Simple Investing

Investing Strategies
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Small update - Applied for Sula IPO small quantity for tracking purpose. Would closely track post listing. With experiential liquor stores, wine tourism etc. on the rise, Indian wine story is only but beginning. Need to understand the Promotor/Management quality & Corporate governance in Sula better. Guess with more time in listed universe, it will gradually be more clear.

Another share tracking closely - Bikaji Foods. Looks very richly valued.

Last few months some attractive opportunities have emerged in some select IT, New age company, Consumer durables & Insurance firms I owned. Could not make much use of it because of some personal needs.

Also, might have to sell around 20-25% of portfolio for family needs in next 6 months - 1 year. Have to devise a strong sell strategy among the stocks I hold. Realizing that for an investor like me, this is most difficult of all tasks and maybe mutual funds would have been much much better here for robotic selling. Main dilemma is if I sell the winners, although I get to book decent profits, but I could be selling future winners as well. And if I sell the losers, I am leaving a story I believed in (and still believe but obviously cannot predict the timelines for it to play) at precisely the wrong time!

A balanced option maybe to treat the portfolio as a mutual fund/single entity and sell stocks mechanically in either similar ratio or a pre defined percentage for each stock depending upon future expectation from each. This approach, although looks practical, but is contrary to my investment philosophy of making things “Simple”.

Much more to think, learn and act…Thoughts Welcome!

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Its always better to sell the percentage and keep all, stock which gies down doesn’t mean that stock is bad and vica versa.

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Atleast you could offset your capital gains, if any, for next 8 years if you book loss. So it is better to sell the losers.

Or sell both winners and losers in a way that your profit is negligible enough not to pay any capital gains tax.

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Really good to read about the yearly updates of fellow members in the forum. Appreciate how minutely they able to track their returns etc.

As I generally track all time high & deviation from that, I can share that last year my portfolio peaked around Oct-Nov 21 and ended the year with around 6% down from peak. This was worse than Sensex but better than BSE Midcap index deviation from their respective peaks.

My reflection during year has been - I see this past year as great opportunity for those again trying to build a portfolio. Consolidation, stagnancy, bearish sentiments are indeed very difficult to handle but are good times for those who intend to build for future. I had been rather in haste in deploying whatever incremental capital I could. I misjudged the Feb/March dip as a short dip in a bull run. Although, did not feel during year that we entered a Bear market but the dip has been rather much longer timewise than I initially anticipated.

I maybe wrong but I see most of 2023 may follow similar trend unless there is some really positive surprise in global scenarios. If I was in a strong portfolio building phase, I would have been glad about this opportunity. As I mentioned that I might have to sell some part of my portfolio in 2023 rather than incrementally building, I see this as a specific risk to me hence I would be very cautious.

Overall 2022 has been a perfect year for learning many things together. Tide can turn anytime and as always would know that only in hindsight, so all a simple investor like me can do is to - Stick to basics & try to maintain some discipline. Best Wishes to All

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Having done nothing with my Insurance holdings so far, interesting to note is that yet again the extreme thoughts came near probable recent bottom of the sector. Post that many PSU insurance firms have run up significantly and Private Life Insurance firms are showing some signs of strength. There have been some positive developments for the sector as well in terms of possible composite licenses…lets see how this story unfolds in Indian context…

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I have generated 20% return over 2021 peak still portfolio is up 15% from last year ATH in Dec 21. Major supporters Shoppers stop, AB Capital, AGI Green and some smart trades in LT Foods, Arvind Fashion. Timely exits from Tata Motors, KPR Mills, Hindware homes. Rushil Decor.

My end observations are BUY AND HOLD DOESNT WORK IF YOU DONT SELL THAN SOMEONE ELSE WILL​:joy::joy::joy:

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The thing is if you have started investing after covid there is a pretty good chance that your portfolio is green even till today. If I look at my portfolio, its 120% even when nifty has been volatile for last one year, it does not mean I have generated this return all by myself. The whole market went up and so did the returns. Ofcourse if you have started investing before covid then I must say your stock picking is impeccable and you know when to sell a stock, but let me remind you, even when you sell a stock if you have held if for some period of time. You have to hold a stock and give it time to go up in order to sell right?
So stating buy and hold does not work won’t be wise. Of course if you are referring to buy and hold as holding a stock for years no matter what happens to the earnings then its a different argument.
For an analogy, it takes at least a decade for a mongo tree to bear fruits and once it does it keeps bearing until it is cut down. You have to hold a stock irrespective of the time period.

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Congrats bro for good returns last year.

I would beg to differ here. Buy & hold would work depending on stock selection, timeframe and Portfolio strategy. Of course someone else will always sell, but that doesn’t affect us in any way until we sell low or buy more to eventually sell even lower.

