Hi Hitesh sir,
In these Market panic scenarios like last week, If anyone has cash in hand, whether to buy the existing quality companies or new companies with sound fundamentals.
Which approach you feel better or is it depend on our conviction on a particular stock?
During market crash (or at any other time for that matter) whether to add the same company you hold or add new names depends upon some basic factors.
You need to look at the kind of allocation you have to the existing company in your portfolio. If you feel there is space to add more, if you are convinced about the company (obviously you need to be convinced otherwise it should not be there in the first place) and the kind of price value equation, then it makes sense to add more. Otherwise look to add something new.
Benefit of preferring the company you already hold (assuming you are holding it for some period of time and are tracking it closely) is that you know a lot about the company, business model, promoters/management, variables affecting it etc. So the only equation that needs to be considered is allocation and price. There is one famous quote of Peter Lynch⌠The best company may be the one you already hold.
Thank you for your details answer sir. Itâs really wonderful insight and my doubt got clarified and I liked the famous quote given by Peter Lynch.
I have one more query related to churning of portfolio like selling the bad stocks and buying the good quality stocks. What is the better time and efficient way of doing churning that means during the bull market or bear market?
The time to churn your portfolio by cutting out bad stocks and getting into good quality stocks is âASAPâ - as early as possible. No time is too early for these kind of exercises.
Regarding timing, you again need to read Lynch and his chapter on timing the markets. He says January to March are dangerous months to buy. So are the rest of 9 months⌠( Or something similar to this message - but you get the drift of his key message. 
)
If you seriously want to invest and have not read his book and some other basic books on investing, I suggest you do that first before buying any stock. You will be improving your odds of success by doing this. And who knows, might be on the way to financial freedom. But the hard yards of acquiring knowledge from people who matter comes first. These days a lot of new YouTube gurus keep doling out knowledge for free, or for fees. You donât know their background. Here, atleast we know Lynchâs background. He delivered nearly 29% CAGR returns for his mutual fund subscribers for 13 years. So he knows what he is talking about.
Hello sir, what is your view on Steelcast ltd?
Attaching my note on it:
Note_on_Steelcast_Ltd.pdf (482.5 KB)
Looking forward to your technical views as well. 
My view on the technicals of Steelcast. @hitesh2710 sir please correct me if any.
Long term trend is bullish. The 40 WMA/200 DMA is a nice support for long term.
The short term support is along the line from which the price bounced today. Letâs wait for the closing candle today
I read your note on Steelcast. (loved reading it. ) I did not know much about the company except having talked with a friend about it many years ago. Fundamentally I think you have done a lot of in depth research and your views might be more learned than mine. The only concern regarding the company will be the constant fear in the mind of investors about impact of downturn in Europe and US. Even one quarter of less than expected results can plant doubts in the minds of fickle investors. However for someone who has done research and tracks the company closely, these fears and associated price volatility bear little concern.
Coming to the charts, the stock price chart is of a stock which has had a stellar run, punctuated by brief pauses off and on. Current level seems to be one of pause. Stock has established strong support at around 400-410, having consolidated above it since nearly 4 months. This level is less than 10% from current price. A brief attempt was made to breakout from a flag like pattern, but with last weekâs brutal correction in small and midcaps, the stock price of Steelcast too corrected and now retest of breakout zone seems to be going on.
Hello Sir @hitesh2710
I started using valuepickforum recently this year.
I have read just about all your posts of last couple of years and wisdom that you have shared on this forum.
This is an appreciation message. Thank you very much for all the knowledge you have shared. 
Hi @hitesh2710 Sir,
Whatâs your point of view on NHPC? I have heavily invested in NHPC when it was trending at an ATH. While the monthly MACD indicator was suggesting otherwise, still went in to ride on the renewable sector wave thinking it could give us multibagger returns in the next 2-3 years. Now the stock has corrected more than 10% after my entry. What will be your suggestion? Should I downward average?
Aside, many pundits also suggest not to expect much from PSU stocks, and hence wanted to seek your expert views on this.
Thanks in advance for your response.
P.S. Became a VP member just yesterday. Have been an avid follower of your posts, and continue to draw inspiration from them.
Dear @hitesh2710 ji,
I want to clarify a point on JM financials.
