@ChaitanyaC - sorry if I’m bumping into this (for first part of your query regarding non-FA)
Hitesh-ji once summarized the list of books to be studied sometime back. Kindly refer this post.
Hope this helps.
2 Likes
Yes, my question does not limit to books, my question was also about developing a perspective, a trading psychology. I should have mentioned this in my query, my bad.
I would like to know if anyone exists who moves along with the market and does not focus too much on macros and micros, and has been successful for decades. I am looking at a lot of content, and while I am coming across many successful traders with varying styles and varying perspectives, so I wanted to know if Hitesh sir has encountered anyone whose works resonated with him, like Lynch did w.r.t investing. I ask because unlike investing, trading styles vary very much, there are more number of ways to skin the cat in trading, than in investing.
There exist some threads which are helpful in creating a trading psychology.
And I personally believe that, there is nothing Hitesh sir cannot answer as far as my questions are concerned, and as he explains in a lucid and succinct manner, my doubts get cleared, and I get to learn.
1 Like
Some basics related to technical analysis remain relevant all throughout these years even with the use of new age technologies. Some basic concepts like drawing trendlines and looking out for trend reversal, and when this happens with a big candle with big volumes, there are high chances of getting expected results. The more you look at charts, the more things you uncover about simple things working out most of the time.
The one person who focusses a lot on technicals (some methods devised of his own style) and can be a comparable role model to Lynch ( for fundamental based investing) is Mark Minervini. I have read his books and was lucky enough to watch his master trader program videos. Some of his basic concepts like watching out for a sector that breaks out to a fresh high when market is coming out of correction being the sector to be in are very relevant. There are a lot of other things which he teaches and are easy to follow and implement.
25 Likes
@hitesh2710 CDSL Q2FY24 results has been in line with expectations, as the stock continues to do well how does it look technically?
1 Like
Hello Sir I’ve heard a lot about you.
I am a med student doing internship at Nair hospital Mumbai.
But since last 2 and a half years I am involved much more in investing and how to manage money.
I want to ask you sir how do you go about analysing a company, and as warren buffet said you should invest in business that you understand so I think that will be Pharma sector for me. So how would you go about analysing a Pharma company. How would you analyse a sector as well and their future prospects.
Others views re also welcomed.
This thread of Dr. Hitesh is as large as your medicine books, it consists of thousands of questions from members and Hitesh sir’s answers, which can be divided into volumes. As you are interested, you can go through the thread to find answers, not just for the questions you have asked, but for thousands of other questions that are related to investing, FA, TA, markets, psychology and what not. It will take time, it will be overwhelming but it is educational.
And there are many other doctors who are active in the forum, apart from Dr. Hitesh, you can check their threads too, if you have not already.
5 Likes
Sir, In above reply to my last year question of How to Avoid Big Drawdown, you had mentioned that you had gone through 40% drawdown during 2018. I asked my self ‘how can I avoided that drawdown If I were at your place?’ I found following bearish pattern and chart by which I could have taken cash call to Exit Portfolio during Starting week of March 2018:
First Dark Line of previous support was clearly violated 3 times and index was forming LH-LL on Weekly chart of Mid cap Index and went below 30-40 EMA (Stage 4) (same was the case for Small Cap Index). At that time Most of The Individual Portfolio Stocks must have broken down their previous support and resistance and went below 10-30-40 WEMA and we could have taken exit call on individual stock also (Hypothetical statement but most of the stocks developed bearish chart patterns).
Sir If you had knowledge of Technical Analysis at that time and seen such bearish chart pattern, could you have avoided that kind of drawdown?
I strongly believe that if we observe charts daily or weakly and spot such bearish charts for all of our portfolio stocks along with bearishness in Index Charts, we can take exit calls on portfolio level. (For me its only belief because I have not experienced any large drawdown and implemented this Cash Call for my portfolio.)
You can provide your inputs about my Cash Call Strategy from you experience, so that we can finetune it.
4 Likes
Even though you have asked this question to someone else, I just want to add my 2 cents here.
Technical analysis does not work every time, b/w 2020 to 2023 I have seen this pattern in multiple stocks, but in the end reversal did come and those stocks gave very good returns. There could have been a possibility that the pattern you pointed out became triple bottom pattern in 2019 May. Only looking at historical charts now we can say “Oh it was clearly visible”. Technical analysis is very important, but we might need to stay invested for a long time to cash big.
3 Likes
In 2018, I had identified the top quite well and exited a lot of stocks I used to hold also. And still manage to lose nearly 40% of my portfolio. Reason was that I ended up buying small and midcap stocks that had corrected a lot during that time and even after my buying, they corrected even further. And I ended selling at the wrong time. Post the correction of 2018 , the place to be was the so called “quality” stocks which went up very well and all this while small and midcaps languished.
The charts you have drawn do depict possible top formations, but when markets are in strong momentum, you get caught in the moment and many a times things clearly written on the wall become difficult to decipher.
I did have the knowledge of technical analysis at that time too, but did not rely so much on technicals as I do now. So maybe you have a case for that. But I clearly identified froth in small and midcaps in the rallies preceding the 2018 correction. I think I might have put up a note to that effect on this very thread at that time.
If you see current markets, we have had so many close calls in the past couple of years where one could have gone totally into cash, and in the process managed to miss wealth creating opportunities.
