Thanks for sharing your thought process. Really helps to know from an experienced investor.
Agree with you @kkpatel1924. Its a great idea to invest efforts into macro themes and sectors benefiting from them. The best thing is that this approach really saves time.
Real Estate & especially Banking seem like good themes to ride from a 3-5 year standpoint based on my understanding.
Not sure of technology or pharma from the limited research I have done so far because its very important not to overpay for growth.
If the market goes down 20-30% its a very different story altogether.
I think, we as investors should also have the humility to accept when thereās no value and stop fighting the market in search of a miracle. Its much safer to go for low-risk bets in debt or index/ETFās. Some hard facts I have learnt from experience.
Even most celebrity PMSās have returned around 5-6% max ( based on their model portfolio and Iām assuming before their 1.5-2% annual fees) this year while a debt fund or PPF would have given around 7-8%
Some interesting thoughts I shared here on growth vs. value and the pitfalls of overpaying for growth, paying for good management, value traps- Finding value stocks in an overvalued market
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When they come, interesting times can come fast.
Have deployed around 3 odd percent today and some prior to this update. Added two stocks (QuickHeal and Hawkins) and increased allocation to 3M, Monsanto and Ineos. Total invested is now 20 percent.
Sold BASF the next day after not so good results. I still want to buy BASF back, but I think market will offer an much lower price for BASF so I can pick it up then.
I also ended up buying a little bit (0.5% of portfolio )of one stock from my longer watchlist (not mentioned above) but I think that was a mistake. Not feeling good about buying it, will discard it. Mistake made. Not at loss as such but I took a heat of the moment decision and should not have donāt that. The one thing is liquidity allows you to correct mistakes in the stock market. Any other business, it would have been irreversible mostly. Thatās why I am enjoying this business.
Also, I am finding there is a conviction to buy, and another conviction needed to hold 
akaā¦ BASF and the stock I bought today by mistake. But mistakes must be corrected ruthlessly.
ps: slightly confused right now. to go in with more allocation or to wait by the sidelines. donāt know what is the right answer so increasing allocation in small baby steps.
Learning and enjoying it.
Current Portfolio
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@valuestudent - What the risks and opportunities that you see with Quick Heal ?
From my limited reading it seems that they are heavily dependent on Antivirus for PC and now starting to move to Antivirus for Mobile and Enterprise security while expanding outside India. Iād been keen to see their progress only on Enterprise Security given that the Antivirus business has a lot of competition and less scope of growth. I havenāt invested in the business. Ken had a decent article on their business back in Aug-18.
Whatās driving your conviction on Ineos, given you have such high allocation to it? Is it valuation comfort? Or is there something specific that you think will trigger the stock price upwards? Bhansaliās results werenāt good, though Ineos is a superior company probably.
Disclosure: I hold Ineos too, and curious to understand your rationale.
Why Bayer + Monsanto. All action should happen in Bayer now onwards as they are being merged . Or thereās some special situation scenario?
Dear @dipen01
I started looking at quick heal when Mr Damani mentioned about it. I instantly liked the company on account of the business model. No debt, and reasonable growth. Now, I myself have been using a free software for antivirus for many years for my and my companyās computers. Early last year, our server was hacked and we realized the cost of free security. Since then, we invested in paid antivirus, bought a physical firewall etcā¦ so my thinking was, this is where it is going in the future.
Also, there is a real worry with countries on using an anti virus product on key installations on using foreign products. So I feel, sooner or later, a major part the anti virus business of India (which is 20% of the worldās population and has a large number of banks and corporates) will land into the hand of an Indian company, and it should be so. Not only software, there is a major problem with using even foreign hardware as that can be a threat as well. That is also something to lookout for in the future.
So added with decent valuations and a decent yield, this seems like a good business with a good management.
An optionality is their investing in or buying other key infrastructure needed for India like cloud and other tech.
Plus, there are very few tech / internet companies in India that are listed. They will as we go into a more tech driven world command a premium. All Indian innovation is behind VC funding and we usually donāt get to partake in the story. Here we do, so I am in.
