Myself a learning investor and newbie to this forum.
I would like to discuss about missed opportunities in the market, how to avoid them or deal with them mentally.
Has it ever happened that you came across a stock and put it in your watchlist, thinking to see its price movement for a few days and then invest in it later.
And after a few days you see that the same stock has moved 20%uc or 10% and now the same stock seems to be on the costlier side of your analysis.
The opportunity seems to have gone and that ship has sailed.
The same thing is happening since the past few days and i am worried as to how this can be avoided.
How can we strike at the right time or how to get the mindset to invest even after the stock has moved by a huge margin.
I am also a learning investor and I am sharing my mental model to deal with how to cope up with such problems. In principle, the idea is to know your company better and know your investment approach better.
- One can not manufacture investment opportunities. One should do the analysis on company, keep it tracking continuously and then wait patiently for the opportunity to be available at the price one is comfortable to pay. I found it very very difficult to invest in any new companies, during March, which I was not tracking earlier. For the companies, I was tracking I could quickly analyze worst case situation and then decide if it makes sense to invest or not. For any new opportunity, understanding base case itself was difficult and normally takes lots of time.
- If you believe that the company you are looking to invest would be much bigger opportunity in the future, a price run-up of 20% should not matter. Anyway, you can stagger the purchase in the future. For example, if you have high confidence that ideal purchase price should be Rs 100 and in 10 years it would grow 5X to become 500 and currently available at 120, why should you not buy it at Current Market Price?
So my suggestion would be to analyze why did you miss the opportunity? Was it because you were not tracking such companies? If yes, it would happen again. and the way to fix it, is to keep track of all the companies in which you are interested and wait for the correct price.
if it is 2nd case, take the plunge, the opportunity cost might be higher in not to invest. But be open to stagger the purchase, if it is available at attractive price later.
I would say that that i did not invest because i am still too skeptical about the market. It seems it can go down anytime due to the quarter results but there is also fomo of missing out the good companies.
Overall huge amounts of patience and strength is required in the market.
I believe i did miss out some opportunities but it has helped me to learn a lot.
I don’t know whether I would call myself investor or a gambler. I had understanding of various financial ratios under a subject in my engineering but couldn’t apply it practically in real life.
On Valuepickr, the analysis done is pretty detailed and I find it intimidating. When I started picking up some large cap stocks in April, I picked in small quantities as I didn’t know enough about the companies as well as due to seeing other people’s losses. Now in July seeing the valuations go from 1.5x to 2x, I feel the FOMO feeling.
I can either time the market and hope for good stocks for good valuations. Or I can learn about performing analysis ( my aim to perform high grade qualitative and quantitative analysis). This will take time but I believe that there will be good upcoming companies in the future to invest in. It sucks that I can’t change the past but I can shape my future and that hope drives me on.
A lesson learnt is also a good return. Hopefully in the long run things will be timed perfectly
I am also in same boat. I am still thinking market could go down due to bad quarterly results. But I might be wrong. So I am also waiting on the sidelines to deploy whatever cash I have left once I see some correction. It may or may not happen. But it is a lesson learnt that we should be ready with our wishlist with a price in our mind and deploy cash whenever company is available within our price range. Also important point is to buy truck load of quantity once we get company at our targeted price. I am still not convinced to buy 100% of a stock in one go. Probably I would go for 30-30-40 of 50-50. It means start buying once prices reaches to our level. If it falls further, deploy rest of the money. It could be done in 3 parts or 2 parts.
Timing the market is fraught with danger. Stocks may move with markets over short term but over long term their fundamental merits will count. Many 10 baggers are seen even during bear markets and many losers are seen during bull markets. When it comes to markets just think you don’t know what markets will do tomorrow.
Many stock market pundits and MF managers made you believe so. Yes timing the market is not possible. If at all if it happens it is due to pure luck nothing more but that doesn’t mean that you buy blindly. Just look at NDX, Do you think the kind of euphoria it is going through sustainable? You buy shares only when it is fairly available not when they are at the stage of euphoria. Fed and other central banks are manipulating markets and artificially inflating asset prices. You are not obliged to buy stocks for the sake of it. Is risk-reward in your favour? I can clearly say the answer is NO. So put your money in liquid assets earn as much as you can and wait till risk-reward favors you. We haven’t seen bear market in last 11 years and if you think there isn’t any bear market in next 10 years i will be surprised. So have patience and wait for the right time. If you invest even in high quality company at wrong time you will have to wait years to break even. For ex: If someone invested in Infosys during the peak of 2000 he needed next 6 years to break even.
