Portfolio Construction and Playing the FED Taper

Q&A: Questions & Answers
1

A Big Hello to the ValuePickr team and my fellow investors

It has just been a week since I discovered a hidden Gem called ValuePickr, courtesy Google and since then I have been day in and day out stalking forums to learn and eventually to contibute

Just to give a honest background on my past investment failures. For the fist time ever I jumped into the markets in 2007. I made money in the run upwards in the likes on RNRL and RPL. However have lost huge sums in PunjLlyod, Parsoli Cap and few others in 2008 when sensex was at 20k levels, I entered these stock at their peak on tips and not my own research (my eye opener)

It has been a hard learning, but never the less made me have a cautious approach

My current portfolio has been dormant on the BUY side since 2008 and have only Power Grid and NTPC since then but both to mention are in loss

I need your expertise together, to build a smart portfolio from scratch bit by bit

I have three concerns and need your opinion here as well

a) The market is again is at 20K-21K levels, is this yet a right time to invest, I ask this question since as you read above had invested in a similar market and yet havent recovered

b) Come 2014 with Elections and FED taper, the FED taper (if it happens) early next year, how do you then play the markets as the currently market is being driven by the FIIs who would take the money off the table on or before that event occurs

c) Emerging Gems stocks like PI Industry, Paper, Atul Auto etc not being a large cap, would these also be beaten up when the Liquidity dries up or would they sustain given the fact they are fundamentally rich companies

Feel free to correct me

Thanks looking forward to your opinion/comments and suggestions

2

Hi Faraaz

)------PSU’s are known for their inefficiency… If you can, do book loss in them and start initial position in any recent valuepickr stocks with sufficient margin of safety…

)------Sensex and Nifty and even most of the valuepickr stocks are slightly on the high… You can wait for some correction to invest in…

)------Its a difficult call i guess… FED taper is a risk… FIIs are into top stocks… If they pull back, we can get some top stocks for lower valuations…

Elections------If BJP can stitch a coalition with Modi as PM then markets may soar…

Either way you can slowly start investing from now…

)---- Don’t think they are solely driven by liquidity… As you have mentioned they are fundamentally rich companies with good prospects…

mallikarjun

3

Thanks Mallikarjun

I am as advised I would be closing monitoring the markets now…especially the interest rate sensitive stocks, is there any that you would say like a must have to begin with?

On the FED taper there has been an interesting article in ET today extract of the same below

Now the only big cue that can success the markets, for the upside or downside, is palpably from abroad

Read more at: http://economictimes.indiatimes.com/markets/analysis/rupee-at-68-or-60-sensex-19000-or-22000-all-eyes-on-jan-15/articleshow/25694243.cms

4

Thanks Mallikarjun

)------ Didn’t get you… If you meant stocks, you can go through the individual stock threads completely and try to build a portfolio for long time…

)------Faraaz getting macros right is next to impossible… So you can very slowly invest without worrying about Fed taper, rupee depreciation, elections etc…As you understand more about the company you can increase your investments…

You can try to invest in companies which will be least affected by some events…

Please go through ‘Towards a Capital Allocation Framework’ thread before you start to build the portfolio…

Regards