How do you determine stop loss for kind of patterns like rounding bottom pattern ? Do you consider recent correction as negating the rounding bottom pattern ? During recent corrections this went down to ~68 levels and slowly trying recovery compared to many others which recovered very fast.
How can we determine if the going up of a stock was âme tooâ when whole sector in fancy or not. Or the current slow recovery is due to fear of NBFC challenges related to covid recurrence fears ?
Thank you.
Usually in rounding bottoms, we are playing out for targets at top of rounding bottom (in case of JM fin it is 117) so stop losses should be at or around 200 dema⌠In case of JM fin, 200 dema currently is at 71. In the recent sharp correction, stock price went well below 71 to hit a low of 67.20. So someone following stop losses strictly would have been stopped out on price going below 71⌠But guys who follow such strategies would be quick to get in once stock price recovers above 71.
Personally I sat through the correction because I was quite confident about valuations and prospects⌠If the correction would have extended and markets would have turned weak, I might have contemplated an exit.
But the correction a couple of weeks back seemed like a typical shakeout phase, to get the markets lighter in small and midcaps. And the Covid fears also seemed to be over rated, as on ground situation in India did not seem to warrant too much concern.
Key breakout level in NHPC was at 34.50 and post that at 37. Immediately post listing high is shown in charts as 42, but I would not consider it as significant as it could be a fluke trade. So we have two important breakout levels at 34.50 and 37. Once stock price broke out past 37, it made a fresh all time high of 46.90 and then retraced to post swing lows of 36.75 and now at around 40. It has continued to make higher lows and higher highs, so I feel the trend still is intact, though momentum is missing.
Stocks often undergo time consolidation within a range, or above key levels before regaining momentum, and one has to be patient and give them time. And keep watching key levels to assess continuity or reversal of trend.
I am not too sure if NHPC is supposed to deliver multibagger returns, as fundamentally there is nothing exciting in business, except steady business and high dividend yield. Some revenue producing projects will keep coming on stream going ahead, but I donât expect anything earth shattering from the company.
Overall I consider it as an anchor stock in portfolio, which also can be an option as a parking space if no other ideas are available. If something else more exciting comes up, one can switch. Stocks correcting 10-15% from purchase price is nothing new, especially in choppy markets which we have witnessed over past few weeks, month and overall whole year.
Hello @hitesh2710 sir, can you please help me with one clarification. Given that greenpanel was demerged from greenply in 2018 to have a separate entity for MDF business, why is greenply again entering into the MDF business now ? Am i missing something in here ?
I donât have any idea about greenpanel or its demerger.
You can go to through the annual report and conference call to get idea about your query.
Am i missing something in here ?
There was understanding between the 3 businesses (Ply, Panel, Lam) that one will not compete with another for âxâ years. If I am correct, x was 3 years here.
I am not a big fan of economists and their forecasts. But found an interesting article attributed to Ruchir Sharma. For a change, itâs devoid of complicated terms and logic and easy to read and understand. What he says may or may not play out, but it makes for some interesting weekend reading.
RUCHIR SHARMAâs investor guide to 2023: from peak dollar to better TV
FT
Talking to leaders these days in any walk of life, I have a sense that people are frozen. They see that inflation is back in a serious way for the first time in decades, forcing central banks to raise interest rates at the fastest pace since the early 1980s. They understand that this sudden change in the price of money â the most important driver of economic and financial behaviour â marks a fundamental break with the past. But they are not acting. After living with easy money for so long, they find it difficult even to contemplate a different world. There is a term for this state of mind: zeteophobia, or paralysis in the face of life-altering choices.
So many people keep doing what they were doing, hoping that somehow they wonât have to deal with change. On the assumption that central banks will once again come to the rescue, investors are still pouring money into ideas that worked in the past decade â tech funds, private equity and venture capital. Governments are still borrowing to spend and homeowners are refusing to sell as if easy money was bound to return soon.
But tight money is not a temporary shock. The new standard for inflation is closer to 4 per cent than 2 per cent, so interest rates wonât be falling back to zero. As this phase wears on, tycoons, companies, currencies and countries that thrived on easy money will stumble, making way for new winners. Some things will improve. The time of lavishly ridiculous digital coins and TV shows will pass. An age of more discriminating judgment will shape the trends of 2023.
