Hey friends,
I’m back from my break and into the thick of things again.
I’m jubilant. Not because of the wonderful pizza co but because I have won a mental battle. If you recall in my tweets and even on the blog I have been harvesting a bearish view on psu banks, metals, capital goods excluding cummins and larsen. I have also been extremely bearish on some stocks including opto circuits, punj, sintex which are within trading possibilities as also on stocks like a2z, delta, geodesic which unfortunately are not possible to short or trade except by delivery holders.
I’m pleased to see the mighty fall in most psu banks, much to the discomfort of a few friends who believed that value existed in the likes of many such stocks. While the greatness of the stock market is a reversion to mean and it may well be possible that some of these stocks indeed re gain lost grounds, round 1 is over with a decent battering of most stocks.
If one looks at cos like kfa (was bearish on it throughout despite several brokerage upgrades, recos etc on the mere analysis that no where in the world do these stocks make profits for shareholders), skumars and many more names, the bad debt situation is clearly reflecting an overhang for some banks. The issue gains some depth if one looks at the spread of psu banks to several sector exposures including infrastructure, farming, small scale units, power etc. most of the loans extended are seeing a huge strain and given the better services extended by pvt sector banks and their nim, one was best off these sectors. Factors such as over indulgence by govt, lack of clarity in the Sbi merger of subsidiary bills etc added comfort to the thoughts.
Since the bearish view, bob has tanked from 750 to 570, sbi from 2450 to 1995, engineers india from 250 to 150, opto circuits from 70 to 20 and punj from 58 to 38 odd.
I am rewarded now for my wrong view on arshiya more than adequately.
Markets are not a play ground. Don’t play if you don’t understand the game and not with tools of mass destruction, as Buffett calls them, in derivatives. I do derivatives contrary to the above comment but with a small exposure in the form of some shorts or longs with a max exposure of never more than 5 pct.
Mathematics has taught us that if you get it 100 percent right on a short you make not even 100 pct as rarely do stocks hit 0. However on the upside 100 pct has no limit. So use trade offs occasionally and only if you are not otherwise in cash or light on your investments.
Also I’m inundated by questions on mkt timings. This is akin to a placebo effect and nothing more. All we an do is to research, read, balance greed with fear, balance and be orderly or at least try. To err is human and will always remain. In the end a few losses won’t matter if we make gains overall which is what I intend to do.
I shall be updating the portfolio shortly but am happy with its performance so the changes would be minimal.
Cheers.
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