Here my mistakes and learnings, but i believe mistakes and learnings are part of growth story in market but repeated mistakes are cost higher.
Came to market in fluke bcz of friend took me to zerodha office to opening account.
First share i bought was RMCL which is big disaster CMP is 2 i bought at 36.
Then started basic knowledge application to buy future growth stocks found all are costly price then searched for all future industry stocks bought many in 2018 which are below 100rs, again opened the account in 2020 covid time when everyone saying crash my stocks was 60% + profits then started buying few more. Saw mamy multibagger returns from 100% -6000% .
Then started buying one share for monitoring all went 100% again fear adding them as thy already High they went 2x still not bought,
Bought yes Bank by listing to someone and all wiped out 95% loss.
Bought 1share on many companies which are grown well but didn’t added volumes
Bought many shares without full research but all are went to minus
Got confused about it ,them started value research to pick good company and business but less number
Confused abou short term profit longbterm profit, bought Ashok Leyland at 85 and when it cross 110 sold, now it’s crossing 140, now felt like I would have kept it for long,
Regrets mistakes are part of learning and now i got confidence the market needs patience and controlled mindset and fixed target and less emotional and partical approach on returns profit and losse.s. profit and losses
I bought Tanla in 2009. The name used to be different. I also bought Pidilite back then.
Tanla dragged on and i forgot about the stock market for many years. In 2012, If I remember correctly, i sold Tanla on an impulse and kept Pidilite because it was in substantial profit.
It was a mistake because I don’t know when this company took off and it would have been many thousand percent profits for me, had i not sold it.
I still own Pidilite, now 5500% profits, goes to show what holding a stock for a long time can do to your money.
So here’s the second mistake. I bought a very low quantity of Pidilite and never added it subsequently, funnily because any new purchase would have increased my average purchase price. Ego over money
These are not mistakes per se, these are losses or missing profits. These will be mistakes, if we can provide the reasons for buying and selling, and everything that happened in between, so that it provides a context.
Missing a bus could mean a lot of things, I was busy looking at something and I did not see the bus coming, or I did not know that, that is the bus I should board, or I did not expect the bus to move so fast, or the bus only stopped for a second, or I fell down, so on and so forth.
The reasons why we did what we did are important, not every loss or a would have been a profit is a mistake. Also, if the sold stocks fell, would we still call them as mistakes, I guess not.
Buffett lost some bets, even Soros did, even Newton did, so I guess we cannot learn from numbers, unless we are provided the context in which those numbers took place.
I’ll just share my post here, seems suitable here.
I’ll just add the text here in case anyone doesn’t want to go to the linked page
" However I would like to share some mistakes I have made during my investing journey. Hopefully it will be helpful to anyone interested.
I’ll start with the one which lost me most money
-PTC india Financial services-
1st buying date
selling date
loss%
size in portfolio when sold
average holding price
average selling price
Jul-18
Mar-20
45%
44%
15.5
8.5
Investment thesis-Let me start with a little background. I had seen PFS trade in 40s .so when it had fallen to around 15 and dividend of Rs 1.2 per share I was interested. The thinking was that the dividend will keep the share price from falling too low a classic case of low downside and substantially higher upside and so I thought.
When I was analyzing the company in 2018 it had a lot of legacy bad loans which pertaining to 2012-2015 era, due to which the provisions were very high . The PBT was 529 Cr of which 150 Cr was provisions and the market cap was around 1000 Cr.
I was hoping with resolution of bad loans the provisions will come down and in turn PAT will increase and with it the dividend, even with low AUM growth. Already dividend yield was 10% any further increase in dividend yield will surely increase the share price.
However what I didn’t know that bad loans don’t resolve so easily, every other quarter there was an unexpected spike in provision , the resolution dates for bad loans kept going further to the future, new bad loans appeared .
I could never predict how the quarter results will turn out .
Every concall the management gave new dates for future resolution of bad loans , AUM growth didn’t translate to net profit due to high provisions and management had new reasons for why it was so(I don’t fault the management , maybe the business was tough but I have no capability to judge) .Finally during covid crash I sold my position at almost 45% loss. This was my largest position and my largest loss till date.
Learnings-
If you can’t roughly predict how the company will do 1-2 year down the line , that means you don’t understand the business, stay away from the company. You should have a rough idea how the company will perform 1, 2 quarters into the future, so that and deviation is accounted for.
I bought PFS when it had a PE of 3 and a dividend yield of 10% , today net profit is a seventh of what it was in 2017 and PE of 19. Learn to identify a difficult business and stay away from them.
-Turnarounds normally never turnaround . if a company is in bad shape make sure that the reason is not the company itself, maybe the company go lucky like PFS (it rode the infra boom of 2010-2015) and if it has seen bad days before.