1. Peak dollar
The dollar has been the worldâs dominant currency for 102 years, eight years longer than average for its five predecessors going back to the 15th century, including most recently the British pound. Decline is overdue. Yet the prevailing assumption remains that, lacking serious rivals, the dollar can stay dominant â now and for the foreseeable future.
The dollarâs long rule has been far from a steady climb, instead rising and falling in long cycles. Its two major upward swings â one starting in the late â70s, another in the mid â90s â lasted about seven years, yet by October its latest upswing was 11 years old. The greenback is now as expensive as it has ever been, on some metrics. Lifted by the dollar, New York rose to top (jointly with Singapore) the list of the worldâs most expensive cities for the first time in recent history.
The dollar is overvalued by about 25 per cent, and that kind of overvaluation foretells decline. The dollar started falling in October, turning at almost exactly the same point â 20 per cent above its long-term trend â that has on average signalled multiyear falls in the past. This year the economy is expected to grow more slowly and interest rates are set to rise less in the US than in other major nations. These signals point to a further fall for the dollar and less global purchasing power for Americans, more for everyone else.
2. Rise of the ROW
The ROW, or ârest of the worldâ, has been living in the shadow of US financial markets for years and many believe that this aspect of American dominance will continue. After all, the US has been the best performing market in the world over the past century and so, many argue, why bother investing anywhere else?
But is anyone alive today waiting for returns a century from now? Consider a more practical timescale. Since the second world war, the US stock market has tended to outperform the ROW one decade, then trail behind the next. The 1950s, â70s and 2000s were great decades for investing outside the US.
In the boom of the 2010s, the value of the US stock market expanded, reaching 60 per cent of the global total in 2021, a full 15 per cent above its long-term average. In every other way, the global footprint of the US is much smaller: less than half of corporate earnings, a quarter of economic output, one-fifth of listed companies, and a mere 4 per cent of the population.
With US stock valuations near post-second-world-war highs compared to the ROW, investors sticking with American companies are assuming that the US can improve its position, not just hold it. Thatâs not a safe assumption, particularly now that the era of easy money is over. By one estimate, half of the increase in US corporate profitability in the last decade can be attributed to lower interest costs. True, easy money was available in most countries. But financial engineering to boost returns became an American speciality.
3. Not-so Big Tech
Big decades for the US market tend to coincide with tech booms. In the â90s, the likes of IBM in software and Cisco in internet hardware led a rush of US companies into the global top 10 by market value. But companies that make the top 10 one decade rarely last there the next, and tech is particularly prone to disruption.
In the 2010s the leading tech firms rose in mobile internet services â shopping, search, social media â but that model is showing signs of exhaustion. Earnings are under pressure from the law of large numbers, regulators, competitors. Of the seven tech firms in the global top 10 as of 2020, three have fallen off. Two of those are Chinese, Alibaba and Tencent. One is Meta, which has fallen out of the top 20. The value of the other American giants is shrinking too, although they still hold on to top 10 positions, for now.
The next evolution of the information age is dawning, and it will generate new models and winners. One possibility: they will apply digital tech to serving industry â biotech, healthcare, manufacturing â not individual consumers.
If it is still hard for frozen imaginations to think of a time not dominated by todayâs big tech names, the arrival of tight money makes churn at the top even more likely. Easy money encouraged risky bets on expensive but fast-growing stocks, which in the past decade meant big tech. Now that bias to bigness and growth at any price is fading.
4. Less money, better TV
Unlimited access to cheap capital helped to fuel what has been widely hailed as a âgolden age of televisionâ. Worldwide spending by the big streaming services on new content rose over the past five years from under $90bn to more than $140bn. The number of new shows scripted for TV exploded.
But like most hot trends of the easy money era, TV was spoiled by too much money. The golden era tarnished itself, producing more quantity, less quality. The average IMDb rating for Netflix TV shows peaked in the mid-2010s at 8.5 out of 10, then fell steadily to 6.7 in 2022. The subject of how and where to find the few riveting shows in this expanding menu of mediocre options became a staple of dinner table conversations. For every gem like The White Lotus or Tehran, there were dozens of duds like âSnowflake Mountainâ and, of course, The Kardashians.
