ON 25.11.11 WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY TTK PRESTIGE AT CMP OF 2520 WITH A STOPLOSS OF 2496 FOR A TARGET OF 2548, 2563, 2588, 2613, 2628, 2643, 2663, 2678 AND 2693. OUR NINETH TARGET OF 2693 ACHIEVED TODAY. BINGO!
Tuesday, November 29, 2011
3RD BINGO! VIP IND REACHED OUR SIXTH TARGET OF 128.40
ON 22.11.11 WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY VIP IND AT CMP OF 114 WITH A STOPLOSS OF 111 FOR A TARGET OF 117.80, 119.40, 123.80, 125.40, 126.80 AND 128.40. OUR SIXTH TARGET OF 128.40 ACHIEVED TODAY. BINGO!
2ND BINGO! NIFTY F&O REACHED OUR EIGHTH TARGET OF 4873
ON 25.11.11 WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY NIFTY FUTURES AT CMP OF 4716 WITH A STOPLOSS OF 4680 FOR A TARGET OF 4748, 4763, 4788, 4813, 4828, 4843, 4858, 4873 AND 4888. OUR EIGHTH TARGET OF 4873 ACHIEVED TODAY. BINGO!
1ST BINGO! ORCHID CHEM REACHED OUR SIXTH TARGET OF 160.40
ON 25.11.11 WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY ORCHID CHEM AT CMP OF 148.50 WITH A STOPLOSS OF 146 FOR A TARGET OF 152.80, 154.40, 155.80, 157.40, 158.80 AND 160.40. OUR SIXTH TARGET OF 160.40 ACHIEVED TODAY ITSELF. BINGO!
Monday, November 28, 2011
3RD BINGO! ORCHID CHEM REACHED OUR FOURTH TARGET OF 157.40
ON 25.11.11 WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY ORCHID CHEM AT CMP OF 148.50 WITH A STOPLOSS OF 146 FOR A TARGET OF 152.80, 154.40, 155.80, 157.40, 158.80 AND 160.40. OUR FOURTH TARGET OF 157.40 ACHIEVED TODAY. BINGO AGAIN!
2ND BINGO! TTK PRESTIGE REACHED OUR EIGHTH TARGET OF 2678
ON 25.11.11 WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY TTK PRESTIGE AT CMP OF 2520 WITH A STOPLOSS OF 2496 FOR A TARGET OF 2548, 2563, 2588, 2613, 2628, 2643, 2663, 2678 AND 2693. OUR EIGHTH TARGET OF 2678 ACHIEVED TODAY. BINGO!
3RD BINGO! LOVABLE LINGEIRE REACHED OUR FIFTEENTH TARGET OF 398
ON 25.11.11 WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY LOVABLE LINGERIE AT CMP OF 316 WITH A STOPLOSS OF 308 FOR A TARGET OF 323, 328, 333, 338, 343, 348, 353, 358, 363, 368, 373, 378, 383, 388 AND 398. OUR FIFTEENTH TARGET OF 398 TODAY. BINGO AGAIN!
1ST BINGO! NIFTY F&O REACHED OUR EIGHTH TARGET OF 4873
ON 25.11.11 WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY NIFTY FUTURES AT CMP OF 4716 WITH A STOPLOSS OF 4680 FOR A TARGET OF 4748, 4763, 4788, 4813, 4828, 4843, 4858, 4873 AND 4888. OUR EIGHTH TARGET OF 4873 ACHIEVED TODAY. BINGO AGAIN!
Saturday, November 26, 2011
5 TIPS FOR A PROFITABLE TRADE
5 TIPS FOR A PROFITABLE TRADE:
1. Plan the entire trade before you enter the trade. Have an entry strategy, and an exit point (both a winning exit point and a non-winning exit point). This will inherently force you to look at your risk/reward ratio. Write these entries and exits down in a journal.
2. Eliminate distractions. It's difficult enough to find trading time at all if it's not your regular job. If you're a part-time trader who trades at work between meetings and phone calls, think about this: there are full-time professional traders who are concentrating on nothing other than taking your money. It's not that they're better or smarter than you – they just have the time to focus. If you must trade, set aside blocks of time to study or trade without distraction. Or it may be more feasible to do your trading on an end-of day basis, meaning you
place your orders and do your 'homework' the night before when you can
focus on it.
place your orders and do your 'homework' the night before when you can
focus on it.
3. Choose a method or a small group of methods, and stick to them. Far too often we see a trader adopt a new indicator or signal only to see it backfire. Become a master of your favorite signals, rather than a slave to any and every signal. Understand that an indicator will fail sometimes. That's ok. The sizable winning trades should more than offset the small losing trades initiated by an errant signal. This trading method is designed to eliminate the emotional bias of trading.
