Thanks Dinesh, for your views.
Hey Dinesh. What do you think about the current valuation of Rajratan Global Wire? Is it justifiable?
I wouldnāt buy Rajratan Global at CMP. In fact, I wouldnāt buy it even if it fell 50% from CMP.
But as I mentioned earlier in this thread, I would have loved to buy it around April-May 2020. The missed opportunity is my own fault for not researching it soon enough after I shortlisted it and āthumb suckingā as Charlie Munger would put it.
Rajratan Global will be one my biggest mistakes (Error of Omission), right up there with DHFL and IndusInd (Error of Comission).
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Iāve done an extensive research about Rajratan and the business has tremendous entry and exit barriers. Over the years the company has been garnering its market share from the local players and also it has improved its global footprint towards different western countries. Considering all this aspect the company has been well transitioned to be a global player in Bead wire segment. But like you mentioned the valuation seems to be overpriced but I donāt know to what extent it is. Have you done any DCF model analysis for Rajratan? If so can you please share it here or DM me. It would be a great help for me. Thanks Dinesh 
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Dinesh,
Do you still hold a large cash position or have you deployed the cash ?
Please see my message above.
Hi Dinesh, I have big respect for you because of your independent and clarity of thinking. Pls do not take below as any advice, it is only a discussionā¦
When we are not clear of which stocks to buy or none is able to fulfill our criteria, is it better to park money in balanced/hybrid funds than debt funds, specially in a bull market? I was checking that in Nov 2020 Market was at its all time highs (approx. 42K which it made in Jan 2020) and I missed deploying some cash I had then as was thinking to keep that part safe but in hindsight, the bull market gave index returns of 30-35% since then in 8 monthsā¦parking the cash in hybrid fund would have already yielded approx 40% returns by now and even if there is a 30% crash anytime soon, we would have fared better than the debt fund returns over the yearā¦
would be good to know your thoughts and learn from your perspective as wellā¦
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First off, Risk Aversion is not the same for every individual. When I want to have Cash in hand, I prefer taking as low as risk as possible just to protect my capital. If you would like some Capital Appreciation, thereās nothing wrong with going for riskier options.
Secondly, the keyword here is āriskā. Everything is crystal clear in hindsight. Nobody, at any point of time, can predict which way the market will move and for how long.
TLDR is, if youāre willing to take risk, you can invest in riskier funds. But just the act of taking risk doesnāt guarantee returns.
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Very good insight. IMO Risk needs to be evaluated at every crucial juncture of journey and/or at regular or periodic intervals.
@Investor_No_1 I think the return at present of the yesteryear is just a point return at current peak has no or little relevance in the long term. More often than not the most people get mesmerized with lofty returns of bull market until bear attack mercilessly!
IMO average return over a long period of time (I mean 10yrs+) is what important considering the risks as well i.e. how well the risks has been managed peacefully to achieve the underlying return. The peak return of bull run is deception at best. Divide the peak return of bull market by 50% - this is the actual return to be considered and to be contended with.
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@dineshssairam @Vijay_Kiran
Agree to your points very well, the point I wanted to make is that the cash position that I intend to keep risk free would neve mean to enter equity, whatever the market levels, bull or bear etc.
Now, the part that I intend to keep āsafeā or ārisk freeā for entering equity is something not actually meant for debt but is just sitting there because of my assessment of āriskāā¦
even if we take 3, 5, 10 or 50 yearsā¦hybrid and equity funds have done much better than debt fundsā¦even if one bought at previous peaksā¦
So, I very well do understand āriskā and safe money should be in debtā¦I was talking about the money that I intend to keep safe until putting it into equity one dayā¦
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Very good point and discussion.
I am just taking liberty to extend the set understanding little forward.
All is good when things and circumstances turns out to be positive after devastating downfall in Equity as we have witnessed in couple of extreme cases. My scenario is what-if the history doesnāt repeat or rhymes? And/ Or the bear extends its grip beyond the imagination or historical facts? If Someone with not so deep pockets got caught in unimaginable situation for a extended period of letās say 5, 7, 10,15 years then what? Therefore risk assessment is individualistic in nature but not competitive with others. Asset allocation is the key. IMO One should not follow the herd mentality. The small edge of here and there is insignificant. It is based on context of individual overall financial situation and family obligation. I felt Being fearful is always good.
But at the same time i agree for calculative risks as you espoused depending upon individual case. I am afraid it cannot be generalized. Great discussion and am learning the others perspectives as well. Keep them coming.
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Extended and prolonged bear market will anyway make equity investment non viable. Japan Nikkei is often referred as a case study. Infact in Tokyo, real-estate prices are falling due to shrinking population. This is kind of permanent contraction of economy and its manifestations.
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Cash in FD is for Emergency
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Cash in Equity is waiting for the opportunity.