However that does not mean we should not try to be on the lookout for major market tops. If something of a warning sign is visible on the charts and it concides with excessive froth in a stretched market, then there can be a case for going into cash.
CDSL chart has already been discussed on the 52 weeks high thread.
@mzambare Warren buffett has described circle of competence, which is to restrict oneself to sectors and companies one understands while investing. But as investors we need to widen our circle of competence and try to learn as much as we can about other sectors too. Best book to learn how to analyse a particular sector is Five rules for successful investing by Pat Dorsey. He describes in details about how to analyse particular sector and has covered most sectors that matter. There is no short cut if you are into investing Till date I have not found any alternative to good books. These days a lot of wannabe investors want to listen to YouTube videos on certain topics and try to go full throttle on investing. This does not cut much ice with me because in the first place the credentials of the guy making the video are not established or clear. Whereas books written by well known investors who have good track records behind them are worth their weight in gold.
43 Likes
Hi Hitesh sir
Please let me know your view on power mech projects
How it looks on long term/ fundamental basis
Your view on power proxy sector like power mech
Advance Thank you Sir
Sir as you said I started reading these books but I am unable to grasp this part of this book why net profit is not equal to Cash. Those highlighted part in second image is also what I did not understand. Can someone please explain this to me in more simpler way than this.
1 Like
You will need to read the book multiple times to get a grasp of things. Its an example to explain cash flows in a company. Don’t worry, I also did not get it when I read it first, or a few times more… Took me multiple readings of these things to get a hang of these things… If you can read and digest medical books, these are nothing… 
And who says investing is easy? This also is a subject that needs dedication and persistence. It takes a few months to a few years to get the basics and then the learning curve becomes easier and faster.
Just don’t neglect your medical studies. That comes first because going ahead, that is the main profession that is going to generate capital which will then compound using knowledge of investing.
@axiskumar I don’t track Powermech.
29 Likes
Hitesh Bhai, do you track Cyient? Also thank you so much for spending so much answering so many queries and sharing so much of your knowledge. Truly commendable.
1 Like
Hitesh Sir I came further in the book 5 rules of successful investing. I want to ask what is 10-k filing equivalent in India where I can analyse the management like how many salary bonuses they are taking?
Also I did not understand “the company capitalising it’s cash flow generating asset or expense it” (I read it multiple times though, Googled it also.)
Can you please explain this concept to me with example and how does this affect the companys prospects.
1 Like
@mzambare you can refer to this thread Basics – ValuePickr for basics and there are lot of other resources readily available on valuepickr. like this: 10-k,10-q and 8-k forms in India?
6 Likes
You seem to be getting lost in unnecessary details. If you are learning something new, try to learn basics first and then go into details. I suggest you read a book from first to last page on first reading without getting too deep and on subsequent readings focus on what is important.
Thanks @S.A.B for providing the links to resources.
@Sandeep_Mehta I don’t track cyient.
5 Likes
Sir this Is what happens when I read medicine books as well… this might sound a little weird but how does one gets to know what is important? What are the basics to grasp? And I have this bad habit i don’t rest until I understand something completely and I end up wasting a lot of time reading things again and again.
1 Like
You answered your own question.
1 Like
Beyond a point, extra analysis yields diminishing returns. Sure knowing the core aspects of a business’s financial health, earnings, cash flows, debt levels etc is crucial, but we need to mindful of our own analysis-paralysis zone.
The market environment and external factors can change rapidly. An overemphasis on historical data without considering the future prospects can lead to misguided decisions.
Finally it is all about the time that one has. Spending excessive time on analysis of one investment opportunity can lead to missed opportunities elsewhere.
5 Likes
In an attempt to try and think about an investing conundrum in a clearer way, I have written down my thoughts (sort of a journal) in the note below. Would appreciate thoughts/perspectives.
–
I have been thinking of a situation - as value-conscious mid & small-cap investors, we buy companies after extensive research and when they do work out, sell when we think it’s overvalued and end up making, let’s say 3x or 4x over a period of few years. In all likelihood, these stocks go up a further 50%,100% or 200% and that too in a matter of weeks/months. If I was this investor, I would definitely feel like a fool waiting out 5 years for a 3x-4x return and then miss a further 100%, 200% in a matter of weeks/months. This would lead me to think - how do I play the “Greater Fool” game and maximize the selling price each time?
Firstly, what is the “Greater Fool” game? I think a phase of greed, because stock prices are increasingly detached from fundamentals. So in order to win at this game, the next question would be - at what level of greed will the stock reach its top? Certainly a question which cannot be answered?
Even if we find a way to identify the top, what guarantee is there that there will be sufficient liquidity to exit timely? Also, doesn’t this state of mind come in the way of level-headed thinking - an important aspect for success in investing?
As an example, I think it’s fair to say that the probability that an investor in 2011 could correctly predict a Mayur Uniquoters going from a P/E of 7-8x to a P/E of 20x is much higher than predicting where it can go from there? So unless we’ve identified an outlier (and hence would give it a longish rope), the discipline to sell when we think it’s overvalued is important? Else, not much has to go wrong to lose significant amounts of money in such investments (even with a stop-loss?), because they are prone to sharp corrections?
Isn’t this Mr. Market’s ultimate test - to test how firmly investors stand by the core investing principles? Only those who have the discipline to consistently do so are successful across market cycles?
7 Likes