Nifty PE crosses 24|A statistically informed entry-exit model!


#1105

(VP_amit) #1106

Interesting statistic from Berkshire Hathaway:

image

… so such a drop has happened pretty much once every decade since the 70s to such a great company.


(Tejas Chachcha) #1107

All stocks go down when there’s panic on streets, though difference is quality stocks would bounce back and recover quickly while the dud ones never come back.


(Kamlesh Patel) #1108

“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”- Charles Mackay


(PavanM) #1109

Perhaps we “should expect sub moderate gains” in the near future.


(Kamlesh Patel) #1110

Corrections are important. In a way, they show us who is man and who is boy among stocks.


#1111

Brilliant article to understand why predictable FMCG companies trade at high PE despite moderate growth. Also, why some overvaluation is best ignored by long term investors.

http://www.lindselltrain.com/~/media/Files/L/Lindsell-Train-V2/investment-insights/2017/Confounding%20Compounding%20-%20February%202017.pdf


#1112

Another in the series

http://www.lindselltrain.com/~/media/Files/L/Lindsell-Train-V2/investment-insights/2016/Re-evaluating%20Valuations%20-%20Exceptional%20Companies%20Deserve%20Exceptional%20Multiples%20-%20April%202016.pdf


(josephseby) #1113

The famous buffet Indicator. MCap to GDP ratio: Whom to belive

Bloomberg says that Mcap to GDP ratio has crossed 100% where as gurufocus says that it has only reached 66%. Can any members in the forrum
put some light???


https://www.gurufocus.com/global-market-valuation.php?country=IND


#1114

66% seems to be too low. Close to 100% appears more accurate unless they are trying to exclude holding company mcap to avoid double counting


(Sandeep Patel) #1115

Our MCAP-to-GDP ratio is ~89% currently.

Total MCAP of BSE listed cos is 145.75L cr as on March 5, 2018
India’s GDP would be ~164L cr (+/-3L cr) at the end of March 31, 2018

MCAP source: https://www.bseindia.com/
GDP source: http://www.imf.org/external/pubs/ft/weo/2016/02/weodata/weorept.aspx?pr.x=55&pr.y=8&sy=2000&ey=2021&scsm=1&ssd=1&sort=country&ds=.&br=1&c=534&s=NGDP%2CNGDPD&grp=0&a=


(gautham1) #1116

Guys,
isnt there a flaw in market cap/gdp theory?. because GDP will have a lot of unlisted companies.


#1117

To some extent yes. But also look at other way : Holding companies which leads to double counting of mcap. e.g. HDFC Bank contributes a significantly to HDFC mcap also. So effectively it adds to about 6 lakh cr to BSE mcap.


#1118

Here’s a good resource to determine valuations and performance of each sector before drilling down to individual stocks in that sector: https://www.indiainfoline.com/markets/sector-overview/

Valuation: https://www.indiainfoline.com/markets/sector-valuation/

Performance: https://www.indiainfoline.com/markets/sector-performance/


(Mahendra243) #1119

when all the global markets are going up…India for sure has under performed all markets i think in 2018…what may be the factors behind this? LTCG selling to book profits before march? MSCI warning of not sharing data to SGX Nifty from 6 months now…any other factors ?


(Yogesh Sane) #1120

Nifty 50 moves in tandem with global indices as can be seen from the chart below.

Source: Google Finance

The only time our index moves away is when there is some India specific event like general election or demonetization. Even then it catches up quickly.

Looking at PE ratio of such an index and making decisions based on that may not be optimum since earnings are driven by domestic factors while price is driven by global factors. Yes, large caps do have a sizable export component but domestic economy does play a big role in earnings.

Perhaps a better index would be a small or a mid cap index as most of the VP members invest in small and mid cap stocks. However, PE ratio of NSE Small Cap Index is 90 and that of Midcap index is 51.


#1121

Another great article from Lindselltrain. Why high RoE companies are generally good buys despite high valuation. Rings “ITC” bell in my mind

http://www.lindselltrain.com/~/media/Files/L/Lindsell-Train-V2/investment-insights/2016/Re-evaluating%20Valuations%20-%20Exceptional%20Companies%20Deserve%20Exceptional%20Multiples%20-%20April%202016.pdf


#1122

From Ray Dalio: Why India is great investment for a decade and why worrying about 2008 type of meltdown is futile…


(phreak) #1123

9700-10200. This shopping range has just come into play today.


(Mahendra243) #1124