Businesschannelson TV (CNBC, Moneycontrol etc.) and paid analysts are creating a lot of hype of BSE index reaching 21,000 level in 2013.
How does this affect us? Does this mean it is a time to sell or to buy? Does this mean our portfolio should be in profit?
We should be worried about how the businesses of stocks we own are performing. Whether, the promoters of stocks we own are honest? Do they share profit with minorityshareholders? Do we own excellent, sustainable businesses? Do these businesses have barrier to entry, pricing power and competitive advantage? Are the valuations of the stocks we own in a sane range? Is our portfolio allocation right for long term wealth creation- http://goo.gl/4Z494? If the answers to all these questions is positive, we should not at all be bothered where the sensex is headed.
Let us look at the performance of sensex vs a few stocks in the last five years.
Five year return a Sensex vs select stocks
Rs. 20 lakh portfolio of Hawkins, ITC, Titan, and HDFC Bankwould havegrown to almost a croreby now. While thesame 20 laks investedin Reliance comm, Reliance cap, DLF, HDIL and GMR infra**would have shrunk to only Rs. 3 lakh as of date.**The index has returned -6% in the same time, so have many mutual funds.
Do you still think that sensex level has any relation to your portfolio return? Are you still listening to the analyst who is predicting sensex level of 21,000 in 2013?
I have always believed that irrespective of index levels, good stock picking will always deliver outsized returns. We at valuepickr have seen it a number of times.
Before posing the question as to what should one do as the Sensex nears 21000, I browsed the site and found this.
I believe, the question has been answered by your apt comparison. Also,this is also validated by other experienced valuepickrs like Vishal, Vivek, Hiteshbhai and Raj.
Well said Vijay. In any rolling 5 years period, there will be enough stocks that would have hugely outperformed sensex, that would have hugely lagged sensex and that would have been roughly on par with sensex. Same is true even now. If anyone can constantly select stocks from the first bucket, he will be very very rich over time.
Sorry if this is the wrong thread, but the P/E of BSE SMALLCAP index is shown as 70.81 on the BSE website. This seems implausible especially considering that the yield is 1.52%.
With respect to exit strategy, is it possible to exit after peak has been established and the clear momentum is downward after excess frenzy just like in 2009. My worry is that everyone being aware of impending down side in crash, in such scenario if i intend to cash my complete portfolio there wont be any buyers?
Would i be able to sell my midcap stocks in full quantity in a single shot. It is very important to me as to understand weather i should go on cash after peak is observed and downward trend is obvious. Or should start cashing my portfolio before a potential crash which is very difficult to predict.
I dont want to end up in a situation where there are no buyers for my mid cap stocks.
my holding can be considered 5-10% of daily average turnover of midcap stocks.
