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View Poll Results: Stocks as a percentage of my net assets are -
0 - 25% -- I'm like the most conservative Indians. I love FDs. 219 32.02%
26 - 50% -- I have a few stocks. 302 44.15%
51 - 75% -- I'm an active trader. 113 16.52%
76 - 100% -- Hey, I'm an i-banker!!! 50 7.31%
Voters: 684. You may not vote on this poll

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Old 13th June 2014, 12:22   #2401
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Default Re: Do you play the stock market

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Hi Patience, great to read your post, I can see that you are making a genuine attempt to learn and your steps to cut expenses are really appreciable.

Just to understand your thinking process, if you do not mind, can you state what your hypothesis was when you bought BHEL and CG?
BHEL: India is highly power deficient and BHEL will benefit from government's initiative in this area. Even though the order book growth has slow down and there are payment delays with slow down, they still have very good order book. The payment for work in progress will have to come in at some point as the customers have already invested a lot in these projects. It is just an effect of recent slow down. Debt free status, high RoE, and good cash flow. Good moat with respect to brand name, product quality and economies of scale. Not very capital intensive and the large number of suppliers do not have enough bargaining power. The recent strain on low profit growth, margin pressure, trade payables etc are attributed to the current state of Indian market and were factored in the price I paid for the stock. For any form of power generation, turbine is a must, and BHEL is a market leader here. I think BHEL will do very well once the slow phase is over. I started buying the share once it started going around Rs. 170. I wanted to bought more when it went to Rs. 100, but did not have cash at that time.

CG: I am not as bullish as BHEL, so allocated a very small portion, and is in watching mode. The consumer products division has been improving, good brand name in power transformers (huge market in India), decent balance sheet - not much debt, decent working capital situation with the cash flow. The acquisitions have also started doing well and the financials are improving. Good return of equity, return on capital employed, good free cash flow (excluding the recent downturn). The recent restructuring programs are getting reflected in financial results. I bought when the market was not optimistic about the business - Rs. 90. Now it is around Rs. 220. But I do not regret investing more as risk reward ration was pretty high, and my analysis is weak.

Last edited by PatienceWins : 13th June 2014 at 12:30.
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Old 13th June 2014, 12:32   #2402
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Folks. Let us not discuss individual scrips. If I buy and you sell then I expect the price to go up, and you down! My judgement against yours.
This is typical demand-supply situation.
If a person X recommends a stock that he has purchased, he could do it to help others. But it would still push up the stock since now based on the recommendation, many buyers will queue up and the stock will hit the upper circuit.
This typically happens with value-picks blog. The stock recommended on Saturday goes to upper circuit and stays there for next 3-4 working days.
In this process, the person recommending is making a notional profit for that week. He may just sell off his stake and sit back with the profit if he chooses to. Some people have accused "value picks" blogger of making money in this manner.


Now, what happens after that euphoria dies off? The fundamentals probably will decide on the price.

So, I think recommendations are fine, as long as a new buyer does not buy immediately after the recommendation.

Of course, some of the recommendations come with targets which are quite high and the ETA is several years.

Last edited by S_U_N : 13th June 2014 at 12:34.
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Old 13th June 2014, 12:44   #2403
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So, I think recommendations are fine, as long as a new buyer does not buy immediately after the recommendation.

Of course, some of the recommendations come with targets which are quite high and the ETA is several years.
Recommendations are fine. It will give us more ideas to explore. As Vindy Wheels has commented earlier, we do a lot of home work before buying a car, but we decide to buy stocks in a matter of seconds. Our attitude with respect to stocks is the problem. We cannot blame our friend who recommended a car if we buy the car without even looking at it. As in other walks of life, we are responsible for our actions.

I would recommend to learn about behavior biases in investing. Authority bias and liking bias are very strong factors - the main weapon of CNBC. The main reason why they show all pretty, good looking, well dressed people there. It is very easy to make predictions and fool people.

I started going through valuepickr yesterday. What I liked about the site was that it is driven by analysis and the home page provides enough avenues for learning. Information with respect to stocks, learning, and investment philosophy are shared liberally.