This is endless discussion and guess there is a separate thread on this going on where I expressed my views.

Congrats again. it is good to see someone confident of their good returns and their strategy.

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Agreed with your point of view, let me correct my statement, i bought Tata Motors around 67 levels during fall of 2020, kept a hold without selling till Aug 2022, only sold when debt started rising on JLR and all. Europe was under grip of recession, exited at average 480 levels now its at 390, i know Tamo is worth 800 however exit was made based on changed negative triggers.

My skills are in rotation of capital, identifying unloved stocks buy in bulk hold for 4-6 months exit 40-50% and keep remaining. I sell stock if i feel is overheated or see some future negative triggers. It has worked out well till now.

ABFRL and AB cap i have never sold, only bought whenever dips came.

PF value in Jan 2020 dropped by 80% in March 2020, rightnow PF is 3 times of Jan 20 value and 18 times Mar 20 value. :joy::joy:

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Buy and hold needs long experience or long suffering if you dont have experience(like me :slight_smile: ). I sorely wish that I had sold IEX,Laurus ,Globus etc. a year ago when they had doubled from my buying price . On the other hand ,I would have sold Polycab,VBL etc as well and VBL has doubled in last 1 year .
My present idea is not to go the buy and hold way unless its in some particular sector like fmcg,consumer goods etc. where the scope of growth is beyond doubt if general lifestyle improves .For other sectors it better to book out if I think that next couple of years company is not going to perform better than the last one.
@Cshar which was greater ? The pain of 80% drop or the joy of a 18 bagger portfolio ? And how did you handle the drop mentally ??

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True, it requires a specific mindset more than anything else IMO

You have got it on target here. Precisely that’s why stock selection (sector selection) is important. Even in these sectors there will be long periods of dips/stagnation/ company specific issues that you need to be wary of. A long term hold in FMCG Bajaj Consumer or even Emami has been disastrous in last decade or so whereas same in larger firms like HUL, Nestle, Marico, Tata Consumer has been rewarding.

Consumer durables can have very painful times is what I have learnt over time. They are probably the most cyclic in a structural growing Consumer segment. We need to be wary of that as well.

IMO buy & hold in today’s context is not simply buying in one go or in one small timeframe and holding it. It involves being active during the buying timeframe, once you got the first piece of Stock selection right.

Also, I feel for each stock, there needs to be a story in mind and that story should have a sell condition. That’s even for buy & hold mindset and we need to be aware of those conditions.

For eg in my portfolio, most FMCG names I have are currently in “hold” phase since long time. IT/Retail/Insurance have recently entered “hold” phase after buying slowly around 2019-22. Consumer Durables have been in very gradual “buy” phase over last 2-3 years. Had I not been in need of funds, Consumer durables would have been a strong buy for me. I am well aware that such strategy over last 2-3 years have dampened my CAGR but I don’t need to provide an yearly report to any Senior management over this.

The only flip side to such strategy is if one is in need of funds during the partial portfolio building phase, then there is a clash and that’s what we need to plan for better. People who practice momentum investing are much better off in this aspect as they are masters of selling and have constant cashflow from their portfolio which can be utilized in case of need.

Disc: Views personal & only for academic purposes. No buy/sell recommendation. No Portfolio strategy recommendation. I can be wrong in all my assessments

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In stock market pain is always greater than Joy​:joy::joy::joy:. This is human psychology to have more pain than happiness in case of equal loss and profit. Sitting on 80% loss in Mar 20 really devastated me, I had a major accident due to heavy losses in yes bank in Jan 2020, it was a double blow. By gods grace luck and some skill factor helped me regain the lost value. From 2020 till now i have completely avoided banks Infra, metals.

Seeing in hindsight as far as i compare PF now from Mar20, its a big sigh of relief as investments matters a lot to me. Priorities have changed to book losses first than profits if any change is fundamental happens.

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A post was split to a new topic: Saikat Portfolio Suggestions

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Hi CShar,

I was also in the same stage with respect to Yes Bank, but i got the hope when the Government has came forward and moving things forward ,which added more faith on Yes bank will not close. from that point onwards I started average it as it comes < Rs.10. now i have very big numbers in terms of qty with 20% loss,

I still have a full confident that it will reach 200 levels, Yes is turn around store, will take longer then you expect. similarly i had a same situation in IDFC First bank as well, i have started added as it goes down , now i am in profits of 45%.

In Way back situation is same for SATYAM, I have made a very good Profits.

Stay invested.

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Something that keeps popping up in timing the market is the “Fear and Greed Index”. Does anyone have experience with it ? Is it a reliable indicator? As to what stocks to buy it would have to be blue chip names as the Fear and Greed index itself is largely based on Nse 50 stocks.