Dear @asarun
Ineos forms 4% of my total portfolio. That is the max I am willing to bet right now. The reason the allocation looks higher is because of the amount of cash I am holding. It is a turnaround bet with an MNC management that has been in the business for decades. I am believing their word that the issues with their margins were short term and I am playing this as a turnaround. If I see that they come out with good results due to crude softening and also them repricing to their existing customers then it will be visible in the coming results. If I feel they have a story rather than performance I will jump ship.
Dear @RadheyShyam_Aggarwal
The merger is in progress. For every 3 shares of Monsanto you will get 2 shares of Bayer. Currently as I write, 2 Shares of Bayer are worth around 8,500 (4250 each). 3 Shares of Monsanto are worth around 7650 (2550 each). So you are getting Bayer at a discount by buying Monsanto. So by buying Monsanto you are effectively buying 2 shares of Bayer for 7650. Thatās a decent discount and builds more MoS in buying Bayer via this route
Disc - Not SEBI registered. Novice and idiot investor. Student and Learning. Donāt know much at all. None of this is advice.
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Commendable thinking and hopefully mingled with generous Desh-bhakti as well
The anti virus market is dominated by two US companies - Norton and McAfee with Rashian Kaspersky coming in top 10 as well. Much as I agree with your sentiment, it is hard to see how the top two can yield away market share other than by being much lower priced. The malaise of security threat is much more widespread as you correctly pointed out - hardware with installed software is an even bigger threat. Anti-virus software can protect against an external infection, but if the hardware and installed firmware + OS is designed to send data out to remote servers, an antivirus can do little here. This is the reason why I never purchase phones made by Chyniz companies and I believe there is an advisory in Defence forces to not purchase Chyniz phones. The security threat at routers or network infrastructure gear is even higher and itās shocking to learn that a state service provider had Chyneez routers across their networks! You would be aware of the current disqualifications of a Chyneez vendor Who-ah-vay by some Service providers in Western World. Kaspersky has raised similar suspicions though never proven AFAIK. Most large business in India seem to prefer one of the top-2 and its the smaller businesses that go to QH probably on price front. Let me dig into this a bit more, but please share any thoughts you have on whether you see QH breaking into big league even in India. As they correctly state, the shape of computing and data storage is changing to cloud ( as opposed to on-premises) and this is where QH need to play on a larger field where enterprises are the customers, not individuals like us.
In security field, most of the algorithms have to be vetted by NSA, the US security agency and its common knowledge in industry that they always insist on a trapdoor for their snooping purposes 
IOW, even Norton and McAfee likely have trapdoors that NSA can access and this is where QH can step inā¦certainly Iām rooting for QH!
The reason why I talked about network/routers/phones/enterprises is because the enterprise today looks for an integrated security solution that protects his computers on premises, cloud infrastructure and end-point devices, preferably from one vendor and he does not have to mix and match different solutions. This is where I feel QH might be behind a bit.
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Dear @arunsg Sir,
A very wise person taught me that being the number one is not necessary and being number 2 or 3 with a good business can fetch great returns 
. You know I am talking about you . So I believe as long as they have a value proposition (maybe lower price, maybe their being a Indian company or both) for Indian institutions they will grow in the institutional business in security as well.
Being a business guy, I also know they will be considering many options, and looking at the amount of cash they hold they seem like prudent thinkers. So I would like to see how they deploy their cash whether by buyouts or setting up infrastructure to go deeper with software plus hardware solutions for large enterprises. I must invest in them before they themselves have discovered what all they will do in the future. So thatās how I see them growing.
These guys donāt even hide it anymore 
But yes, I am from the camp that does not mind anyone snooping. Please feel free to scan through my life NSA. Half of it is spent on ValuePickr and the other half on reading, thank you. Jokes apart, I feel quite sure as the world becomes more open and connected, the more the value of national security will come to the fore and I think if nothing else, QH should do all right.
You are absolutely right as always sir. I am placing a bet that they will get into these in the future but we will have to give them 5 - 10 years to build and scale all this.
