone WB and got out since he also got out. Will not be surprised if they now invest in Amazon.
Just my two cents and honest concerns.
update - Looks like they did buy Amazon much earlier than WB/Todd/Ted and increased their weightage recently. WB bought IBM in 2011 and PPFAS in Nov 2013. So my cloning criticism is not valid.
Could you pl share the returns made by PPFAS over 1/2/3/4 years period.
PPFAS is a great fund but overall I think the good days of US economy are over. I would be more positive ASIA , India Vietnam , Indonesia and little bit China …
I dont understand this hype about PPFAS. In the past they had quite a few duds. Noida toll, IL&FS, MT educare, Polaris, IBM to name a few. As the above poster mentioned, they kept defending it and sold off when everything was lost. Even the current portfolio they have a few Mahindra holiday, persistent etc. ( If am not wrong they have been holding mahindra for more than 5 yrs). And their confused strategy/allocation to pharma. They bought Lupin above 1000 and Sun recently before the fall. Minuscule allocation. Neither exiting nor averaging down. They buy global Suzuki and Neste ( instead of the local entities) because their PE is low compared to Indian entities. I am not sure if this is the right way to look at it.
Usually I dont talk about stock/fund performance. But if we look at this fund, their CAGR for 1,3,5 year is 5.72%,13.66%,13.02% respectively. Its more or less the same as the category (Multi cap) performance. But I am surprised to see this not so impressive performance despite the the hype like value, overseas investing, long term etc.
I like these guys for 2 reasons. 1. Only one equity fund unlike the other fund houses who confuse investors with so many overlapping schemes. 2. Less number of stocks in the portfolio.
Discl: I dont invest in any equity mutual funds.
I also am unable to understand why PPFAS is unable to outperform its category of funds since they seem to be doing things very much true to the value and long term approach. One possible reason I can think of is their insistence on holding on to losing positions for too long (probably one of the drawbacks of following a pure value investing approach)
I know we are repeatedly told to focus on the process and not the outcome, but at the end of the day, the outcome is what matters.
Would love to understand what holds back PPFAS’s performance.