Here’s the value for NSE / Nifty / India.

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Looks like its good for shortterm trading on index and index stocks only ,since it has gone from greed to fear in last 1 month, extreme fear to fear in last 1 week . One surely can’t think of exiting or entering individual stocks unless it was a short term swing bet.

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The recent volatility in Life Insurance firms

Well, I intend to have a portfolio least dependent on changes in policies, budget etc. Although you cannot shield from broader economy, policies & macros but can strive to have a portfolio with least direct dependencies.

With above as a strong thesis in back of my mind, I still managed to have around 10% of my portfolio in a sector which went down around 15-20% since budget, specially HDFC Life, which also forms major part of my Life Insurance holding.

Wanted to keep a note of my evolving thoughts here. Life insurance was already a sector I was evaluating to partially exit few months back, specially when it was making lows without having done anything meaningful since last 3-5 years when first of Life insurance firm made IPO. Initial valuations had a big role to play in this underperformance of stock price. Business vise, APE, VNB growth, margins all had been excellent inspite of Pandemic of a century. Still - my patience was dwindling - because of the way insurance has still been a push product and seeing stagnation of Life insurance industry in global markets as well.

I was and am continually thinking, in Indian context, is Insurance a Consumer product which consumers want/need (or rather perceive to want/need) or just a push…

Now, regarding current context of changes in policies.…Somehow, I think the changes in budget would over long term enable Insurance industry to be more meaningful. Insurance is not Savings and intention of government here is bang on. It will make this sector more mature over long term.

What I liked about HDFC Life in particular is their transparency & accuracy. The immediate accuracy with which they could report the impact on APE (10-12% if they do nothing - which will not be the case) on same day of budget, acknowledge it & within couple of days even mention actual impact if they do something (meaning they already charted a corrective course & actions) - of mid single digit - is unmatched!

This experience has been very good & reliable, although, I did not like the fact that out of all the insurance firms they had marginally highest dependency on this high ticket easy low margin product. (Obviously SBI Life in incomparable here because of its strong rural presence).

I see many positives as well as negatives of this sector being in my Portfolio and hence always evaluating. I needed a strong exposure to Financials without the risk of being in Banking. Had it not been for the exposure to Financials, I would have been just fine with a 5% in Insurance based on my understanding & conviction level of this sector.

Having said that, need to be cognizance of opportunities when they present themselves and also, when is the right time to re-balance, if needed with evolving thoughts…

If these firms are able to continue on their growth trajectory inspite of recent changes, I think they would pass a very very significant test. They would finally become one of those lesser dependent on policies etc. & more aligned with Consumers, they would then warrant a higher allocation than 5% for my portfolio as well…lets see…

Disc: Invested in HDFC Life & SBI Life hence highly biased. Transactions this week. Not a buy/sell recommendation. Not eligible for any advice. Views only for academic purposes & I can be wrong in all my assessments.

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Dissecting some of my picks for Learning - Feel free to share thoughts to make us better

Consumer Discretionary

Last 2-3 years have been intentional effort to have a decent percentage of portfolio into Consumer Discretionary. Overall I am not happy with my stock & sector selection. Trying to jot down some points here and would be great to get inputs from senior members like @hitesh2710 @richdreamz @jamit05 as we have talked on this sector in few other threads as well. Also, views from all other members invited

  • First mistake - Mixing Consumer discretionary with Consumer durables. Although both are non-frequent purchases but durables follow a distinct trajectory of their own because of different dynamics of raw material handling, impact of inflation, competition & pricing power. Current view - Real discretionary picks seem to have superior brand power and business dynamics over long term and across cycles.
  • Quasi Discretionary - I considered United Spirits & United Breweries as part of discretionary - Although this segment again has its own dynamics, these are best companies of India in respective sub segments and well managed MNCs. I am ok to wait for the business dynamics to turn better and more towards a FMCG type landscape.
  • Durables Mistake - Followed basket approach of Voltas (Tata ecosystem, AC leader, adjacencies opportunity etc.), Johnson- Hitachi AC (Premium AC/Fridge, Make in India - one of most indigenously manufactured ACs, relatively small cap & positive surprise element if India becomes their export hub), Whirlpool (Big potential from US experience, used to have better business metrics, again make in India export hub possibility - overall feel this one has been a mistake as losing conviction)
  • Sour grapes - One of rare few who has been tracking Page Industries (although passively) since 500 odd levels and have not purchased a single share inspite of understanding its potential when it was at 500 levels. Reason - It runs in India as a license like QSR. What if Page loses that license/contract? This What if cost me lot of Ifs…
  • Make up for above not done well - Tried to make up for the license miss and took position in QSRs as basket - Restaurants brands (largest in basket. I would consider this as a thoughtful good pick until Indonesia happened out of the blue), Devyani (Probably will exit it eventually) & Jubilant Foods (This one I am comfortable riding the business turnaround cycle at the moment)
  • Savings grace in stock selection - Apart from United Spirits & United Breweries above, two retails picks - Trent & Dmart have been savings grace in otherwise wayward stock selection. Inspite of doing good in retail, had that uncanny urge to put 1-2% in two duds so far - Nykaa & Spencer Retail.
  • Good Money going over bad - Another fear, with stock correction this happened somewhat but then I stopped. I dont mind buy on dips and averaging but not if I start to question my stock selection.

