Price anchoring is a common bias many investors suffer from. So one has to consciously try to overcome it. Maybe buy a small quantity of shares even after the run up has happened and gradually get over the bias. regarding buying on the way up, usually the 200 day moving average is considered to be a sacrosanct level for long term trend change though that’s not etched in stone. Some people consider the golden crossover (50 day moving avg crossing above 200 day moving avg) as an important event. But I think there are different ways of spotting trend changes. I follow the more visible patterns of trend change and continuation patterns I have mentioned many times before.
Ideal stop loss after a breakout is to follow the recent swing low or the 200 day moving average or some percentage below buy price. One needs to figure out what is suitable for oneself.
I still end up buying a big lot on entry and sometimes add on way up. A recent learning for me was in case of Laurus. I had bought at around 360 before Corona debacle and watched it go up to around 430-440, booked partial profits and once it went down, along with markets, felt jittery and sold out around 350 or so. But once q4 results were out and stock price reacted positively I again got interested in the stock and had it in my watchlist when it was around 500 plus. But then came a piece of luck when it corrected because of the first tranche of selling by Warburg when stock price corrected to 420-430 and once could have bought as much as one wanted. Post that there was another tranche of selling by Warburg at around 510 when I added more and last small tranche I bought was around 610 as I was very confident it was going to cross its all time high of 640 soon enough. Post that I have been riding it. But the whole process was quite enlightening for me on how to buy on the way up. I have read a lot about pyramiding on the way up, but never did it firsthand in a serious manner with decent allocation.
Once a sector starts its bull market, and gathers steam, it keeps rolling till it hits a wall. I think currently pharma is in a strong up trend. Personally I had bought alembic once it crossed all time high of 790 (post which it underwent slight correction). But with the current rally in most pharma stocks and the kind of results alembic posted, I was comfortable adding more after the qip was concluded as I felt a big overhang was out of the way.
hi @hitesh2710 . My query is not about laurus. How do you build conviction to buy at a time when a large share holder is selling?. (If I am not wrong warburg has a good reputation) . I understand these institutional investors have their own rules, and we shouldn’t read too much into it. But most of the time, market participants consider it a -ve event. (Considering these funds know the management closely, one might think they know better than the market. And the price fall during that time also adds to it)
It has now been widely acknowledged that Pharma Sector is having a strong momentum. However, what is your opinion on the momentum which the technology sector is also having since April-May. Many of the smallcaps have doubled whereas the mid-largecaps have also gone up 40-50%. How do you see the sector on the charts?
I had the same “Price anchoring” bias, I used to deploy fresh money either in new stocks or in the portfolio stocks that hasn’t moved up and end up allocating more capital to stocks that are falling down (or) going through time correction. As an effect of this, most of my top holdings delivered little to negative returns. When these stocks break out of time correction after long time, I end-up booking partial profits and go through the same cycle again.
Since 2020, I am trying to come out of this mental model and started averaging up and trying to ride on my winners. So far the results are much better, but still need to understand the downsides of this approach when the tide reverses.
@hitesh2710 ji, When averaging up, would you invest fresh capital or move money from existing holdings? In the current market condition, I’m little scared to deploy fresh capital at market highs and hence ending up selling existing holdings where my conviction is low which seems to be a portfolio churn to me.
@hitesh2710
Hitesh bhai can u go thru below kopran results and it’s chart and give your valuable advice . It has shown excellent June results.it looks very interesting from charts
hi Hitesh
on the subject of conviction,when Laurus come out with the 1 st quarter result,i was wondering why management has not gone for higher shareholding as it was obvious the share price will shoot is my fears unwarranted ?
Laurus Lab management is appearing in TV frequently and mentioning about his bullishness in business . Can it be one of the criteria to sell the stock as you have mentioned earlier whenever management appears frequently in TV , we should be careful.
I think expecting the management to jack up the shareholding when they knew stock price was going to go up it stretching things a bit. There are some managements who might also be interested in focussing on business rather than these stock market related gimmicks. I fail to understand why after all the information is out why we don’t focus on the business of the company rather than get distracted into unnecessary stuff.
@HIMSHAH Kopran charts are strong… I dont follow the company fundamentally so no idea about its prospects.
I too was surprised at the apppearance of dr chhava on tv today. Looks like a bit too much exposure in too short a time. I think we need to keep a watch for more such antics from the management.
Thank you so much for your honest guidance. It is extremely useful for novices like me. I think I understand technicals even poorer than fundamentals. Wanted to get your thoughts on something I observed in the laurus labs order book today:
What we can see, is 9 lakh stock units waiting to be sold, while only 70,000 units waiting to be bought. To my untrained mind, this could be a premonition of an impending fall since a lot more people are willing to sell near the higher prices. Is this the right way to think or is there a flaw in this thinking? Would also suggest/request others to add their comments if they have any.
Disc: I am not invested in laurus, and do not intend to right now. But hear about it a lot in the news these days and hence wanted to check it out, technically.
If you want to look at Laurus as an investment candidate, look at the work put up by Donald on laurus thread rather than focus on these intra day buy and sell data and the faulty inferences based on that data. What you have put up can change in a matter of minutes. How much weightage should such things be given?