4. Choosing not to trade can also be a prudent choice. You'll frequently hear 'don't fight the tape'. The same idea also applies to a flat market – you can't make stocks do something they're just not going to do. Wait for good entries into a developing trend rather than force a bad entry into an unclear trend.
4. Choosing not to trade can also be a prudent choice. You'll frequently hear 'don't fight the tape'. The same idea also applies to a flat market – you can't make stocks do something they're just not going to do. Wait for good entries into a developing trend rather than force a bad entry into an unclear trend.
5. Take responsibility for your trades – all of them. Examine why the losing trades failed, and why the winners were successful. The reality is that you chose to enter each and every trade. This can be painful, at least initially, since the ego is built to deflect blame yet accept praise. That's a trap. If you find yourself saying "that was a good trade entry but….." then stop yourself immediately. Either everything before 'but' or after 'but' is inaccurate. If you rationalize or justify poor trades, then you'll never learn from them. This may be the most important idea of the five – the ego can prevent real learning. If you can learn to accept some failure without being emotionally devastated, then you'll be a good trader.
The only advice I would add to this list is simply to keep a daily trading journal. This can be a journal of trades, signals, ideas, and emotions about your trading. The more you put in the journal, the more you'll get out of it. It will also help you in applying and tracking these five concepts above.
Friday, November 25, 2011
6TH BINGO! TTK PRESTIGE REACHED OUR THIRD TARGET OF 2588
TODAY WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY TTK PRESTIGE AT CMP OF 2520 WITH A STOPLOSS OF 2496 FOR A TARGET OF 2548, 2563 AND 2588. OUR THIRD TARGET OF 2588 ACHIEVED TODAY ITSELF. BINGO AGAIN! NOW NEXT TARGETS R 2613, 2628 AND 2643.
5TH BINGO! LOVABLE LINGEIRE REACHED OUR FIFTH TARGET OF 343
TODAY WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY LOVABLE LINGERIE AT CMP OF 316 WITH A STOPLOSS OF 308 FOR A TARGET OF 323, 328, 333, 338, 343 AND 348. OUR FIFTH TARGET OF 343 TODAY ITSELF. BINGO AGAIN!
4TH BINGO! PARSVNATH DEVELOPERS REACHED OUR THIRD TARGET OF 35.80
TODAY WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY PARSVNATH DEVELOPERS AT CMP OF 33.25 WITH A STOPLOSS OF 32.40 FOR A TARGET OF 34.80, 35.40 AND 35.80. OUR THIRD TARGET OF 35.80 ACHIEVED TODAY ITSELF. BINGO AGAIN!
3RD BINGO! VIP IND REACHED OUR THIRD TARGET OF 123.80
ON 22.11.11 WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY VIP IND AT CMP OF 114 WITH A STOPLOSS OF 111 FOR A TARGET OF 117.80, 119.40 AND 123.80. OUR THIRD TARGET OF 123.80 ACHIEVED TODAY. BINGO!
2ND BINGO! TITAN REACHED OUR THIRD TARGET OF 196.80
TODAY WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY TITAN AT CMP OF 188 WITH A STOPLOSS OF 186 FOR A TARGET OF 193.80, 195.40 AND 196.80. OUR THIRD TARGET OF 196.80 ACHIEVED TODAY ITSELF. BINGO!
1ST BINGO! JINDALPOLY REACHED OUR THIRD TARGET OF 191.80
TODAY WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY JINDAL POLY AT CMP OF 184 WITH A STOPLOSS OF 181 FOR A TARGET OF 188.80, 190.40 AND 191.80. OUR THIRD TARGET OF 191.80 ACHIEVED TODAY ITSELF. BINGO!
Thursday, November 24, 2011
2ND BINGO! BATA INDIA REACHED OUR THIRD TARGET OF 623
TODAY WE RECOMMENDED OUR PAID SUBSCRIBERS TO BUY BATA AT CMP OF 616 WITH A STOPLOSS OF 610 FOR A TARGET OF 623, 628 AND 633. OUR THIRD TARGET OF 633 ACHIEVED TODAY ITSELF. BINGO!
1ST BINGO! ADANI ENTERPRISES REACHED OUR THIRD TARGET OF 323
TODAY WE RECOMMENDED TO OUR PAID SUBSCRIBERS TO BUY ADANI ENTERPRISES AT CMP OF 301 WITH A STOPLOSS OF 288 FOR A TARGET OF 313, 318 AND 323. OUR THIRD TARGET OF 323 ACHIEVED TODAY ITSELF. BINGO!