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Well, NSA may not care much about your debates with DineshSairam 
but certainly no enterprise would like their data to be seen by anyone else including NSA as a matter of routine. Even knowing that their data storage or data pipe is not secure is unacceptable. While QH seems to succeed in retail/individual licenses which is more of a compute model, how they go towards the enterprise/cloud model which includes network model in addition to compute is the big question.
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Thanks got the idea. But again ,the questions remains : Then why to have Bayer! Play through Monsanto only where youāre getting Bayer at discount !
Dear @RadheyShyam_Aggarwal,
I bought an initial allocation into both Bayer and Monsanto as I wanted to own a little bit of both so I am keen to follow them in the interim and then Bayer was cheaper than now and Monsanto was higher than now.
Since then, I have only been buying Monsanto. Further to my last update, yesterday morning I bought for now my complete allocation of Monsanto/Bayer. I now have a 25% Bayer and 75% Monsanto spread. I think now I should have managed to acceptably get the benefit of the arbitrage.
Disc- Not SEBI Registered. I am just learning. None of this is advise. I may buy more or sell anytime.
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Is the merger done or is there still time to buy Monsanto?
The merger has received approvals and expected to be complete in 2020. Until then they are separate entities.
Musings;
The seeds of profit are laid when everything looks bleak or dreary or worrisome. Money cannot be fully juiced from a bull market unless you buy a bear market. The bearishness of the market participants is making me more and more bullish.
Everything is looking difficult. That means there are not many players and only few are willing to buy. Basically everyone is waiting it out 
The business narrative is; Scams, Bankrupcies, Lack of Earnings Growth, Lack of Capital Markets Oversight, There is no FOMO at all; all Investors seem guarded against the machinations, real and imagined, of promoters. In short; what a wonderful time to invest.
The current framing of recency bias may be affecting many people. Recency of last 17 months is telling investors that making money is very difficult in the equity markets. All of this seems like a dream. It is what I have been waiting for. Pessimism is clear and present, so what if it is not the point of maximum pessimism. It deserves a reasonable deployment. If we hit the point of maximum pessimism we can deploy more and faster.
Addressing the current elephant in the stock markets, I have seen two political narratives (yes, no one mentions it on VP but they are playing out in our markets). One narrative is; There is only one savior. The second narrative is; The very existence of democracy is at risk. Both seem silly to me. Neither can the country be dependent on one person and neither is our democracy at risk. We as India will do reasonably well whatever happens with the politicians. We would do well to ignore the machinery and focus on our business; the business of investing (unless one is in politics of course). Well since most of us are not, then we should not waste much of our time with chatter. The only thing we should do is exercise our right, and then forget about the noise. Donāt let your politics guide your investing.
The current market after whipping people into negative for 2018 has since gone nowhere, I am able to buy most of what I want to buy at near same prices over the last 12 months approximately. I am so happy that I can deploy evenly over a time period before the next up leg of the markets so I can fully enjoy the fruits of the next phase of growth in the good businesses in our capital markets.
I have been steadily deploying my cash and am now around 46 percent invested. If the season of bleakness continues I will continue deploying to reach 80 to 100 percent.
One cannot obviously buy the type of euphoria we had towards Jan 2018 and make money, and that should have been avoided. Likewise, one must buy the pessimism to have any chance at making a good investment.
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There is FOMO, not all are on the sidelines, many have tipped their toes in the waters and are ready to take the plunge because I am yet to see a substantial fall in many stocks. Although I am aware of the possibility of the past lows I have seen few months ago being repeated as we approach to the results date. If yes then I will get opportunities, but then again I am thinking that the incumbents will retain their power, so I also donāt want to wait as these may be the only chances, so nibbling too.
Hereās more.
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I will act as devils advocate here -
- Nifty PE is still approx 28. If you believe next up leg of Market will begin soon, that may take PE to 33-35 levels? We have not seen such high PE in history, what has changed in current scenario?
- Do you see MOS emerging in many quality stocks?
- What is the downside to your stocks from these levels if we encounter 2008 like global crisis / negative trigger? (risk / reward in your favor?)
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I would like to answer the first two questions as they are for everybody.