Quoting Abhishek Sir, post for reference.
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Exactly, the biggest risk to equity is something like a great depressionā¦when for almost 50 years indices went nowhereā¦we need to remember that and I have in my to do list to read books on great depression in detailsā¦if anyone has any good books on this era, do shareā¦
Having said that, history may not repeat itself, global central banks & governments have learnt their lessons well over great depression and hence the magnitude and urgency of reactions they takeā¦ but still we as small investors cannot undermine such or similar riskā¦
However, if great depression or similar event after a big crash followed by 50 years of stagnation do happen, then we should never be more than 20% in equityā¦considering we all are small investors and not deep pocket peopleā¦but that may not be best decision to take for various reasonsā¦
There must be some companies which must have done extremely well during the great depressionā¦would be interesting to find out how their stocks reactedā¦being invested in stocks of such caliber might induce some confidence to keep equity exposure greater thoughā¦
Disc: Above thoughts purely personal and for academic purpose. Not an advice at all and I maybe completely wrong. Thanks for great discussion!
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Assumptions based on Extreme and infinite optimism or pessimism in a magnitude of human average life span are both dangerous and appears hilarious!
But yes for someone in late fifty made 100% equity investment for assuming long term time horizon and deep recession of even 5 to 7 years will have devastating effect on individuals overall finance. Beyond a point equity investing is just case to case specific. It cannot be generalized either way.
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Just one correction, above were not assumptions just awareness of possibilities as you yourself mentioned ābear extends its grip beyond the imagination or historical factsā and historical fact has been 50 years in Great depressionā¦
Agree it can be dangerous to think and act on extremes but certainly not hilarious. Cheers!
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I think this whole argument can be simply reduced personal preferences of Risk Aversion.
Iām comfortable with just protecting my capital. So Iām not concerned about investing in Liquid Funds. Youāre interested in Capital Appreciation. Maybe youād like to invest in riskier funds.
Thereās nothing wrong with either choice. Itās just different choices, is all.
But Iād just like to point out that higher returns are not owed to you just because you took higher risk. Risk is risk. You have some probability of facing the upside, and some probability of facing the downside.
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How do you reconcile with the a theory that we are moving to high liquidity environment where valuations are expected to remain elevated.
Wouldnāt you be holding cash for a long long time?
If you want the technical answer, āhigh liquidityā typically means lower interest rates. Lower interest rates means lesser Discounting Rates. Lesser Discounting Rates means any Valuation I do will be a little more lenient than before.
Ex: I currently use 15% as the flat Discounting Rate for all of my personal Valuations. If interest rates remain lower for an elongated period of time, the 15% might drift lower to 12-13%.
However, the other side of the coin is that if interest rates reduce even further, Stocks get marked up too (Due to the above reasoning). In other words, even if I think my Valuations should be higher, so will other people. Thereās no reason they shouldnāt.
Hence, weāre met with a stalemate. Ultimately then, there ought to be a sweet spot where my requirements for Value with a bit of Margin of Safety and the market quote(s) for the Companies I like should converge. Until that time arrives, I am comfortable being in less risky securities.
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Kindly share your opinion on Manaksia industries;
Hello,
BUSINESS DETAILS:
Sponge iron and value added steel products comprising Cold Rolled Sheets used in interior and exterior panels of automobiles, buses and commercial vehicles, Galvanised Corrugated Sheets used in the rural housing sector and factory buildings and Galvanised Plain Sheets, used in the manufacture of containers and water tanks and Colour Coated (Pre-painted) Coils and Sheets for sale to construction, housing, consumer durable and other industries.
ļ· Aluminium rolled products in coil and sheet form used in closures, bus bodies, flooring and general engineering
purposes and Colour Coated (Pre-painted) Coils and Sheets for manufacture of heat exchanger fins for air conditioners
in the HVAC sector and Aluminium alloy ingots used in the steel and automotive industry.
ļ· Roll on Pilfer Proof (ROPP) Closures for liquor and pharmaceutical sectors, Crown Closures for beer and carbonated
soft drink sectors.
ļ· Kraft, Brown and Fluting paper
FINANCIALS:
Market Capitalization:440 crores. TTM profit:78 crores. P/E:5.57
Main reason why i am interested in this stock is that the latest annual report released 2 days back discloses mutual fund investments of around 400 crores.On top of that the working capital of 263 crores.As a result it is now trading at a deep discount to cash +WC.Also all comparable stocks like NILE,Ram Ratna Wires,Precision wires are also at higher P/E multiples.
Furthermore,the company has paid 117 percent of its profits last year and 33 percent of its profit this year as dividend.
The shareholding has also gone up in the past year by 2 percent to close to 75 percent.
Kindly share your thoughts.
Disclosure:Not invested.