[carboy]

Originally Posted by Thermodynamics

Would like to get opinion from forum members that under these turbulent waters, what type of asset allocation would be a good strategy ?

I am thinking of these levels (equity:debt/cash)

1. If market is overbought : 50:50
2. If it is oversold: 70:30
3. Extreme correction: 90:10
4. Extreme overshoot(bubble): 20:80

Use a fixed allocation - i.e. decide on a single ratio for all the time based on the current value of your stocks & debt. Let's say you keep the ratio as 50:50. Then if the market is reaching new highs, then your stocks would automatically go up & your stocks would be worth more than your debt. i.e. the ratio would go to (50+x):(50-x) even if you haven't changed it yourself. So then you sell x worth of stock & put it into debt. You decide how frequently you should do this - once a week, once a fortnight, once a month, once a quarter etc.

[SmartCat]

Originally Posted by Juggernaught

now I'm still left with these which seem to be deadweight. Would really appreciate advice from experts like SmartCat and others, if I should still keep these in the portfolio hoping for some miracles in the long term or just sell them off and make my peace with it.

I have a small rule (which goes against the advice dispensed by books or experts) with respect to the stocks: NEVER SELL AT A LOSS.

- It is not deadweight at all. These stocks are no longer weighing down your portfolio since they have already lost 95%+ of its value
- Whenever you check your portfolio and you see these stocks at the bottom of the pile, it serves as a reminder not to repeat such mistakes. If you sell now, lessons learnt will be forgotten.
- Once you pick up the bad habit of selling stocks at a loss, the cycle keeps repeating and repeating, killing your overall returns. Just having the above rule (never sell at a loss) is prevent portfolio churn and also protect you from making mistakes during a stock market crash.

However, 'never sell at a loss' rule is applicable only to 30+ stock diversified portfolios. If your investment style is to hold just 10 or 20 stocks, then the above rule might not be applicable.

[adimicra]

I am a techno-funda positional trader. My max loss tolerance is 7-8%.and I use trailing stop losses for existing positions. So, 50% of my portofolio got sold y'day. I think I will be in 100% cash by today

Given that I made almost 100% returns in CY 2021, I think it's ok to give back 5-10% to the market.

[Latheesh]

Originally Posted by SmartCat

- Whenever you check your portfolio and you see these stocks at the bottom of the pile, it serves as a reminder not to repeat such mistakes. If you sell now, lessons learnt will be forgotten

Agree 100%. I have few shares like Reliance Home Finance, Prakash Industries, and HMVL (their losses are between 65-95%). They are worth nothing now but it is a big lesson whenever I open my portfolio and they stop me from making stupid decisions.

[m8002?]

Originally Posted by Lord Lucan

I usually move my surplus funds from savings back to liquid funds [LIQUIDBEES] in Zerodha. When situation like today presents itself, you can sell the liquid funds in a blink of an eye to free up funds for fresh stock investments.

To my knowledge Zerodha doesnt offer a switch.
when you sell the liquid funds, are the funds credited to your Zerodha account or to the bank account?

[Lord Lucan]

Originally Posted by m8002?

To my knowledge Zerodha doesnt offer a switch.
when you sell the liquid funds, are the funds credited to your Zerodha account or to the bank account?

LIQUIDBEES are ETFs, you can purchase them and sell them similar to stocks in Kite. Once you sell them, the amount will be immediately available for making fresh purchases in Zerodha. These are different from Mutual funds which are transacted using Coin.

https://tradingqna.com/t/everything-...nds-etfs/53116

[lapis_lazuli]

THE BIG Facebook (meta) fall. It seems the giant fell 28% or so today. Apple policy and a USD ten billion foreseen revenue hit, spooked the investors.

https://www.ndtv.com/world-news/behi...-tweak-2748248

Off late, FB offerings haven't been as exciting or revolutionary either. I mean videos of girls dancing, making strange faces, detox pouts...I think people walked past it.

[m8002?]

Originally Posted by Lord Lucan

LIQUIDBEES are ETFs, you can purchase them and sell them similar to stocks in Kite. Once you sell them, the amount will be immediately available for making fresh purchases in Zerodha. These are different from Mutual funds which are transacted using Coin.

https://tradingqna.com/t/everything-...nds-etfs/53116

The link mentions that the settlement cycle for LIQUIDBEES is also T+2. So in that case, you still cannot buy into the markets ( shares or ETF) on a day it crashes.

The only way is to keep the money in a savings account linked to Zerodha account. Or am I missing something?

[Lord Lucan]

Originally Posted by m8002?

The link mentions that the settlement cycle for LIQUIDBEES is also T+2. So in that case, you still cannot buy into the markets ( shares or ETF) on a day it crashes.

The only way is to keep the money in a savings account linked to Zerodha account. Or am I missing something?

You can immediately use it to buy into the markets. You cannot transfer it to the savings accounts immediately, you have to wait for T+2.

[AjinkyaP]

I'm a 'know nothing' investor, started my journey couple of years back after i came across the term 'Coffee can investment', popularized by Saurabh Mukherjea.