What direct connection has Nifty PE to my stock PF? Although my stocks would fall in tandem with Nifty but for how long, until the next quarterly results? Even if Nifty rises, if I am invested in the laggard of the 50, what good does it do? We have never seen huge inflows into MF too before, not that all those who invest in these MF are educated investors and will stop their SIPs, but who are and who donāt have other income will invest for their goals.
I guess MoS and quality is like an oxymoron, unless an incident happens I guess they will not be reachable, Nestle, Bajaj Finance.
I am waiting for such corrections, falls and crashes, I would want to invest in quality companies which have visible growth for the next 5-10 years and which are not disrupted by any changes, and sit tight. I hope such chances come often, for a small investor like me.
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Dear @hiral
First, I am a student of the game, so I am learning. Whatever I will type below is simply my understanding at a point in time, and will be subject to change as I learn.
Well, I have come to a conclusion that the Nifty PE means nothing. In the time when I was still a relative newbie, I did not know how to frame the exuberance and madness of people that I could feel in my gut, and the Nifty PE was a good representation of the euphoria that I could see and feel, and thus the Nifty PE gave me an outlet to focus on, to express the exuberance of the players of the game. My understanding now is that the game is of buying pessimism and selling optimism (if one wants to sell at all, if not, there is a point at which fresh deployment at least should be stopped till things cool down).
So once I have reduced my errors of commission by staying out of the 30-40 percent drop that comes after peak euphoria, then I can start taking on good businesses at decent valuations.
So, the Nifty PE maybe a normal would be 25-30 if the constituents are changed to FMCG companies, or a normal 10-15 if they are industrial conglomerates. Especially in the earlier years of building a portfolio being very aware of the exuberance and getting out (and believe me it is very difficult to walk away when money is being showered on you ) can have a very remarkable impact on oneās capital growth and that is all there is to it. Avoid Exuberance and buy Pessimism.
Well, the GFC was a spectacular crash and burn and except for a very few no one could see it coming, but those who focused on and took decisions based on the exuberance before the event should have done quite well. I could not say what the downside to my investments will be if such an event happens in the future. But I am a business guy, and have made many many investments that have gone to zero Of course, also some that have done well that more than made up for the oneās that went to zero. So whatever the impact if there is a GFC like event, I can handle it (I am investing money in the equity market what I can sleep comfortably with). The key according to me at least is not getting pulled in by the greed of making a lot and then taking risks that can lead to ruin. If my portfolio is hammered by a 50% fall, my ego will be more bruised that my future.
Since we are on the Nifty PE, I did a small exercise. As we know, the Sensex has 30 stocks and the Nifty has 50 so there is no rule that I cannot build a index myself and eliminate a few stocks I donāt like in that index
I took the excel shared by @diffsoft and removed a few stocks from the index. I removed Tata Motors and the banks with NPA troubles (I must add I was aiming for approximation and not precision). The Changu Mangu 46 Index Consol shows this as per Feb 2019;
Attaching the edited file: Nifty PE Q3 FY19 for valuepickr_corrected.xlsx (27.7 KB). So as you can see the Consol PE was 20.30. So when I bought late in March at around 10500 odd the Consol PE was below 20. It looks reasonable for the constituents.
Having said the above, please do not take this above for investment decisions. These are simply the thoughts of a novice who is learning. I may be dramatically wrong but like I said, I am able to sleep peacefully with my decisions.
Also, @ChaitanyaC - Nice posts.
Disc - Not SEBI registered and none of the above is investment advise.
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I should add my thoughts to your understanding of pessimism and optimism. Once something becomes conventional wisdom, it is no longer weird, or wild. In the past when people had no chance of knowing and lacked information, they must have gotten out of the markets once they start falling, but not anymore in this generation, with this generation. Even a novice like me has come to know that you should buy when it falls, if I could understand and practice that (been waiting for a few stocks to fall), everyone else can too. Who have seen market cycles would wait for the right time as they can time, not the freshmen, so better to buy what one feels like a good opportunity and sell accordingly. Until the evolution happens, the lessons are to be learnt.
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