One thing I would like to point out is that your investment style does certainly play a big role in how you perceive missed opportunities and also the classification of what is a missed opportunity.
Mathematically, yes, 10% higher, or even 1% higher will make a stock costlier. But we need to look at the larger picture. For example in my case, I look to invest in stocks where due to a combination of upcoming growth and current under-valuation, i expect them to at least give 3x-5x returns in next 5 years. If that is the case, does missing the first 20% really hurt us so much? I donāt think it does. 5x/1 = 5 and 5x/1.2 = 4.16 which is still pretty good! If youāre buying a smallcap/midcap stock expecting 10-20% returns, this does not work IMO. Because theyāre too volatile and too illiquid.
Whether the opportunity has gone depends on the size of the opportunity. If the company has a secular growth runway of many years (i consider 3-5 at least since its hard to see much further into the future) then paying up 10-20% might not be such a bad thing.
Yes it has. In the last 1-2 weeks, Iāve been buying Poly medicure. I started buying at 300 rs and now the stock is 400 rs. 33% move in last 1-2 weeks! Thankfully, i generally start with largish positions. I started out with a 2-3% of PF position size and have been averaging up. This is one of the things I learned from VP. For good companies with great managements, it is okay average up since they have a better support and all that, technically speaking.
Here is a snapshot of my trades from zerodha for POLYMED:
trade_date
tradingsymbol
exchange
segment
trade_type
price
order_execution_time
2020-07-06
POLYMED
NSE
EQ
buy
310
2020-07-06T09:15:55
2020-07-06
POLYMED
NSE
EQ
buy
310
2020-07-06T09:16:01
2020-07-06
POLYMED
NSE
EQ
buy
309
2020-07-06T12:11:00
2020-07-07
POLYMED
BSE
EQ
buy
301
2020-07-07T13:08:54
2020-07-08
POLYMED
BSE
EQ
buy
311
2020-07-08T15:15:41
2020-07-09
POLYMED
NSE
EQ
buy
313
2020-07-09T13:26:20
2020-07-09
POLYMED
NSE
EQ
buy
313
2020-07-09T13:26:24
2020-07-10
POLYMED
BSE
EQ
buy
333
2020-07-10T14:03:11
2020-07-13
POLYMED
BSE
EQ
buy
366
2020-07-13T09:38:21
2020-07-13
POLYMED
BSE
EQ
buy
370.2
2020-07-13T12:28:35
2020-07-13
POLYMED
BSE
EQ
sell
370.9
2020-07-13T13:42:30
2020-07-13
POLYMED
BSE
EQ
buy
364
2020-07-13T14:55:13
2020-07-14
POLYMED
BSE
EQ
buy
385
2020-07-14T15:20:23
As you can see, Iāve been slowly averaging up. Note that this does not work in all cases. Some companies which go up will also come down (almost immediately). This could happen in polymed case as well in near-term future. But that does not trouble me because I know Iāve bought a great company with a great management and with a large growth runway.
@sahil_vi
In poly the ship sailed for me.
I put it in my watchlist around 320-330 and as i checked the price kept on increasing.
Normally a stock moving a good range in such short span and after that it consolidates or comes down heavily.
So in my head i am thinking that in 300 i could have bought it and now the same stock at 400 looks like it wont move up now so soon.
In future if this goes to 1000 for example or even more than this 100rs gap wonāt matter much but at this point of time it is creating a bump.
Correct. But why do we care about the āso soonā part? Are we trading or investing? If weāre trading, i believe this platform (and specifically this sub-forum āInvestment learningā) is not accurate for that. For investment, how does it matter if if it go up soon or not. In fact after buying a great company, we hope that it stays there or goes down in coming days so that we can invest more at a better price. The only question which matters is: Is rupees 400 (or 370 or any other price) a reasonable price to pay for Poly Med given the future growth of company? IMO the answer depends on the individual investor.
I agree with the sentiment here but disagree that a few days of stock movement shouldnāt matter because it depends on the amount of movement as well. A stock movement of 2-5% does not matter but 20%+ starts eating into your margin of safety so it depends on the particular stock and gain %.
Tbh Iāve gotten over this whole missed opportunity conceptā¦ at the end of the day we are in the stock market to make moneyā¦ thatās all that matters. Buying a stock at its cheapest possible valuation is obviously idealā¦ but itās never going to be possible. Firstly, you need to have all your capital available with you to invest at that right moment. My money is usually tied up in other stocks so that isnāt possible and I need to invest in a slow sip format based on when I have the funds available. Secondly, if you go all in at the cheapest valuation you may end up in a lot of trouble. For eg recently I decided I wanted to buy a stock called kpit. Wanted it at 40 but things were so scary back in April that I ignored it. Then itās Q4 results came out and they were spectacular so I bought 1/10th of the total allocation I wanted. Recently the IT sector seems to be doing well based on q1 results so I bought my second lot of KPIT a few days ago. So Iām averaging up as my conviction in the stock increases. In the ideal world I would have invested all my money at 40ā¦ I wouldve made the biggest profit on paper doing soā¦ However, in reality there is no way in hell I wouldāve invested lakhs of rupees in it in April. As the quarters pass and I get more convinced il put in more and more funds. Usually itāll take me a year+ to put funds into a stock. So the price never really matters for me as long as the reasons I want it are intact. Itās safer too. If kpit crashed further at 40 I wouldāve sold all my holdings in a panicā¦ since I had a little in I did not mind holding lol.
Note that I learnt this from Hitesh on this sub. Before I was a wait for " blue chip to fall and then buy" person. Now I have all the patience in the world thanks to him
True but an average company will almost always never be a weath compounder for its investor over a longer time horizon which a quality company (definition matters) that doesnāt seem like a good investment in a short time frame , will almost always be.
