BULL in BEAR Market

Great cut out. Who’s interview is this. I remember reading similar thing in late Paragraph Parikhs book.

Druckenmiller interview in Barron’s in 1988
“Money Manager Stan Druckenmiller is still bearish”

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When you are planning to be Bull in bear market - Keep watching for MEGA SHIFTS

How Inflation / Deflation @ global level shifting is very important …

The above shift tells us why pure value Ben Graham investing was great till 1980s and why Buffett new style worked after 1990s . Probably Warren Buffet was one of few who saw the mega shift from Inflationary to deflationary ( low inflation ) …

India shift can be different - India was in high inflationary era in 1990s also and to some extend in 2000s because of oil price and fiscal imprudence . Now in last 5 years … we too have moved to low inflation era . If China slow down materialises then this disinflationary era can be longer … Unless we see mega size war - ( Real or Trade ) - this deflationary era will not shift to inflationary era …

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Some points for me and my friends who are keen to be bull in bear market …

Feb to May 2019 will be interesting , testing times … It is probably the time to be most active and build long term portfolio . I am reducing my cash levels hope to be 90% in equity by Apr/ May 2019 .

This period might severe bout of volatility and sharp correction in lot of stocks for no reason whatsoever - We should try to use this phase to spot & leverage opportunity presented to us by irrationality …

Only Caution is not to leverage as survival through these times is more important than thinking huge returns .

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Do you mind sharing your watchlist business where you want to deploy ? and what is the thought process as how you deploy your cash…like say if your watchlist scrips correct 10 or 20%?

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I don’t talk about my stocks and watchlist in public forums directly . You can see my post in various threads to see in what sectors I have interest in … Plus to some extent my investment approach is outlined in Portfolio Analysis - Shailesh

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

  1. Help cos. Having debt by lowering the interest costs.
  2. Help banks by lowering NPAs and with higher demand for loans.
  3. 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. ?