Hey hope all of you are doing well. There seems to a sudden spook factor in markets. I’m surprised that:
a) ppl are talking of a market crash that seems to have happened or is underway. First of all, when a market corrects by a few hundred points, over a month, its not a crash. Our model portfolio itself for example delivered great returns and a correction of a few percentage points is good. All of a sudden, I’m looking again at stock valuations and portfolio adjusts rather than being in a state when all I could see is one stock after the other on a tear. The very fact at my tweets reduced on stock picks was not to to some ack of enthusiasm but the fact that I could not find compelling buys. That is changing now.
b) the doomsayers have not even one reason for the markets to fall, just as they had not Ben one reason for its rise from nifty levels of 4700. It’s almost like markets “had” to go up from 4700 as if to prove the majority wrong and “had” to correct from 6200 to again prove the majority wrong. If you recall, my last post, was on experts and their views. If you also recall, most experts were sure of a per budget rally. Again to be proved wrong. Once again most have no clue. Is it not ironical tat a reading of good investment books will always teach you that in the long run and over a sustained period, even funds do not beat the markets. They have their ups and downs and usually tag the market.
C) I’m happy with govt actions on the last few months particularly on diesel and petrol. One hopes that while subsidy will be cut going forward, govt and pvt sector spending on infra somewhat revives. We need good infrastructure to attract economic growth an investment. I have been bearish on infra, capital goods and psu’s since the last 2 years, barring cummins and Larsen. This has rewarded well with the likes of bhel, beml, gmr, gvk, Crompton, ivrcl etc underperforming by far. Same applies to public sector banks where pvt sector pays recommended by me like Indus ind, hdfc bk, Jk bank, city union etc have done far better. I am bullish also on icici bank and karur vysya bank.
D) just as there was undue euphoria on delisting hopes for mncs and most saw their stocks soar, there is undue pessimism on their called off plans for delisting. True, that there could become concerns on enhanced royalties, but one cannot forget that royalties are a function of increased sales, mnc’s enjoy high margins and usually have the best strategies to grow in economies that are developing as against a saturated growth in their advanced economies.
e) it has reconfirmed my belief that markets can humble all of us. I appreciate and respect some of the great friends I’ve made in markets and am conversant with some of their excellent stock picking skills. However an investor can and should never forget that even the good guys have bad days and endup with losers. I recall how some value picks including but not limited to engineers India, apw president, sanghvi movers, Gujarat reclaim (now GRP), oriental carbon, cebbco (which I believe was endorsed by a dozen stock pickers), Crompton greaves, bhel, gspl, bank of baroda, to name a few have suffered. In my own universe of stocks, arshiya gave some pain, although I have fully held my position. I advised many of you not to average it as I don’t bet more on losing positions. I haver remain invested in arshiya and ave taken the fall a prolonged phase of future returns.
f) the magic has been diversification and opportune investing. We did some good trades in opportune investing. That created so additional cash for us that was invested in core ideas. As of now, we have no trading positions open. Diversification ensured that we got saved in our portfolio with arshiya. In fact it made a less than 2 pct impact despite a steep fall. We were luckier to have gained in almost all other positions.
g) investing is a lot of reading on one hand but an equal amount of chilling on the other. Over enthusiasm to buy or anxiety to sell just because of some news is not necessarily a winning thought. I’ve reduced my exposure to watching TV channels although I remain on the look out for interviews of some smart investors. More for macro assessments and least for stock ideas.
I reduced positions in den, hathway and exited tv today, whie increasing positions in tv18 and sun TV. That’s on the digitization front, a story I believe in for long. I also booked good and timely profits in tbz and hold residual position at zero cost with additional profits converted to cash.
I have added some mnc stocks to the portfolio. These include styrolution abs given their huge bullishness on polymers, Fairfield atlas given its pounding just because of a delisting call off, Astra Zeneca, almost for same reasons. I’m looking for more. Fairfield is up some 15 pct since buying, styrolution marginally while Astra is almost marginally below my buying.
I may have missed some stocks, just the effect of a long flight back from the US.
I continue to remain bullish on strides, Wockhardt, Asian paints, Godrej industries, financial tech and Mcx, the pvt banks, nbfc like mah finance, bajaj finance, muthoot finance.