Monday, November 21, 2011
BE CONTENT WITH WHAT IS POSSIBLE
BY CARL FUTIA:
This post is about the frustrations that market fluctuations generate for a trader and how to deal with them. My message is a simple one: be content with what is possible.
What does this mean for you? It means that you should be focused on one thing and one thing only when evaluating your trading record.Have you been making consistent profits or not? Forget about how much you might have made - those sort of calculations are not in the realm of what's possible. What's possible is steady, month-by-month, quarter-by quarter profitability. Some people can achieve higher rates of return on their capital than others, but so what? Don't worry about what other people do. Focus only on what you can do based on your market knowledge and trading skills.
I had a friend who was a member of the Chicago Board of Trade and later a member of the Singapore exchange. He had a profit goal he aimed for each year. When he reached it he stopped trading for the rest of the year. It didn't matter whether it took him two months or six months or eleven months to reach his goal. When he reached it he stopped.
For him trading was just a way to make a good living, not a test of his value as a person or an affirmation that he was smarter than everyone else. This is an example of sane behavior in a business where various forms of insanity are the rule, not the exception.
This post is about the frustrations that market fluctuations generate for a trader and how to deal with them. My message is a simple one: be content with what is possible.
I have been in this business full time for nearly 30 years now. I have known many traders. The majority of them were only in the business a relatively brief time. Most of these left because they lost money but some left because, even thought they were making money trading, they couldn't stand the constant frustration traders experience.
Markets move up and down, sometimes quite violently. People tend to evaluate their trading performance not simply in terms of profit and loss but also in terms of how much money they could have made had they been able to catch a substantial part of most of the market's up and down swings. In fact, I have known profitable traders who were constantly frustrated and unhappy because they felt that they had left so much money on the table.
Put simply, this is crazy behavior. What basis do you have for thinking you can catch a substantial part of the market's many swings? Sure, in hindsight everything is obvious and we can see how we might have become gazillionaires.
But we cannot trade the past. We can only make profits betting on the future. And people who bet on future price fluctuations must necessarily rely on very, very cloudy crystal balls. So as a practical matter you should count yourself fortunate indeed if you consistently capture a small part of any given market swing.What does this mean for you? It means that you should be focused on one thing and one thing only when evaluating your trading record.Have you been making consistent profits or not? Forget about how much you might have made - those sort of calculations are not in the realm of what's possible. What's possible is steady, month-by-month, quarter-by quarter profitability. Some people can achieve higher rates of return on their capital than others, but so what? Don't worry about what other people do. Focus only on what you can do based on your market knowledge and trading skills.
I had a friend who was a member of the Chicago Board of Trade and later a member of the Singapore exchange. He had a profit goal he aimed for each year. When he reached it he stopped trading for the rest of the year. It didn't matter whether it took him two months or six months or eleven months to reach his goal. When he reached it he stopped.
For him trading was just a way to make a good living, not a test of his value as a person or an affirmation that he was smarter than everyone else. This is an example of sane behavior in a business where various forms of insanity are the rule, not the exception.
Friday, November 18, 2011
2ND BINGO! PIPAPAV SHIPYARD REACHED OUR THIRD TARGET OF 61.80
TODAY WE RECOMMENDED TO OUR PAID CLIENTS TO BUY PIPAPAV SHIPYARD AT CMP OF 56.50 WITH A STOPLOSS OF 55.65 FOR A TARGET OF 58.80, 60.40 AND 61.80. OUR THIRD TARGET OF 61.80 ACHIEVED TODAY ITSELF. BINGO AGAIN!
1ST BINGO! NIFTY REACHED OUR FIRST TARGET OF 4898
TODAY WE RECOMMEND TO BUY NIFTY AT CMP OF 4865 WITH A STOPLOSS OF 4830 FOR A TARGET OF 4898, 4923 AND 4948. OUR FIRST TARGET OF 4898 ACHIEVED TODAY ITSELF. BINGO!
BUY NIFTY AT CMP OF 4865 WITH A STOPLOSS OF 4830
WE RECOMMEND TO BUY NIFTY AT CMP OF 4865 WITH A STOPLOSS OF 4830 FOR A TARGET OF 4898, 4923 AND 4948.
Wednesday, November 16, 2011
5TH BINGO! VIP IND REACHED OUR SECOND TARGET OF 123.40
TODAY WE RECOMMENDED OUR PAID CLIENTS TO BUY VIP IND AT CMP OF 114 WITH A STOPLOSS OF 108 FOR A TARGET OF 119.80, 123.40 AND 125.80. OUR SECOND TARGET OF 123.40 ACHIEVED TODAY ITSELF. BINGO AGAIN!