@Ajjugattu, Please avoid these one liners which add no value to the discussion. If you have to put up anything meaningful even on pledge, put it up on the company thread with relevant data and source of data. Even on gmm thread I saw a lot of garbage being piled up. These kind of posts disturb the smooth flow of reading useful stuff as these one and two liners tend to clutter the threads. On the subject of pledge, i have made myself clear about my views.
If you are interested in a company for purpose of investment, read the thread fully before posting any comments. Most of the times, the concern and query is already addressed earlier. If not, and if you feel your post adds value to the thread, then only add the post.
At valuepickr, we encourage democratic participation from all forum members, new and old. But whatever we put up, whether its a piece of information news or a query, it should be value accretive to you and others. Otherwise it holds no meaning.
Thanks, hitesh sir. I am reading Donald sir’s collaborators corner Laurus post : Laurus Labs: A much bigger journey ahead? It is extremelty informative. It is just a bit scary to buy a stock which has run up 3x in 4-5 months. Definitely need to dig deeper to build stronger conviction.
Sahil, I may be talking from the experience of an untrained eye.
Ever since I came across VP, I have been reading a lot (VP threads, ARs, ConCalls, investor presentations). Out of 15+ ConCalls (across sectors) I read (I prefer reading over listening), the bullish tone (of Dr Chava) I found in Laurus Labs is worthy of one’s time to dig further. Laurus Labs seems to be on the strong growth path. Past numbers can be a new base, and they aren’t one off thing.
Senior VP members (especially Hitesh Sir) can correct my views.
Whether management walks the talk or not, only time will tell.
I remember a quote from Lynch, where he mentions that it’s okay to catch a stock even if it has run up. If it has long runway of growth, one can still catch several baggers.
@hitesh2710,
Sir I wanted to extend Sahil’s question and needed your thoughts on that. If one gets enough conviction to invest in a Co, should one depend on technicals to guide way on time to entry? Sahil has pointed to an instance where sells overweigh buys. Should one wait for some signal/chart through technicals which indicate consolidation in CMP before making an entry?
[Thanks to Sahil for bringing this up]
Disc: I have invested 8% of my PF in Laurus Labs in the past 3 weeks. Had to build a lot of conviction because it has already shot up.
Hi Hitesh bhai,
I too felt similar and remembered your earlier post on mgmt appearing in media . What, according to you should be the trigger to sell?
Many thanks
Disc - Invested
The decision to buy or sell is a multi factorial decision. One cannot rely on a single factor. We have to consider all aspects and put things in perspective and then take a call. Hence the idea should be to look at the complete picture.
The main consideration is deterioration in the growth story. (if in the first place the company has been bought as a growth story. )
Hi Mr. Hitesh,
What is your opinion on Jagran Prakashan ? The management seems to be very fair to minority investors and is one of the better run traditional newsprint business. A market cap of 1100 crores i believe is very low even if it takes a couple of years to get back to its previous years revenues. Looks like a very solid contra and a dividend yield bet. The management raising 100 crores at around 8.35-8.45 also looks the management is pro-activate in mitigating through this tough times. Surely traditional newsprint business will recover financially more quickly than other businesses such as Airlines and Hotels. Are you tracking the stock at the moment and how do you see this playing it out in 3-4 years time?
Hi Hitesh bhai,
Thanks for your insightful reply as always .
When the prime reason for which one has invested is growth , one must exit if growth has come down
In the current scenario , many companies in chemical and pharma sector are reporting great earnings due to the ongoing tailwind . However due to lockdown a few chemical companies earnings are affected eg Deepak nitrite, Bharat rasayan
In some cases market gives a long rope considering long term growth potential and stock still moves up while in some other cases stock goes down or moves sideways . Considering that market knows more than us generally (though not always) This is confusing as to how can one make out whether to give the stock a long rope or exit in case factors are temporary but one isnt certain whether Mr market will give it a long rope or not .
Many times it has happened that when one exits , stock rises despite temporary lack of growth and at other times , one is left holding in hope and market derates it or theres a sideways movement . and this happens though growth is temporarily halted
Hitesh bhai, Request your view on clearing this confusion . Many thanks
In the last one week we have seen companies like Mayur and lupin post bad results and tank , only to subsequently recover the next few days itself…and there have been companies posting good results with good things going for them, who have continued to fall…The book that you recommended Minnervini clearly highlights that results can’t be looked at in isolation and earnings visibility needs to be present
Could you shed some light on How one should one isolate operator play in these kind of situations, especially with packaging films like Poly and cosmo expected to post good results for some time
Hi Hitesh bhai
1 Kilpest India is into agrochemicals and pesticides. Profit has shown good growth with 5 year CAGR being approx 70 percent and quarterly profit jump by 84 percent. It’s a small microcap and price too has increased considerably following the earnings . Can it be considered at a high price as whether theres still steam left as I have seen a lot of times that small caps seem costlier but theres high possibility of growth due to low size but also get worried after looking post 2017 period where lot of good quality small caps were only doing sideways movement despite good result
2 should one keep switching between large and small caps depending on momentum in favour and investor preference ? As I observed in my very short investment tenure that in 2019 many were bullish on page, titan including me and had written off small caps and now its vice versa with renewed focus on small caps
Request your suggestions and guidance Hitesh bhai and thank you so much for handholding amateur investors as you have always done