Summary -

  • Ok with selection of Trent, Dmart, United Spirits & United Breweries ONLY
  • Not Ok with Voltas, Hitachi AC, Whirlpool, Restaurants Brands, Devyani,
    Jubilant Food, Nykaa, Spencer
  • Not Ok does not mean I will immediately or eventually sell, it means I am in need of revisiting conviction, business details and hence views invited

View invited on how best to rebalance considering opportune time to rebalance. For example fully or partly exiting durables at this stage, specifically at onset of summers as most are AC/Refrigerator plays , may not be prudent decision…etc…

New Opportunities

  • At opportune time, intend to correct this mistake and move funds partly or completely from some Not Ok ones to Sour grapes like Page or similar such plays.

  • In this context, while the time to rebalance arrives, I was evaluation Page, Bata, Manyavar, Metro Brands, Campus. This is where @richdreamz @hitesh2710 @jamit05 we had meaningful discussions in other thread.

  • I have ruled out Campus (did not like quality of product), Metro brands (too many brands, too complex to track IMO), Manyavar (did not like the way they were stacked in MBOs, felt brand diluting)

  • That leaves to the most sour grape - Page and its nearest competitor for me in this space IMO - Bata India. @hitesh2710 ji I have seen you mentioning Bata several times in various threads…Would be great to know your, @richdreamz @jamit05 views on Bata Vs Page to understand both better. Both are MNCs (albeit Page operates as a license owner). Page is king of undergarments, swimwear (not sure how big can this piece become) while Bata - No matter what said and done remains king of footwear. They are evolving sneakers and their kids range of bubblegummers seem promising and of decent quality. I have seen them & their products evolve positively with time. Seem they intend to move to clothing as well. They have interesting partnerships with North Star & their hush puppies offer unique products. Soon around 2000 stores and granular ones across all tier cities in India with most seem self owned so whatever upfront cost must have already been absorbed? Overall I see this as a decent pick in discretionary.

  • In ideal world and portfolio, I would see my portfolio to have none of Not OK ones and they replaced by these two picked at decent valuations. Apart from these two maybe one QSR pick…thats all from discretionary.

But not sure if there is anything like Ideal world or …Portfolio :slight_smile:

Disc: Invested in all stoks mentioned hence biased & critical. This is not a buy/sell recommendation. Not eligible for any advice, views only for academic purposes & Learning. I can be completely wrong in all my assessments.

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@Investor_No_1

What I could make out from your write up is that a great company is not always a great investment. There is that little matter of valuations to be considered while buying great companies.

There are times when markets are excited by high quality companies and these times return in markets more frequently than other themes. Currently it seems markets are disillusioned with the high quality buy at any price kind of investment philosophy.

Coming specifically to companies you have discussed, I think the ones that stand out in terms of competitive advantage are the likes of Page Inds, Pidilite, Asian Paints, Bata in that order. I would even throw in HDFC Bank into the mix. But some of these had run up to crazy valuation levels and needed an excuse to correct and correct they did. My guess is these will undergo time/price correction till the time valuations catch up with earnings potential and then move up.

My problem with all these type of companies has always been the valuation factor and that stops me from buying these. In an environment where there is a lot of pessimism, economy is in the dumps and no one knows what to buy, these are the kind of stocks preferred.

Another thing I observe is that the fabric of the market has changed somewhat. And I am not too sure whether this change is only temporary or permanent. Buy high quality, high ROE, high cash generating businesses was always the easy thing to do and there was a reasonable chance of making decent returns. But since past few months, this style has taken a drubbing and a lot of these type of companies have corrected and have failed to start moving up again quickly as was the norm earlier. I have mentioned earlier in another thread also that sectoral preferences in this market change thick and fast and one has to be nimble to latch on to the fancied sectors. The high quality basket has undergone correction only since a few months and hence I think if they were to make a comeback, more time will be needed. So patience might be the need of the hour in these names.

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Thanks @hitesh2710 ji for your thoughts! Really helpful and can relate to it with my experience holding stocks in these names…