The government has swung into action and has asked the SBI and the RBI to use taxpayers money to bail out. Although yes bank issues were known years back and RBI had reported 6K Cr divergence, goi and rbi woke up in th eleventh hour. They couldâve acted long back.
Another Pvt bank and a famed NBFC are in trouble and need to be checked into but the same thing will happen. A cricketer has accused the NBFC of cheating him and there was accusations of unethical practices but no action from the regulators.
When votebank comes under pressure the GOI will act.
As investors, it is no use blaming the Government, RBI, or even Rana Kapoor for that matter. Investors who were already invested in Yes Bank had plenty of opportunity to get out of the stock, since the story has unfolded gradually over almost two years. Those who entered the stock later thinking it was a bargain committed an error of judgement, thatâs all. There is nothing more to it.
To avoid âaccidentsâ such as Yes Bank, one needs to have a proper investment philosophy, framework and process, and stick to it. For example:
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Donât deviate from your asset allocation & diversification strategy, no matter how attractive an opportunity looks . Some losses in investing are bound to happen, but ensure you stay in the game in the long run.
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Donât buy into a stock even if it looks a bargain if the correction is on account of governance concerns.
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Averaging down to reduce losses is a totally flawed idea. Your loss does not reduce by buying more at a lower price. Check with an excel sheet if you donât believe this.
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Never rely on âunnamed sourcesâ, experts on TV or Star Investors even though they might have actually bought those same shares . Everyone has their own logic and rationale for doing what they are doing, and you donât know what that is. Nobody is working here to make you rich. Do your own analysis and rely only on it.
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Sins of omission are better than sins of commission . When in doubt, better to let an opportunity pass by than suffer a loss.
This is by no means an exhaustive list but something that comes to mind with the Yes Bank episode.
Lastly, I want to say something specifically with regard to BFSI stocks . For a long time, media experts were touting private banks & NBFCs as âno brainersâ. But donât forget that BFSI stocks are most difficult to analyse, and all over the world, more âaccidentsâ have happened in BFSI than in any other sector. I had written about this in the Yes Bank thread more than a year ago, please read this:
https://forum.valuepickr.com/t/yes-bank/1227/1110
One Bajaj Finance or HDFC Bank does not change this essential character of BFSI stocks.
This is not the first time an episode like this has happened, nor is it going to be the last. To paraphrase Buffet, the next time it happens a new set of investors will learn some very old lessons again.
Rana Kapoor arrested apparently
How about investors having some kind of stop loss? 15%-20% or even 50% drop in price ? If you donât contemplate exiting or atleast questioning merits of your investment after a 50% drop in price you are either too arrogant or being plain foolish. Iam seeing same pattern play out in bandhan bank , everyone is still touting it as great investment even after a huge drop in price in midst of what was a pretty good bull ran from Oct till feb . Investors should take heed of unusual price behavior of the stock along with fundamental merits especially if the company severely underperforms its peers. RBL and indusindbank seems to be the other weak spots in banking sectors ,markets have sniffed trouble here.
Stop loss doesnât work. Eg.
- Most of the stocks volatility is above 30% so any stop loss below 30% will be easily hit.
- Say you keep the stop loss at 30% and a corporate governance issue crops up, you would be better of selling at 5% than wait for stop loss to hit.
- In the event of market crash or correction, everyone is in panic and selling the script. The stock will hit lower circuit. Your stop loss is hit but so is everyone else. There will be no buyer and you are stuck.
A better solution is to keep a diversified portfolio where even if one stock goes to zero giving minus 100% return other can increase 200% to compensate for it.
Very accurate assessment, this was the same Modus operandi followed in chit fund scams in Bengal. Many 2 bit politicians who can not speak 2 lines logically and coherently were collecting crores by selling paintings. This is a very very popular method apart from NGO donations to collect kick backs. There were murmurs about political connections when the banking license was given to Mr RK. Will not be surprised About full blown scams coming out mainly due to the way no holds barrred loans given to some famous cronies and the subsequent NPAs.
Yes, completely agree. Prices emit signals and especially price movements in frontline well analysed stocks with good trading volumes do reflect behaviour of other investors â others who are probably more knowledgeable and better informed than we are. Investors should be cognizant of these even if they are fundamental investors and not following chart patterns.
