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Old 11th September 2010, 16:00   #1
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Default The story of my experiences in owning stocks

Hi all,

I would like to share my experiences in owning shares of different companies: The reasons why I bought them, at what price and how they are doing. I once joined an investment forum to discuss this subject. But all the members on that forum are traders and not investors. All they want to know is "What stock? What CMP? What Target? What stoploss?" No one there is interested in the shares beyond this!

Next question is why I like to share this information. Most of us are in employment today because someone somewhere at sometime bought shares and financed the companies that we are working for today. I believe we must give back to the society. Most of us on this forum own cars. Let me tell you that you are very well off within 120 crore or so of our national population. If we also invest in the corporate sector of this country we create more job opportunities and spread the prosperity and I believe that it is a national service.

One of my favourite stocks is Allahabad Bank. This could surprise many in the stock market. As per "the market" this is not a charming stock. I once suggested this stock in 2006 to a colleage of mine who is a qualified CA and she tried to persuade not to buy such a boring company. I do not dispute her intelligence or anything, she merely echoed the sentiments expressed by most people associated with the markets. My logic is that this bank has a book value of Rs. 110 per share at the time. It is available between Rs. 80 and Rs.90. I believed that this is a discount up for grabs. The bank is owned by the Government of India. On the surface of it I did not see anything negative. I bought 100 shares at Rs. 78.5 each in April 2008 and held on to them. Those times these banks were not popular because the central government announced a waiver of farm loans. The traders hammered the Public sector bank shares. But my point was that the Government promised to reimburse the losses to the banks in three yearly instalments.

Moreover boring banks do not bother me. When I need a loan I look at the bank that comes out with the lowest interest rate. When I deposit moey in an FD, I look for a bank with highest Interest rate. That's all. I dont deal witha bank because its logo is trendy or its furniture is modern.

Yes this bank may be slow in adopting new technologies. But on the other hand it has a strong network in rural areas where it possibly has lower competition. For a while the prices hovered around that price.

Then banks started collapsing in several parts of the world. Bank stocks were taking a harsher beating than most other stocks in the recession. Finally in March 2009, Allahabad bank was selling at Rs. 36 per share. I wanted to buy more of its shares but I was busy buing Tata Steel that month and so I had no money.

Next month the share hit mid Forties. I invested about Rs. 35798 and got 792 shares and this took my total shareholding to 892 at an investment of Rs. 43648 at an average investment price of Rs. 48.93.

My logic at the time of banking collapse was this: Banking collapse is happening in the economies with ridiculous lending and spending habits. It could take down those banks that are involved with them. But since the beginning we knew that allahabad bank is not such a smart bank that trades in numerous international markets. On the ther hand it is such a dumb bank that does business in the rural hinterlands of Bihar, UP and Bengal. And I love those dumb banks.

The reason why I bought only 792 shares is that I had surplus money that month just enough for that. If I had truch loads of money, I would have backed up my trucks in the NSE parking bays and I would have unloaded the money and would have stocked up on Allahabad Bank shares.

Now my philosopy is that once you buy a share you live with it. Never sell it. Its like a marriage. Dont buy a share if you have the slightest suspicion that you cant live with it.

In 2008, I got a dividend of Rs 350 for the 100 shares. Dividend per share was Rs. 3.50
In 2009, I got a dividend of Rs. 2230 for the 892 shares that I own.-Dividend per share was Rs. 2.50
In 2010, I got a dividend of Rs. 4906 for the 892 shares. Dividend per share is Rs. 5.50

Current share price is Rs. 227.50 Current value of 892 shares is Rs.202930 plus dividends received so far of Rs. 7486. all this for an investment of Rs. 43648.