Viewers will feel less lost in the coming year. In recent months, the big streaming services have shifted focus to making a profit, rather than spending whatever it takes to get new subscribers. They are ordering fewer new shows and â according to the TV writers and producers I know â imposing higher standards on new pitches and scripts. This is one of the many ways that less money could produce better choices in the new era.
5. Echo bubbles
Bubbles donât necessarily burst all at once; the declines are often punctuated by big rebounds â âecho bubblesâ. These bounces cushioned the fall of many famous bubbles, from commodities in the 1970s to dotcoms in the late 1990s.
By early 2001, the Nasdaq had fallen nearly 70 per cent, but it would stage two false rallies before the year was out. The echo bubbles looked big â with tech stocks up as much as 45 per cent. But it was a mathematical illusion. Bouncing off such a low bottom, tech would have had to rise 250 per cent to regain its previous peak, and never came close in 2001. Tech finally hit bottom the next year, and remained sluggish for the rest of the decade.
During the pandemic, bubblets emerged within the broad markets, appearing in small cap stocks, clean energy stocks including Tesla, cryptocurrencies including Bitcoin, Spacs or âspecial purpose acquisition companies,â and tech stocks that have no earnings but include famous names (Spotify, Lyft). These bubblets have already suffered falls of 50 to 75 per cent, but the story is not over. The fortunes of crypto kings and Elon Musk are still whirling wildly.
The psychology behind bubbles is powerful. People refuse to easily abandon the idea that inspired the bubble. They buy the dips and give up only after their faith has been deflated repeatedly. 2023 is likely to see more echo bubbles, including in the most hyped themes of the last decade: big cap tech in the US and China. But donât be fooled again. The next big winners will be emerging elsewhere.
6. Japan is back
The image of ârising Japanâ, unstoppable superpower, was so ingrained in the global imagination that as late as 1992 US presidential candidate Paul Tsongas could proclaim that âthe cold war is over, and Japan has wonâ.
Today, to the extent Japan has an image, it is old people and bad debts, not superpowerdom. Global investors barely give a thought to Japan, which is just what its leaders should hope for. If hype surrounds countries at a peak, and hate piles on in a crisis, those poised for success are shrouded in indifference.
Quietly, Japan is turning for the better. Growth in the working age population, which turned negative in Japan three decades ago, is about to turn negative across the developed world. Measured as a share of the economy, private debt is on average higher in other developed economies than in Japan.
Japanese households and corporations reduced their debt load for much of the last decade, and will be less hard pressed in a tight money era than many outsiders may assume. Profit margins have been rising steadily. The cost of labour, adjusted for worker productivity, is now lower in Japan than in China.
Japan may not be back in the sense of a rising superpower, but it is poised for a relatively good 2023.
7. âAnywhere but Chinaâ
Couple rising labour costs with Beijingâs turn away from openness toward state control, and many foreign companies looking to outsource production now look, so it is said, âanywhere but Chinaâ. In the US, there is talk of manufacturing coming âback homeâ, or moving next door to Mexico, but the big winners so far are next door to China: Vietnam, Taiwan, India and South Korea.
More than half of US businesses in China say that their first choice for relocation would be other countries in Asia; less than a quarter say back home; less than a fifth say Mexico or Canada. These decisions are guided by all manner of risks and costs, but a central advantage of Asia outside China is wages.
The average monthly factory wage in Vietnam and India is less than $300 â about half the level of China, a quarter lower than Mexico, a small fraction of the $4,200 monthly wage in the US. No wonder American companies are still looking to offshore, just not in China.
8. Return of orthodoxy
In November, amid a market sell-off widely attributed to his generous spending plans, Brazilian president Luiz InĂĄcio Lula da Silva dismissed the sellers as âspeculators, not serious peopleâ. Investors have resumed the sell-off, forcing Lula aides to walk back some of his remarks.
Other countries targeted by market sell-offs in 2022 included Chile, Colombia, Egypt, Ghana, Pakistan, Hungary and even the UK. What they shared: high external and government deficits and unorthodox leaders who threatened to make those deficits worse.