You mentioned about 2000. At that time Infosys was pricy but you could have got into some value buys which were ignored stocks. Similarly there may be stocks right now which will do well irrespective of market movement.
Firstly, we have to decide whether a particular order that we are placing is a trade or an investment.
Trades are made for quick bucks (over a short time period). It is just about flipping the stock. For these
people timing their entries and exits is crucial. This is nothing more than a coin toss (or slightly better than it, if you are exceptional at Pattern Detections).
For an investor, it’s about the long run. Really long run. As an investor, you don’t care about the movement of last few days or weeks. You care about the fundamentals of the company. You do analysis. You read last 4-5 years of AR. Read about management integrity. Minority Shareholder protection. Competition. Cashflows. liabilities & assets of the company. Promoter profiling. Read and analyse and think about the future of the company. Then you come up with what you seem is a fair value. Then you keep some buffer to that and start buying the stocks. It’s that simple (or maybe not! ).
For a good investor, it’s less about being at the right time in the market and more about mental and psychologically being in the right place. Markets have to do something everyday. So the stock price will go up/down for no reason. This is just noise.
As an investor, we will always be unhappy. Either we have missed an opportunity, or we have put very small amount on a good stock or we have put a lot of money on a bad stock. We all have to deal with it. It’s a fight everyday, to trust yourself, to accept mistakes when we are wrong, learn from it and again trust yourself.
would you mind suggesting few names? I am searching hard for the high quality value stocks but so far unsuccessful
First get rid of this jargon of high quality. Think about investing in companies where the future is much better than today. Even if it’s not good business Today, can the business transform
For example I invested recently in tv today and laurus. They may not be high quality but I feel if the market falls they may not fall much. Also rain industries I bought at 80.
How do you know future? Anything can change future much the way Covid-19 did? Govt policies, macro changes, management changes. Only if it is into right business and be the leader in that business would offset the some of the above risks. For Ex: Rain industries which was trading at 400 rs dropped to 50 rs just due to one supreme court order.
You’re right that for an investor it is to look for the long run.
But you see as a new investor seeing your stock on the green sight gives you good feelings and similarly on the red it makes you worried.
When you’re new you will definitely feel these ups and downs along with the stocks
At this time of corona crisis look into the pharma sector it will give good returns . Today all index are in red obly pharma is in green in the near future pharma looks good.
Dis: theses are my personal views, please make your purchase after your own research
If you miss the bus you can’t really do anything
You can arrive at the bus stop a bit early or far early, there is no guarantee you can arrive at exact time the bus arrives at your stop
It can happen a few days if you are lucky but generally you have to reach the bus stop a Few minutes earlier than scheduled time
The bus can be late and you still have a chance of catching it but if you are late you don’t
When you have a destination don’t try to time the bus. Where timetables are available like for a bus, you can appreciate how difficult it is to time it! It’s infinitely more difficult to time a stock selling price !
I think this depends on one’s capability of managing risks. You exit fearing that the stock would go down, then it goes up, but that’s OK. This basically tells you, you are not ready to go through the volatality or fear risk of loosing capital.
- Time and again I have realized in my portfolio and specific stocks it’s better to cut losses, which gives me better sleep at night. Some people ride it out.
- I have started buying options for hedging and also do some short term trades based on TA but even that comes with a cost and risk.
End of the day its all about managing risk and be ok with whatever way you choose. Everyone doesn’t get it right all the time. Who knew market would bounce back like this in March and who can tell now that it will certainly test March levels again?
We really don’t have control on short term in market movements and trying to play smart most often proves fatal. Look at from managing risk stand point and you will do fine.
Even nestle fell when they got bad publicity for maggi. Rain has fallen, if they are good then they will manage this and will come out of it.
This fall from grace is what gives opportunity.
Even Bajaj finance which was quality has fallen, why don’t you buy that.
Because i was not tracking it? I can track only handful of stocks. with wishful thinking any stock is a good stock. anyway thanks for your suggestions. It was helpful.
We don’t need quality stock, what we need is good investment. There is a difference between owning quality stock vs owning right investment. An average company can be better investment than a quality company if choosen properly.