I’ll add more of my mistakes in coming days
Thanks for reading"
So what is the mistake here?
I bought it at 83 in 2018 and waited for 1.5 years and finally sold at 55. after that it touched low of 30s also.
What I just want to say is merely missing the opportunity wrt to share price is not mistake. The rational behind buying and selling matters most.
I had significant quantity of Adani Transmission in 2017 at avg price of 164 and sold at 250 in 2019. Today the price is ~3800, I dont consider it as a mistake. Although the business performance has become 4x, the PE has increased by 10x.
My classic mistake, if you call it that, I sold off all my Airtel holdings. The SC said, the dues of 30K crores have to be paid and with Jio hammering everyone out, I thought it’s game over as the debt overhang will take at least 3 -5 yrs to get reduced; in which time Reliance will kneecap all of the other players.
Turns out, GOI did waive it off and changed the rules and Airtel took off; I bought at around 350 and sold off at around 420.
Hardest part , sometimes winners suddenly turn into big losers… and you will think its part of loong term story… and keep holding on to them… as big losers in portfolio…
i had few which did that…
Thanks for sharing this. Can you pls mention which were those so that we know why that happened…also how was your experience with them & change of thesis if any happened with time with them?
i had just started in 2013/2014 and my picks seemed really good… :
Kitex Garments - bought in range of 300 - 500 and it went upto 1050 with in a year… and with no time it start falling off and it gave bonus shares and now trading at 200-250 range … i still think its going to make it big with their expansion… but what i missed was why i didnt sell it when price reached 1000… i only took my partial investment at 800’rs
Spicejet - similar case bought at 15-20’s was still buyer till 50… and it reached 150… and i thought its going really good… again same case… falling off the cliff … when it reaches from 150 to 100 to 80… dont want to sell …thinking of long term aviation story… now trades at 40’s… i had done my analysis on all oil n stuff…
theres no change in both the above ideas… Kitex is expanding huge… in telangana , they had real trouble in Kerala … but its just that it took loong time to move out of kerala…
spicejet - is still the same idea… expanding aviation business… only oil is spoiler… but hoping it recovers well…
another one i can add:
vidhi dye stuff: added at 20-40’s range and sold out in 2019 at 86… but now today trades out at 400’s
but it was in 60-90 range like foreever… and i thought exit was required and also there was money requirement… so i did exit… i could have waited out some more time…
Its very difficult to predict, once a star performer comes down, we keep thinking that its temporary…and at that stage…it can go in both ways equally likely. It may go down and.never go back.to its previous glory…Or it can go up and surpass its previous high and still go higher. We just cant predict what will happen at that point of time. In hindsight, things are clear…But in real time, its totally unclear and everything is possible.
Very true…, in fact if one go through the past interviews of renowned investors, many times they have mentioned that, at some times their stocks were down by 50-70% and then it appreciated to 10x-30x etc. how the patience had paid them well.
In view of all these many investor could not understand what to do. And once thing done people make story out of it.
My experience has been different!
If you are following the company closely, you should be already aware of the potential pitfalls. Time only tells you gradually in which pit the company is going to eventually fall.
There are some subtle and some glaring signs. Management not delivering promises, new excuses for earning misses , target market not growing , receivables growing faster than revenue etc.
I normally jump ship if I find too many amber flags.
When i was newbie to stock market, I used to rely on tips from friends or brokers without any research. Due to this have burned my hands on Sintex and Suzlon.
I have learnt a hard lesson in Yes Bank, 18 lk investment sold for average 2 lk in early 2020 at average price 10. I always keep yes bank in my tracklist to remind me on daily basis that i strictly need to avoid all banks and small NBFC’s. Never bought a bank after 2020. My Portfolio tooka massive hit in Jan 2020 by Yes Bank and than march 2020 by Covid, dropping by close to 70%.
Other mistakes, Rel power, Rel Infra, Rel Capital, PC Jeweller, Gitanjali Gems:joy:
Below are rules i follow now
No rushing to buy hot stocks
Avoid the stock in news at least for 2 weeks to find a real short term price.
Avoid stocks heavily invested by FII and DII as any negative news, exit is rare.
Avoid all Banks and small NBFC’ , only very large corporate houses driven NBFC’s are ok
For Every Yes Bank, You have HDFC Bank, ICICI Bank, KOtak Mahindra bank. So avoiding Banks altogether, is it really worthwhile? Our Nifty and sensex made up of highest percentage of Banks as a sector, Its difficult to avoid them and invest in India…Also we have some good NBFC too…Bajaj Finance, Muthoot finance, Chola Finance…to name a few…Am i interpreting you wrongly?