Its about the buy and forget approach with minimal or no churning involving some of the best blue chip companies.

Experts please weigh in regarding effectiveness of this strategy.

[arvindmanju]

Originally Posted by m8002?

The link mentions that the settlement cycle for LIQUIDBEES is also T+2. So in that case, you still cannot buy into the markets ( shares or ETF) on a day it crashes.

The only way is to keep the money in a savings account linked to Zerodha account. Or am I missing something?

LIQUIDBEES can be sold and purchase ETF or any stock on the same day, but only to the extent of 80% value of the sold LIQUIDBEES. 20% can be used to purchase ETF/stocks or transfer money back to bank account post settlement T+2.

Originally Posted by AjinkyaP

I'm a 'know nothing' investor, started my journey couple of years back after i came across the term 'Coffee can investment', popularized by Saurabh Mukherjea.

Its about the buy and forget approach with minimal or no churning involving some of the best blue chip companies.

Experts please weigh in regarding effectiveness of this strategy.

What is your intended timeframe to hold them?
I am not an expert.
If you are going to hold them over 8-10 years then expect handsome returns.(power of compounding needs time to show its magic). Keep adding more stocks whenever you read news about market fall.

[thirugata]

Originally Posted by AjinkyaP

I'm a 'know nothing' investor, started my journey couple of years back after i came across the term 'Coffee can investment', popularized by Saurabh Mukherjea.

Its about the buy and forget approach with minimal or no churning involving some of the best blue chip companies.

Experts please weigh in regarding effectiveness of this strategy.

Hi, after being in the market for close to 15 years, my experience says HOLD is not a strategy. Your strategy should say following 3 things:
1) Why am i buying?
2) What is the target I want ( What am i winning if i am right)
3) What am i risking ( What am I loosing if i am wrong)

HOLD is what you do in the mean-wile.

Happy investing.

[AjinkyaP]

Originally Posted by thirugata

Hi, after being in the market for close to 15 years, my experience says HOLD is not a strategy. Your strategy should say following 3 things:
1) Why am i buying?
2) What is the target I want ( What am i winning if i am right)
3) What am i risking ( What am I loosing if i am wrong)

HOLD is what you do in the mean-wile.

Happy investing.

Agreed.

But the companies considered here are called as 'Consistent Compounders' having monopoly business , clean promoters and enough free cash flow to reinvest in the business (again , Saurabh's methodology)
E.g : Asian Paints , Pidilite , Bajaj Finance , Nestle etc.

Time window is of min 10 years , so can we expect this much long time to iron out risk factor ?
also , just because these companies did exceptionally well in last 10-20 years does that guarantee the same performance in future ? , what if some of these companies end up 'being Nokia' of that sector ?

I would be happy if my returns beat low-risk, low-reward instruments like FD,PPF and inflation

[SmartCat]

Originally Posted by AjinkyaP

E.g : Asian Paints , Pidilite , Bajaj Finance , Nestle etc.

Finance companies like Bajaj Fin are not suitable for 'buy and hold forever' strategy. They could have NPA issues in the future

Time window is of min 10 years , so can we expect this much long time to iron out risk factor ?

Risk is primarily in valuation. They are trading at 50 to 100 times earnings. So the risk is, after 10 years, the stock could be trading at around the same value. That is, a stock can get stuck in "zone" for many years. This happened before to HUL between 2000 and 2010 when it was stuck in 200 levels for 10 years.



Something similar is happening to ITC right now.

also , just because these companies did exceptionally well in last 10-20 years does that guarantee the same performance in future ?

Stock performance is not guaranteed, but financial performance more or less is. That is the power of consumer brands.

what if some of these companies end up 'being Nokia' of that sector

Nokia used to operate in a segment (phones) that is changing every 2 years. But nothing much changes in toothpaste, washing powder or hair oil segment. So Nokia/Blackberry examples are not applicable to Asian Paints or Pidilite.

[thirugata]

Originally Posted by AjinkyaP

Agreed.

But the companies considered here are called as 'Consistent Compounders' having monopoly business , clean promoters and enough free cash flow to reinvest in the business (again , Saurabh's methodology)
E.g : Asian Paints , Pidilite , Bajaj Finance , Nestle etc.

Time window is of min 10 years , so can we expect this much long time to iron out risk factor ?
also , just because these companies did exceptionally well in last 10-20 years does that guarantee the same performance in future ? , what if some of these companies end up 'being Nokia' of that sector ?

I would be happy if my returns beat low-risk, low-reward instruments like FD,PPF and inflation

First to start with there is nothing guaranteed in stock market or in business. Microcaps have become largecaps and vise versa. That is why i prefer that 3 step approach.
I prefer this, because, where you invest depends on how much(less) you risk. Where you exit tells you how much gain.
On a lighter note, even the best companies wont know what their business would look like 10 years down the line, so any estimation by any analyst should only be considered as estimation and nothing beyond.
As they say there are million ways to make money in stock market. Not necessarily what you are following wont give you money. But my comfort level is knowing what is the cost, if something goes wrong and what is the gain if things go right. Its called risk to reward ratio, if that looks good, I go for it.