I had identified Mayur Uniquoters as a good bet when it was around Rs. 300, based on financial ratio screening. The business also looked attractive to me, especially with increasing promoter share. I would have had more conviction if I was in valuepickr at that time.

Last edited by PatienceWins : 13th June 2014 at 12:48.
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Old 13th June 2014, 15:10   #2404
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Hi, great call on BHEL. The power sector has to pick-up at some point of time. I did see value but skipped the same as I thought opportunity cost could be high especially if the election results were not favorable.

Since you already have a good grip on this sector, have a look at Isgec Heavy Engineering. This company grew even in the last 4-5 years. The business is a bit too complex for me, so yet to spend adequate time on this. Would love to hear your thoughts.

Quote:
Originally Posted by PatienceWins View Post
BHEL: India is highly power deficient and BHEL will benefit from government's initiative in this area. Even though the order book growth has slow down and there are payment delays with slow down, they still have very good order book. The payment for work in progress will have to come in at some point as the customers have already invested a lot in these projects. It is just an effect of recent slow down. Debt free status, high RoE, and good cash flow. Good moat with respect to brand name, product quality and economies of scale. Not very capital intensive and the large number of suppliers do not have enough bargaining power. The recent strain on low profit growth, margin pressure, trade payables etc are attributed to the current state of Indian market and were factored in the price I paid for the stock. For any form of power generation, turbine is a must, and BHEL is a market leader here. I think BHEL will do very well once the slow phase is over. I started buying the share once it started going around Rs. 170. I wanted to bought more when it went to Rs. 100, but did not have cash at that time.
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Old 13th June 2014, 16:36   #2405
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Experts,

How do you pick stocks? I have basically never understood the phrases - "study the company/market etc".
But I am interested.
I know there are many books available to learn, but any suggestion? Something that a layman can understand?
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Old 13th June 2014, 19:42   #2406
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Experts,

How do you pick stocks? I have basically never understood the phrases - "study the company/market etc".
But I am interested.
I know there are many books available to learn, but any suggestion? Something that a layman can understand?
I am not an expert at all. Still learning to get a proper investment philosophy. In my opinion, it is not possible to read a couple of books and get a good grip of investing. I would recommend to read the following, preferably in the order given:

Investing Concepts
1. Intelligent Investor by Benjamin Graham (Do not miss Chapter 8 and 20. It is fine even if you skip the rest of the book).
2. Books on Warren Buffett - Buffett's Bites and The Warren Buffett Way. Explains key value investing principles from the guru.
2. One Up on Wall Street and Beating The Street by Peter Lynch. Very good for a layman to understand stocks.
3. The Little Book That Builds Wealth by Pat Dorsey. Excellent book on moats.
4. The Most Important Thing by Howard Marks. Key learnings from his memos available in his investment firm website - http://www.oaktreecapital.com
5. The annual letters of Berkshire Hathway. (Available free on company website. You can even get a kindle version very cheap on Amazon).

Behavioral Aspect - Helpful in daily life, especially stock market
1. Influence by Robert Cialdini - Must Read
2. Predictably Irrational by Dan Ariely
3. Your Money and Your Brain by Jason Zweig
4. Thinking Fast and Slow by Daniel Kahneman
5. Poor Charlie's Almanack by Charlie Munger. Gives a lot of pointers for self development and life long learning. Introduction to various mental models as well.

Financial Analysis
1. How to Read a Financial Report by John A. Tracy
2. Security Analysis by Benjamin Graham
3. Financial Shenanigans by Howard Shilit. Helps to identify fraud from financial statements.

The best source for learning about a company is the annual reports available on the website. You need to read annual reports for a few years to get a good grip of how the company has been performing. Even if you cannot read the full report, look at Charman's letter (if included), Company Overview, Management Discussion and Analysis, and Financial Statements.

Last edited by PatienceWins : 13th June 2014 at 19:52.
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Old 14th June 2014, 09:47   #2407
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Hi,

One up on Wall street will be a good book to pick-up first. After reading that try to evaluate companies whose business you can understand. You will form your own "circle of competence".

To help you analyse companies systematically "The 5 rules for successful stock investing" by Pat Dorsey will be immensely helpful.

