[Saanil]

Originally Posted by rahulsharma2008

I hope that helps.

Just wanted to know how should one play the telecom/Auto sector? To be specific, Bharti Airtel/Idea and M&M/TTMT/MSIL in the auto space?

[S_U_N]

Originally Posted by carboy

The Goldman Sachs (earlier Benchmark) Nifty, Nifty Junior and the UTI Nifty funds are all Mutual Funds. They are something called as non-managed MFs called as Index funds.

@carboy. Thank you for this insight about index funds. It is quite interesting.
My investment platform (FundsIndia) does not have any index funds from GS, but they have 45 other index funds to choose from. I looked at UTI Nifty Index fund. The three year returns is close to zero. Isn't that quite bad?

Originally Posted by rahulsharma2008

I hope you havent bought any of the penny stocks which are available in plenty in the current market.

(Un)fortunately, my account is still not activated, so I cannot buy anything yet. Plus there are some talks on whether this is a good time to invest or not. I am still pondering, infact preparing where to invest.
I have still to resume my SIP for Mutual Funds, which stopped after 12 installments in October. As a result, I have a pile of cash in my savings account and liquid funds.

From the Nifty pack, only Metal and Reality stocks are the real underperformers of the last 5 years. Valuations wise metals stocks are looking the most attractive around these levels. Stocks like TATASTEEL, HINDALCO and JINDALSTEL are expected to perform well in the next 6-12 months.

From the non-frontline space, have a look at KAJARIA CERAMICS. HDFC Mutual Fund bought 20 Lakh shares of this stock yesterday. I have been bullish on this since 180 levels. Potential multibagger in the next 3-5 years.

I hope that helps.

Thanks. I will add these to the list that smartcat has provided on the previous page.

[carboy]

Originally Posted by S_U_N

@carboy. Thank you for this insight about index funds. It is quite interesting.
My investment platform (FundsIndia) does not have any index funds from GS,

As I said in my earlier post, this is an Exchange Traded Fund. So you need to buy it like a stock and not like a MF - i.e. you need to buy it through your stock broking account.

Originally Posted by S_U_N

but they have 45 other index funds to choose from.

I don't know the current situation, but I had compared some of them some years back. A lot of them had more tracking errors as compared to GS (then Benchmark) and UTI.

Originally Posted by S_U_N

I looked at UTI Nifty Index fund. The three year returns is close to zero. Isn't that quite bad?

On 13th Nov 2010, the Nifty Index closed at 6121. Today it closed at 5990. So the Nifty Index (and the BSE sensex) and the market has fallen in 3 years. So an index fund which tracks will show similar performance. I think you would find that most large cap mutual funds would show similar performance.

[rahulsharma2008]

Originally Posted by Saanil

Just wanted to know how should one play the telecom/Auto sector? To be specific, Bharti Airtel/Idea and M&M/TTMT/MSIL in the auto space?

IDEA is a better pick in Telecom space followed by RCOM in case you are looking at quick returns. Bharti is good in case you are looking at a one year horizon. From the Auto space, I would advise you to stick to Maruti since these it has the maximum potential on the upside from current levels and it really should outperform whenever there is a revival in demand in the passenger car space. One should really wait for TATAMOTORS to correct in order to enter into the same. M&M can remain relatively subdued. Overall Auto sector should pick up by the 4th Quarter onwards.

[rahulsharma2008]

Originally Posted by S_U_N

@carboy.

(Un)fortunately, my account is still not activated, so I cannot buy anything yet. Plus there are some talks on whether this is a good time to invest or not.

.

Anytime is a good time to invest in the markets provided you do the research and stock picking right. Remember how FMCG stocks performed in the last 3 years when nothing else was performing.

Originally Posted by S_U_N

@gemi_kk: If things are so bad all over, then how come the markets are up? There is a negative sentiment in your post, but somehow the markets do not seem that way based on the numbers. Perhaps in near future the bubble will burst? But again, that is just speculation, isn't it?

Buddy !! Welcome to the real world.
We are not the only players in this market. There are millions like us.

May be we should try to understand macro conditions.
- There are big players who do not want the price of a script go down. so called promoters/investors or any other word. They manipulate.
- What does lic do? they keep on plonking money. Because they cant invest elsewhere.
- What does our NRI's do? They will buy as their bank accounts are sufficiently funded.
- Seeing all of them above, many commoners invest. But how many of them really understand the definition of a stock? In my friends circle, there is no one, but there are 40 + Players.
- IT stocks move UP if rupee depreciates for one day. BUT will the companies really benifit/make any profit on this day? But People buy if rupee depreciates. There is no fundamental news. No Fundamental growth.

When every one of them is buying, market moves up. So, if you buy now, (Say) you'll see some 3-6% growth in your portfolio. If you do not sell at right time, you will see the same scripts at -10% or more. Assuming some global/local negeative news comes out.
My only suggestion is. Participate in all these rallies, Only if you can sell @ the right time. If you cannot identify the right time to buy/sell, Then either accumulate slowly (To satisfy your buying desire) or WAIT.