I always joked with my friends when Allahabad Bank was selling at Rs. 36 that its shares were giving more dividend yield than its fixed deposits.
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Old 11th September 2010, 18:53   #2
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Though its a poll, we already have a thread running on stock market - http://www.team-bhp.com/forum/shifti...ck-market.html (Do you play the stock market)
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Old 11th September 2010, 19:10   #3
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Originally Posted by aargee View Post
Though its a poll, we already have a thread running on stock market - http://www.team-bhp.com/forum/shifti...ck-market.html (Do you play the stock market)

Playing the stockmarket is a different thing. Playing the market involves trading. I am talking about investing which does not involve regular buying and selling.
I hope I made it clear.
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Old 11th September 2010, 21:03   #4
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Originally Posted by sridhga View Post
Playing the stockmarket is a different thing. Playing the market involves trading. I am talking about investing which does not involve regular buying and selling.
I hope I made it clear.
yes, you are right. this can be considered as a thread on investments in stocks if mods allow. BTW, living with the stocks is debatable ie never sell it. you have to track the company and if there is anything you dont like or price way out of fundamentals you have to SELL it and book profit.
you should read "one up on wallstreet" by peter lynch. its on investment only.
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Old 11th September 2010, 23:24   #5
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yes, you are right. this can be considered as a thread on investments in stocks if mods allow. BTW, living with the stocks is debatable ie never sell it. you have to track the company and if there is anything you dont like or price way out of fundamentals you have to SELL it and book profit.
you should read "one up on wallstreet" by peter lynch. its on investment only.
I did read the book. Its a good one. Following the companies is not more difficult than following your bank account. Actually the longer you hold those companies, the easier it gets.

Some instances you recover the money back from the investment through dividends. Then you are holding the shares for free.
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Old 12th September 2010, 00:16   #6
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Very interesting sridhga. Would like to know your take on other stocks as well. Perhaps, it could be an opportunity for a few others to invest in a good stock.

One point though, which you have forgotten to mention, is that in March 09, the markets were at their lows. So, practically any stock you bought then would have given handsome returns, for ex: HDFC Bank was trading around 800 then and is today around 2200. Returns may be lower than Allahabad bank, however, its also a large cap stock, so will be less likely to tank in the event of a fall in the markets.

So, while I'm not saying Allahabad bank is a bad investment, I'd like to point out that the stock markets in India in the short term are more about timing than anything else.

Cheers!!!
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Old 12th September 2010, 12:43   #7
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Originally Posted by Lalvaz View Post
Very interesting sridhga. Would like to know your take on other stocks as well. Perhaps, it could be an opportunity for a few others to invest in a good stock.

One point though, which you have forgotten to mention, is that in March 09, the markets were at their lows. So, practically any stock you bought then would have given handsome returns, for ex: HDFC Bank was trading around 800 then and is today around 2200. Returns may be lower than Allahabad bank, however, its also a large cap stock, so will be less likely to tank in the event of a fall in the markets.

So, while I'm not saying Allahabad bank is a bad investment, I'd like to point out that the stock markets in India in the short term are more about timing than anything else.

Cheers!!!

I agree with you Lalvaz. Thanks for the input. March 2009 was the lowest that the markets had seen in recent times. My investing career started in 2007. But I found that irrespective of highs and lows some companies do deliver in the long term. More of that as we go through the different shares that I studied or invested in.
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Old 13th September 2010, 09:44   #8
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Default Titan Industries steep increase in price

I happened to go to one of the Tanishq showrooms, (the largest one in India at T-Nagar Chennai) as I was accompanying one of my family members. She is paying some monthly instalment which enables you to first pool up money and then buy jewellery. I was very impressed by their large variety and the popluarity as the store is very crowded. This monthly savings scheme also seems to be very popular. I just bought 5 shares in Titan just to tune into the company so that I get their annual reports, notices etc. I bought these shares on 8th December 2009 at a total investment of Rs. 6817. Amazingly today their value is Rs. 14756. An increase by 116.4% in just 9 months. In addition to this I received a dividend of Rs. 75 last month. I felt its better to buy the shares of this hugely popular company that to buy their gold.
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Old 13th September 2010, 23:37   #9
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Originally Posted by sridhga View Post
I happened to go to one of the Tanishq showrooms, (the largest one in India at T-Nagar Chennai) as I was accompanying one of my family members. She is paying some monthly instalment which enables you to first pool up money and then buy jewellery. I was very impressed by their large variety and the popluarity as the store is very crowded. This monthly savings scheme also seems to be very popular. I just bought 5 shares in Titan just to tune into the company so that I get their annual reports, notices etc. I bought these shares on 8th December 2009 at a total investment of Rs. 6817. Amazingly today their value is Rs. 14756. An increase by 116.4% in just 9 months. In addition to this I received a dividend of Rs. 75 last month. I felt its better to buy the shares of this hugely popular company that to buy their gold.
Indeed, and you'll find this phenomenon with a lot of companies. However, must tell you that I found the business practices at Tanishq questionable. Now before you and the others shout me down, letme clarify, a friend wanted to buy a ring, with an exchange. The Tanishq showroom at Bandra agreed to buy back the ring, however they wanted to melt it before valuing. fair enough, they also wanted him to pay the melting charges, fair enough, now incase the ring was lower than 18carat, they wanted extra money from my friend, fair enough, if it was more than 18carat, they still wanted money to reduce it to 18carat. Bloody hell, whatever for, we asked? Apparently they only sell 18carat, so if its 22carat, they'll charge money to reduce it. Naaah, we walked out, and found another jeweller across the road who was more practical.