I donāt think there is anything like missed opportunity. Market is full of opportunities. As long as invested capital is not lost , we are still in the game. If you see backward, every year there was a great investment opportunity and this trend will continue in future.
Some years back, I also used to feel the same but thatās entirely untrue.
Most of the advisors are misleading retail investors. Sensex level does not matter for long term investing. Long term returns are driven by earnings compounding.
let us say somebody entered Nifty at 7500 and exited at 11000. He made a 40% profit on say 40 lakh rupees on 1 crore INR invested. He then shifts to debt and makes 8% till the next crash that will occur after 10 years
Let us say you invest 1 crore INR today and hold for 10 years in Coffee Can companies. You will make 15-20% CAGR and much more money than him.
Dont be misled by the experts on twitter and CNBC who advise investing looking at Sensex levels. They will advise you to buy after 7 months when Nifty goes to 14k and falls to 11k again. Ride the wave, invest and enjoy the joys of compounding from Coffee Can stocks
This had happened to me - i was actively tracking IOLCP for their sales in Ibuprofen supposedly end of March the company was suppose to complete set of sales and I had entered at low bottoms. I continued to hold after March Quarter as the result was not justified and during June Quarter the stock hit 10% LC - i sold it at panic with 60% profit later after a week the stock went to new highs giving it about 120% since the levels that i boughtā¦ indeed got it again now trading at 30% profit (my compounding pattern was broken) and the stock is attractive at this level too since the sales figures of March are yet to be cover up for June quarter (the reason was due to lock down the supplies were hit)
Tracking sales can never be justified in uncertain times - sometimes a leap of faith to stay would help
Its good to see that after your ship sailed you could catch it again and it moved forward to give you profits.
In many cases the stock goes down after a high run
This has happened with me recently, again. This time, the price of catching the ship was much higher.
I have been researching into and wanting to invest in Chemcrux. I had created a screener to find microcap stocks and look for favorable business conditions like growing earnings, improving return ratios, undervaluation etc. Among the 50-60 stocks which passed this filter, only 1 seemed reasonable enough to invest in: Chemcrux. stock price: Rs 132 (P/E of 7).
What makes investment in chemcrux difficult is that it is a BSE SME company. Meaning that minimum lot size is 2000 shares. The minimum amount I could invest would be Rs 2,60,000. This would make it my largest holding by far. There is no way I can average up (or down) anytime before one more year because I do not trust my investment skills enough to invest more than a certain percentage of my net worth directly into stocks.
I generally work a 10pm-6pm job and hence cannot do much investing research in the week. Most of it happens on weekends. I read through chemcrux valuepickr threads, last 4 years AR, company website, did a bunch of independent research on their products. By the time i Build conviction about investing into Chemcrux and check the stock price again, it is 181 rupees. Minimum investment amount is Rs 3,60,000 rupees. Most observers might conclude that the ship has sailed. But my investment thesis into chemcrux was not hanging by a thread and dependent upon me entering it at 130 rupees dot. As per my calculations and as per my investment thesis and taking into account the capex already done for capacity expansion, revenues and profits would grow 3x and 4x respectively over next 3-5 years. When the company becomes larger and migrates to the mainboard of BSE, then it would be able to get a fairer valuation of say 15-20 PE (many specialty chemical makers even get a P/E of 30). I would not leave a 7x-8x market cap opportunity because the stock price increased 37%! Yes my future expected profits (basis for investment thesis) might reduce from 6x to 4x but imo this is not a good reason for not making an investment. If you like the company, if you like the management, if you like the industry, if you like the valuation then you enter the stock. yes, relatively speaking, a P/E of 9 is higher than 7, but i believe both are much lower than the company deserves.
As always, only time will tell whether my reasoning is sound, or delusional. Iāll either make decent money, or ill gather vast amounts of experience on how not to think. Either way, Iām not complaining.
Yes if you feel the future value is much higher then you can still invest.
But getting that mindset is all what is needed.
At this point my mindset would be like i would be haooy to board the ship from 132 rather than 181.
At 181 fear seems to seep in.
@sahil_vi whole investment thesis is dependent on EC approval. They havenāt got the EC approval in last 1.5 years, there is a good chance that they might not get the approval at all if the area has a risk of high pollution.
Did you check if any other chemical cos got approval in that area in past 1-2 years. In such cases, where liquidity is so low, I think its better to do some scuttlebutt at the ground level before committing a big chunk of networth.
@fundoo I donāt believe in a growing country like India one can or even wants to fundamentally prevent capex. Even if this specific capex cannot happen, the intent of the management to do the capex (and a large one at that) and their track record in creating value, is the key investment thesis. Even if this specific capex proposal is shot down, Iām sure they will find some other place where they can set up their new plants.
I do agree that this might delay the sales expansion, but it cannot prevent it. The larger risk with smaller companies is that of management not being growth minded or friendly to minority shareholders which I believe is not the case here.
The other aspect is that with the governments push to make India an API manufacturing hub and Gujarat being one of the key states where the api parks will come up, I find the probability of the EC being rejected being low.
PS: everyoneās definition of āsignificantā portion of net worth varies. Even if this specific investment goes to 0, I would not lose much sleep over it. At the same time I do appreciate your advice/concern
Sensex does not compound at rates like that of HDFC bank, pidilite is because it consists of good companies and dud companies too. Instead of buying sensex and investing in good and bad mangoes why not invest only in the good ones
This time it was Borosil Renewables & Premco Globalā¦ Was a active tracker and posted feedbacks on forum at very low levels around 40-50 range but never invested on themā¦ now i regret