Then you can read "The Thoughtful Investor" by Basant Maheshwari. This book came out a month or two back and is very good to understand in the Indian context. He summarizes learning from different books and his own experience in this one book.

All the books mentioned by PatienceWins are must-reads. Also log on to valuepickr and start reading and contributing. No better place to see live analysis of companies in India.

Quote:
Originally Posted by rajesh1868 View Post
Experts,

How do you pick stocks? I have basically never understood the phrases - "study the company/market etc".
But I am interested.
I know there are many books available to learn, but any suggestion? Something that a layman can understand?
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Old 14th June 2014, 16:11   #2408
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Default Re: Do you play the stock market

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All the books mentioned by PatienceWins are must-reads. Also log on to valuepickr and start reading and contributing. No better place to see live analysis of companies in India.
Quote:
Originally Posted by PatienceWins View Post
I would recommend to read the following, preferably in the order given:
Guys,

Thanks a lot!. will go through them one by one. I can spent couple of hours daily.

Vindywheels, I have visited valuepickr site yesterday seeing your posting here
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Old 15th June 2014, 10:53   #2409
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Default Re: Do you play the stock market

We seem to be an environment of instant rises and drops. After the rise over the past couple of months a 15-20% correction was expected. It was just that Iraq triggered it.
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Old 15th June 2014, 23:28   #2410
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is there someone who may share dalal street journal flash news reports ?? i can share my sharekhan reports if some one wants

Last edited by siddutta : 15th June 2014 at 23:29.
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Old 16th June 2014, 12:40   #2411
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Default Re: Do you play the stock market

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We seem to be an environment of instant rises and drops. After the rise over the past couple of months a 15-20% correction was expected. It was just that Iraq triggered it.
Sorry, but do I miss something? I am yet to see any correction. Were you pointing to the current situation or something else?
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Old 16th June 2014, 14:37   #2412
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The current drop in stock prices, How far this will go me depend on the Iraq situation - and ISIL (earlier ISIS). Rupee had also dropped to well above Rs.60!
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Old 18th June 2014, 17:54   #2413
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Has anyone heard or practised the 2652 Theory for Intraday trades?
Went through it today. I feel it gives us the resistance and support levels, breakouts of which gives profits.
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Old 30th June 2014, 15:55   #2414
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Hi, both Ajanta and Page are doing great. Ajanta has given more than 60% returns (price was at 980 in April) and Page 28% (5600 in April). The beauty of these stocks are not just returns but the fact that you can put in large allocation without losing sleep.

The importance of allocation (how much money you allocate to each stock) is most of the time missed out. You make more money by investing 5 lacs in a stock which gives 25% return compared to 2 lacs in another high risk stock which gives 50% return.

I have put in small amounts in high risk stocks earlier and found the whole headache is just not worth it. You can't sleep tight and even if the stock does well you end up with little absolute gains.

Quote:
Originally Posted by VindyWheels View Post
Hi,

Page Industries looks like a good candidate for fresh entry at 5600 levels.

The com trades in the 30-40 forward P/E band and getting a 40 P/E in next 1.5 years looks like a high probability event. If that happens the price can touch 8500-9000. This is a high quality business with high predictability and almost assured growth. It will trade below 30 only if Indian economy goes further downhill. Even if that occurs you can buy more

Another interesting stock pick at current levels is Ajanta Pharma. Its trading at around 13-14 times FY15 expected earnings. Good track record, company is in a growth phase with robust product profile. They are entering the US market now.

You can read-up on both these companies through their investor presentations/concalls etc.

The idea to share interesting picks is only to get more people interested in taking up equity investments in the right way and is not intended to be recos to be adopted without own research. Without own research you will never be comfortable in your positions and will exit/enter at the wrong price.

Also suggest people to read Basant Maheshwari's book - the thoughtful investor. I am yet to read it, but the preview looks very good. This book should give one decent exposure on long term equity investments in India.

Happy Investing

Vindy
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Old 1st July 2014, 13:54   #2415
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When is usually bonus shares / dividends declared? After / along with any (quarter) results declaration or ONLY during the FY end (April - May time frame) results declaration?

Also, where can I track these information - I do see a particular page in moneycontrol website. Anything else for it?
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