Personally I donât use any pre-determined stop loss or Technical Analysis in a strict sense. But I do check price â volume action in stocks I own as it helps get a better insight into them.
Going by that âŚdoes the fall in stocks like ITC , Marico and Bajaj consumer others too reflects any fundamental changes / quality issues ?
Or itâs happening purely due to growth expectations v/s delivery ?
This was a post I made here 1.5 years back regarding one person running the show .
There is something which came in mint today
Idea is not to boast, the only point I would like to highlight is not everything can be proven with data. Even if someone is negative or criticizing , if one cannot hear critiques of the stocks one is holding, life would be tough. I got few hard mails for making baseless claims , was asked for proofs etc etc. No one would give proofs of field discussions which are negative against a big personality . Itâs up to us to be open , investigate it , take it , leave , the kind of shocking remarks I got, kind of made me not to participate much. Have seen similar behavior on multiple thread to fellow members who tried to highlight negative aspect. Humbly pray that people donât lose much here n in similar companies n at the same time hope take it as a lesson to accept critique with open arms. Some of us might have gone through that experience, done that, looked idiot n just may be donât want others to repeat same mistake
The full article is here : Inside The House That Rana Kapoor Built | Mint
Yes, could be due to fundamental changes too - which are happening slowly without making headlines. I am not aware of these specific cases, but my point is that it would be wrong to blindly assume âI am right and everybody else is wrongâ and that things would revert to mean automatically. One needs to ask more probing questions and have more credible answers to bet against the world.
In the current special situation, with SBI backing isnt the risk reward in favour of taking fresh position in Yes bank? I would expect that RBI and SBI have analysed the books thoroughly and arrived at the Rs.10 rate based on that. With SBI backing, the potential investors who were wary of the issues in the books earlier would be more comfortable to participate in the rights issue when it happens. Hence things could get back to normal in 3-6 months time. pardon me if the question is naiveâŚI would like to know and learn from experienced members on how this might play outâŚ
Though personally I was invested in yes bank in two phases âŚthe earlier one was when i bought it in 2012 or so at price of around 200 and one day my dad sold it for around 600 without informing me. Yes bank then was a growing bank under the able leadership of Rana Kapoor. The metrics I was focusing mainly was their casa level, NPA and net NPA and rise of balance sheet.
Second was when the market got spooked after the removal of Rana Kapoor and yes bank corrected to levels of 150 from 300 plus⌠I assumed with the change of leadership. But the next quarter result ensured that I was aware that the loan book is way too toxic, fund raising is very important and their might still be few more cockroaches lurching. I sold off the second time at no profit no loss. The reason was purely fundamental , as my thesis was not working as I wanted it to work.
Since then I have stayed away from yes bank.
What amuses me is that this thread still has the largest no discussion. The markets have corrected heavily and their are plenty of opportunities. A thread on a super business like Britannia has hardly 90 posts. Donât know what to take home from this. Yes bank as a investment idea should be ignored and avoided now as there are lot of moving parts in the equation now. It is unnecessary occupying our thought process which we should use to identify the next compounder in the current market mayhem. Moderators please flag or remove this post if of little use but I could not ignore the way yes bank thread was popping on my valuepickr.
Regards
Divyansh
I keep coming back to this thread because it keeps confirming my worst fears. Now the latest is that this guy was trying to sabotage his own So called diamonds. Good thing from this is that there were indeed buyers and he scared them away. Hopefully it finds someone eventually as a strong enough promoter in the long run.
This story while entertaining is totally ridiculous and planted by the government. When was the last time TOI did any investigative journalism like this? Coupled with the sudden leaks of âPriyanka Gandhi - Rana Kapoor art dealâ from 2010, this looks like an attempt to deflect anger for mishandling of the Yes Bank situation by the gov/RBI.
What was the mishandling by RBI? As far as I understand they could not interfere too soon. This was a private company and govt should have intervened only when it could become a systemic issue. There are some lapses by the regulator but we need to question the star and handsome ex-RBI GOVERNOR who had penchant for tolerance and politics rather than enforcing prudence and ethical behaviour in their regulated entities.
75% lock-in for 3 years period is implemented for any retail investors of yes bank having more than 100 shares.
- Is it like we cannot sell more than 25% at once or we cannot sell more than 25% at all for 3 years? Has any such implementation done for any other stock earlier?