The choice of targets was rational, not ideological. Sell-offs hit leftwing populists such as Lula, and conservatives like UK prime minister Liz Truss, who lost her job in the fallout. All had to retreat in substance or tone. Colombiaâs finance minister promised to âdo nothing crazyâ.
As money tightens, the market grows less tolerant of the unorthodox, and its target list grows. Compared with the roughly eight countries targeted last year, the markets turned sharply against only a few in the 2010s: most notably Greece, Turkey and Argentina.
Since then, Greece has cut its deficits and debts, and returned as a welcome borrower in global markets, but Turkey and Argentina have not. Expect more of these battles in 2023.
9. Political relief
Whatâs not happening will shape the political mood in 2023. For the first time this century, no G7 country is holding a national election. There arenât many election battles in the other G20 nations, either. These days elections sow more discord than unity, so the pause will come as relief.
In election years, developed markets tend to lag their peers, but emerging markets tend to gain, perhaps on hope that new leaders can have a bigger impact on economic growth in younger nations. With few big elections, the spotlight may shine brighter on smaller ones. Two stand out as rife with possibility.
In Turkey, President Recep Tayyip ErdoÄan faces a serious challenge after nearly 20 years in power. A classic case of a leader who started strong but lost his way, ErdoÄan is now perhaps the worldâs most financially unorthodox leader, a standing risk to his nationâs future.
In Nigeria, President Muhammadu Buhari made life worse. Poverty rose, corruption festered. Now Buhari is out, thanks to term limits. Any of the four key contenders in the February election could be an improvement. The most intriguing is Peter Obi, a political outsider with serious plans to clean up Nigeriaâs oil theftocracy. A quiet political year will feel even better if a few elections produce bright new reformers.
10. Blue birds
In the late 2000s, author Nassim Nicholas Taleb popularised the âblack swanâ. Written as a theory of unexpected events that can disrupt for better or worse, the term became synonymous with negative shocks during the global financial crisis of 2008. People have been on the lookout for black swans ever since.
Now the idea of the good black swan may come back as the âblue birdâ â a rare, unforeseeable event that brings joy. Geopolitical shocks and economic gloom have persisted since 2008, and could get worse in the tight money era. Amid endless worries, the world may turn its risk radar toward positive shocks that could bring relief.
The next blue bird might be a surprise peace in Ukraine, which instantly lowers energy and food costs. A thaw in the US-China cold war, which boosts global trade. A new digital technology that revives productivity, helping to contain inflation. None of this may seem likely, but then surprise is the essential nature of blue birds.
Sir, I have read the post.
So would you mind telling us what all of this means to investors like us? Does the probability of a return from equity, lesser than what we have got till now will increase? And as such new investors, in the hope of higher returns or realizing their financial goals, who are coming into equity, will decrease in number and as such there is even more chance of lesser returns? And if indeed China is kept at a distance, India will benefit and the market grows, so a steady if not high growth in the market will continue? And as we are entirely dependent on US or any other country in the world, just like a HUL or ITC which caters mostly to our people, Indian market too will cater to domestic investors and market will continue to grow?
Your thoughts please.
A lot of the stuff written in the above write up attributed to Ruchir Sharma may not be relevant to investing directly. Whatever has been written has been written in simple, easy to understand language. Most of the stuff is self explanatory while some parts of it might need reading in between the lines.
But certain things written like the possibility of topping out of USD for good,
or the anything but China possibility,
or the possibility of a blue swan event, (opposite of a black swan) etc
and the key learning of trying to understand the echo bubbles. Here first there is a bubble kind of rally in stock/commodity ( e.g tesla, or some similar highly fancied stock), then a big fall once there is disillusionment with the prospects of the underlying company or commodity . Once this seems overdone there is a strong counter trend rally, which a lot of people including seasoned analysts and investors mistake for a trend change, but is actually nothing but a counter trend rally from extremely oversold levels.
Some of the trends described above like the fate of dollar, anything but china etc might take many months and years to manifest, but we can keep these at the back of the mind to see the occurence of these events and possible impact of these and opportunities arising out of these.
Sir I would suggest you to read âPrinciples to deal with the changing world orderâ by Ray Dalio.
What are your views on CGD companies as natural gas prices revert to mean. Mgl, igl etc
Hi Hitesh bhai, what are your views on Tube Investments?