I may be wrong too. Only time can tell.

[rahulsharma2008]

Barclays makes TATASTEEL its top sector pick in Asia

http://profit.ndtv.com/news/corporat...in-asia-328331

The quarterly results were also good

[S_U_N]

Originally Posted by carboy

As I said in my earlier post, this is an Exchange Traded Fund. So you need to buy it like a stock and not like a MF - i.e. you need to buy it through your stock broking account.

Now that is clear. I will have to wait for my account to be active before I can see if GS ETF Index fund is available or not.

Originally Posted by rahulsharma2008

Anytime is a good time to invest in the markets provided you do the research and stock picking right.

You make that sound very trivial.

Remember how FMCG stocks performed in the last 3 years when nothing else was performing.

For a newbie like me, I have no clue about this. What is the conclusion from this historical data? That those who had invested in FMCG were smart guys? or they were plain lucky?

Originally Posted by gemi_kk

When every one of them is buying, market moves up. So, if you buy now, (Say) you'll see some 3-6% growth in your portfolio. If you do not sell at right time, you will see the same scripts at -10% or more. Assuming some global/local negeative news comes out.
My only suggestion is. Participate in all these rallies, Only if you can sell @ the right time. If you cannot identify the right time to buy/sell, Then either accumulate slowly (To satisfy your buying desire) or WAIT.

Well, my motive is to stay invested for very long time.
I am not looking for profit booking after 3 years - perhaps I will wait for more than that.
The only hope is that I do not need the money for something else, so perhaps I do not block a lot of money in stocks.

My grandfather has always advised all of us to stay away from the stock market.
The irony is that the stock market has made him a multi-millionaire holding Reliance and L&T shares since the early days. He does not care what happens to the markets on a daily basis. I would hope I could emulate him to some extent.

Originally Posted by S_U_N

Well, my motive is to stay invested for very long time.
I am not looking for profit booking after 3 years - perhaps I will wait for more than that.

Hmm.. i didnt knew that you want to invest for a long term. Now a days, for many, long term investment definiton lasts less than a year.

I would say go ahead and pick fundamentally good stocks. If i were in your shoe, i would invest in top nifty stocks like tata steel/ tata motors, etc. rather than investing in MF's.
Few tips.
- Buy on fridays/ on those days, when profit booking happens. you would get a slightly better price.
- Accumulate over a period. Avoid buying all at once.

[carboy]

Originally Posted by S_U_N

You make that sound very trivial.
For a newbie like me, I have no clue about this. What is the conclusion from this historical data? That those who had invested in FMCG were smart guys? or they were plain lucky?

Well, my motive is to stay invested for very long time.
I am not looking for profit booking after 3 years - perhaps I will wait for more than that.
The only hope is that I do not need the money for something else, so perhaps I do not block a lot of money in stocks.

My first advice to you is to pick up a book called 'The Intelligent Investor' by Benjamin Graham. Graham practically invented the concept of fundamental analysis of equity. Graham was Warren Buffet's teacher. You can read Buffet's speech about Graham here - http://www.safalniveshak.com/wp-cont...en-Buffett.pdf

You may or may not decide to follow Graham's method but either way, the Intelligent Investor is a must read book for anyone looking to even invest money in equity.

Another thing is that stock picking is very very difficult. If you check the most famous Large Cap Mutual funds in India for the last 3 years, they seem to move in very much the same way as the Index. If the index goes up, then the MF NAV goes up in a similar proportion. Likewise when the index goes down. There may be exceptions, but this is true for a good majority of the MFs. And like you said, I think the exceptions may be based on luck rather than stock picking because it's not the same MFs which come out as the exceptions year after year. When the markets are booming, then of course, many funds outperform the index. But then so do I. So what use is the big research teams and fund managers who manage those MFs?

I have been following the stock market for almost 20 years now on on off with huge gaps in between (there was a 8 year gap once). In the current stretch, I have been invested continuously since 2007.

YMMV, but I have seen only 2 investing strategies work for me.
1. Index funds. I have been making do with the Benchmark (GS) and UTI ones. I have been hoping for long for Vanguard to come to India and establish good index funds. Vanguard is one of the biggest MF companies in the world & it's index funds abroad have trivially low tracking errors. They expense ratios are as low as 0.10%. As compared to this the GS Benchmark CNX 500 fund (which is not same I suggested earlier) has an expense ratio of 2% (or 1.5%, I don't remember) Such a high expense ratio for an Index fund borders on the ridiculous. Unfortunately Vanguard has no plans of coming to India in the near future. Till then we have make do with what we have.
I use 2 ways to invest in index funds - SIP plus non regular sale and purchases. In the non-SIP way, I purchase when markets crash and sell when it rises. But the bulk of my index fund investments I just hold. Since I have been in index funds since the time the index was hovering in the 14000s, I have made decent money in this.

