Here is the holy grail
Yes I agree but frankly I was too late in realizing this and I feel the time now is not right given the current valuations. For ex, I should have sold Torrent at 1600 odd and Granules at 140 odd…At these prices, I dont want to sell unless a no brainer opportunity comes along.
My thoughts on cash allocation
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Personally, I find it very difficult decision to implement. The only times it has worked for me is if individual holdings run way beyond my assessed fair PE band. In such cases the decision is somewhat easier but again, the risk is that my assessment can be very easily wrong.
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In a range bound market, it is very tempting to sell at the top of the range and buy at the bottom. It has been fairly common in recent past for individual stocks to fluctuate quite a lot. Let say I am holding cash and market falls, then I feel very happy about being “right” but then suddenly in a matter of 1-2 weeks, the market moves up sharply and I sit there looking like a fool. We dont know when the market will break the range. A good trader will happily buy on such breakouts but normally I would get paralyzed and wait for a correction.
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I have been guilty of thinking about it less when the market last hit 9000+. I now remember clearly that all the stocks in portfolio were going up. I think that is a strong signal to keep in mind.
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Till now, I have been buying when I get my salary and my holding is trading in my comfortable PE band. I have been thinking of keeping some cash in portfolio but haven’t been able to implement it.