Anyways, it worked for you, n thats what matters.

Last edited by Lalvaz : 13th September 2010 at 23:45.
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Old 15th September 2010, 22:18   #10
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Indeed, and you'll find this phenomenon with a lot of companies. However, must tell you that I found the business practices at Tanishq questionable. Now before you and the others shout me down, letme clarify, a friend wanted to buy a ring, with an exchange. The Tanishq showroom at Bandra agreed to buy back the ring, however they wanted to melt it before valuing. fair enough, they also wanted him to pay the melting charges, fair enough, now incase the ring was lower than 18carat, they wanted extra money from my friend, fair enough, if it was more than 18carat, they still wanted money to reduce it to 18carat. Bloody hell, whatever for, we asked? Apparently they only sell 18carat, so if its 22carat, they'll charge money to reduce it. Naaah, we walked out, and found another jeweller across the road who was more practical.

Anyways, it worked for you, n thats what matters.

Strange for a Tata Company. I subscribe to Tata Indicom and they even reimburse me for any dropped calls while billing.
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Old 16th September 2010, 03:07   #11
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There is just one problem with this logic: what is the rate of return you are getting? 4900 pa on a investment of 43648?

Now assume you had put that 50k into a pool for set aside for day trading: with an hour set aside across your day, 30 minutes of it just before trading opens, you can make this 50K back every 6 months! A good software like MetaStock and basic Excel skills help ofcourse!

and it helps if you are not averse to penny stocks: you know the 2/3 rupee stocks: a 1 rupee appreciation/depreciation is a 50% return! In a single day! Can really make a killing. On the downside you can loose badly too if you arent careful!
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Old 24th September 2010, 20:36   #12
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Originally Posted by COUGAR View Post
There is just one problem with this logic: what is the rate of return you are getting? 4900 pa on a investment of 43648?

Now assume you had put that 50k into a pool for set aside for day trading: with an hour set aside across your day, 30 minutes of it just before trading opens, you can make this 50K back every 6 months! A good software like MetaStock and basic Excel skills help ofcourse!

and it helps if you are not averse to penny stocks: you know the 2/3 rupee stocks: a 1 rupee appreciation/depreciation is a 50% return! In a single day! Can really make a killing. On the downside you can loose badly too if you arent careful!
Cougar, Thanks for your views. I somehow never understood the charts. I am not good at softwares either. If you had succeeded at this please let us know. My idea is to invest about Rs.15 lakhs in good companies and watch the money multiply.
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Old 24th September 2010, 21:11   #13
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sridhga, it's a nice thread you've started here. I have a doubt though, there must be a million companies listed on the stock exchange, how do you decide on what to buy and what not to buy?
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Old 24th September 2010, 23:37   #14
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sridhga, it's a nice thread you've started here. I have a doubt though, there must be a million companies listed on the stock exchange, how do you decide on what to buy and what not to buy?
+1 Get the same doubt. I dont believe in what the channels peddle as it always has to be reliance!!

For one i agree with you on buying shares of indian banks like the one you suggested. Was lucky to buy shares of couple of banks when it was launched in the IPO and they are doing pretty well and i hate daily trading as it takes a lot of your time and if done badly chances of loosing is greater
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Old 25th September 2010, 00:26   #15
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Default Can you guess this company?

Now I will show you an interesting(maybe another dull) stock. On Friday September 24th it closed at Rs. 572.10 per share Can you guess the name of this company?

My holdings with acquisition costs and dates included in the attached file
Attached Files
File Type: xls Workings.xls (15.5 KB, 244 views)

Last edited by sridhga : 25th September 2010 at 00:40.
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