2. Buying cheap stock (based on P/E & B/V) of medium or higher size companies with very very low debt and who have a long history of dividends year after year (this is the Graham strategy). But again I feel this works best when my buy is when the markets are depressed & sell is when they are high.

And again, YMMV.

Originally Posted by carboy

My first advice to you is to pick up a book called 'The Intelligent Investor' by Benjamin Graham.
.

@carboy. Need your inputs.
i am currently reading that book. completed till page 280~
And i do not find anything interesting in that book. He uses tooo long Examples and too less valuable quotes/information. I think, the whole book could be written in < 200 pages if, 50% of examples could be avoided.

Will the book become more interesting from here or will be like the first half?

[BaCkSeAtDrIVeR]

For those who need to ask "which share I should buy " my answer is "go put your money in mutual funds."

There is no substitute for hard nosed research and the business you buy into. If you feel weak kneed, there is a reason for it and obey yourselves.


I have about 20 shares in my portfolio, with a market value of 7.5 l. I don't hold shares in any ziT company coz I don't know what they do. Ditto for united phosphorius. But I know what Kpit does, and about 30k lies there.

Remember that no research will show qualities of management. Ex - I got India cement and Madras cement few years back at almost same price. I made a cool 5% loss on india cem when I sold it few months back, but almost doubled my money in madras cem.

My approach is very conservative, annualised return is around 12%, but the portfolio has not gone below cost for a long time.

[carboy]

Originally Posted by gemi_kk

@carboy. Need your inputs.
i am currently reading that book. completed till page 280~
And i do not find anything interesting in that book. He uses tooo long Examples and too less valuable quotes/information.

What do you mean 'valuable quotes'?

Anyway, it doesn't look like the book is right for whatever you are looking for.

This is a age old book with many many editions so I am not sure what's page 280 for you. I have the book with Jason Zweig's commentary - it's somewhere in storage so I am not able to look up the edition quickly. It has further examples by Jason Zweig which are taken for more current situations than Graham. Graham's examples are from 60s, IIRC. Jason's are from the 90s and early 2000s.


The book is all about
- how buying strong stock cheap is the best strategy as per graham
- high level discussion of how to find out if a stock is cheap
- high level discussion of how to find out if a stock is strong
- investment strategy for defensive and enterprising investment (graham's definition of an enterprising investor is not one who is willing to take more risks - it's an investor who is willing to spend more time analyzing and hence proving that what looks like a risk is not really a risk).

The 2nd part of the book covers investment strategies - but again there are lots and lots of discussion with examples.

For in depth technical discussion of analysis of a balance sheet, Graham has another book which is again considered as a bible - but it was too much for me (I think it's for professionals).

Originally Posted by carboy

What do you mean 'valuable quotes'?

This is a age old book with many many editions so I am not sure what's page 280 for you. I have the book with Jason Zweig's commentary - it's somewhere in storage so I am not able to look up the edition quickly. It has further examples by Jason Zweig which are taken for more current situations than Graham. Graham's examples are from 60s, IIRC. Jason's are from the 90s and early 2000s.

What i meant was more related to finances rather than how stocks performed in years. Most of the examples in that book corelate the prices of stocks before/after 5/10/15/20 years.

All these examples seemed like more of a comparision over years.

What i was looking for is something like this.
- Grahm says do not pick a stock, if its PE ratio exceeds 20-24 multiples. He says they are expensive and returns % will be less. But Why? No information has been provided regarding such cases.
Moreover i was looking for indepth analysis, which i found missing in this book. So couldnt complete it. :( I think, i should give it another try and complete it.

[SmartCat]

Originally Posted by gemi_kk

- Grahm says do not pick a stock, if its PE ratio exceeds 20-24 multiples. He says they are expensive and returns % will be less. But Why? No information has been provided regarding such cases.
Moreover i was looking for indepth analysis, which i found missing in this book. So couldnt complete it. :( I think, i should give it another try and complete it.

It is easier to understand PE ratio this way -

P/E Of 24 means it will take 24 years to "get back" the money you invested in the company IF the company's profits remain stuck at current levels. So in that way, lower the PE, the better.

Although, this concept is theoretical (because a particular company's profits keeps changing over years, and never remains constant), it is still good advice to buy stocks with a PE lower than 25.

But remember that low PE alone cannot be a factor in deciding whether to purchase stock in a company.

To give you a car analogy (since we are on team-bhp), you would not buy a car just because it has "low maintenance costs". You will look at other factors like styling, power, ride & handling, brand, mileage etc.

Similarly, for stocks, you need to look at other aspects like management quality, return on equity, debt to equity ratio, sales growth, profit growth, dividend payout ratio, type of business etc - before you decide to invest in the company. All these aspects are covered in most investment books