4TH BINGO! BATA INDIA REACHED OUR THIRD TARGET OF 668
TODAY WE RECOMMENDED TO OUR PAID CLIENTS TO BUY BATA AT CMP OF 646 WITH A STOPLOSS OF 633 FOR A TARGET OF 658, 663 AND 668. OUR THIRD TARGET OF 668 ACHIEVED TODAY ITSELF. BINGO AGAIN!
3RD BINGO! NIFTY OPTIONS STRATEGY GIVES RS. 11500 PER LOT
ON 09.11.11 WE RECOMMENDED OUR PAID CLIENTS TO SELL NOV NIFTY FUT @ 5300 AND BUY NIFTY NOV 5300 CALL @ 85. MAXIMUM LOSS POSSIBLE IN THIS STRATEGY IS JUST RS. 4250 PER LOT AND MAXIMUM PROFIT IS UNLIMITED. TODAY COVER NIFTY FUTURE @ 5050 AND SELL 5300 CALL @ 65. TOTAL PROFIT EARNED IS RS.11500 PER LOT.
2ND BINGO! NIFTY REACHED OUR SECOND TARGET OF 5048
TODAY WE RECOMMENDED TO BUY NIFTY AT CMP OF 5002 WITH A STOPLOSS OF 4980 FOR A TARGET OF 5033, 5048 AND 5068. NIFTY HAS TAKEN SUPPORT NEAR 4984 WHICH IS 61.80% RETRACEMENT OF THE LOW OF 4725.55 AND HIGH OF 5341.25. OUR SECOND TARGET OF 5048 ACHIEVED TODAY ITSELF. BINGO!
1ST BINGO! NIFTY REACHED OUR FIRST TARGET OF 5033
TODAY WE RECOMMENDED TO BUY NIFTY AT CMP OF 5002 WITH A STOPLOSS OF 4980 FOR A TARGET OF 5033, 5048 AND 5068. NIFTY HAS TAKEN SUPPORT NEAR 4984 WHICH IS 61.80% RETRACEMENT OF THE LOW OF 4725.55 AND HIGH OF 5341.25. OUR FIRST TARGET OF 5033 ACHIEVED TODAY ITSELF. BINGO!
BUY NIFTY AT CMP OF 5002 WITH A STOPLOSS OF 4980
WE RECOMMEND TO BUY NIFTY AT CMP OF 5002 WITH A STOPLOSS OF 4980 FOR A TARGET OF 5033, 5048 AND 5068. NIFTY HAS TAKEN SUPPORT NEAR 4984 WHICH IS 61.80% RETRACEMENT OF THE LOW OF 4725.55 AND HIGH OF 5341.25.
Wednesday, November 09, 2011
OPTION STRATEGY FOR ALL TIME BULLISH TRADERS
WE R NOW IN THE PROCESS OF STARTING OPTIONS STRATEGY. HERE IS THE FIRST CALL FROM SGRG.
BUY NOV NIFTY FUT @ 5300 AND BUY NIFTY 5300 NOV PUT @ 85. MAXIMUM LOSS POSSIBLE IN THIS STRATEGY IS JUST RS. 4250 PER LOT AND MAXIMUM PROFIT IS UNLIMITED.
BUY NOV NIFTY FUT @ 5300 AND BUY NIFTY 5300 NOV PUT @ 85. MAXIMUM LOSS POSSIBLE IN THIS STRATEGY IS JUST RS. 4250 PER LOT AND MAXIMUM PROFIT IS UNLIMITED.
Saturday, November 05, 2011
SGRG-S.I.P.- BE MASTER OF YOUR OWN DESTINY
SGRG–SIP: BE THE MASTER OF YOUR OWN DESTINY
Welcome to the World of S.I.P. (Systematic investment Plan).
Thanks to the massive amount of time, money and efforts put in by the Mutual Fund Industry over the years, investors are now very much aware of this technique of investing.
Welcome to the world of SIP. In a SIP you invest a fixed sum at a particular interval ( say a month) in a security over a given period of time.
Lets revisit the logic of SIP. We call it SGRG-SIP.
In a SIP you invest a fixed sum at a particular interval ( say a month) in a security over a given period of time. In a SGRG-SIP, instead of choosing a regular MF scheme, we decide an Index Benchmark, which can be NIFTYBEeS, JUNIORBEeS, GOLDBeS, BANKBEeS depending upon your risk profile.
Disciplined Approach
The first benefit of a SGRG-SIP is that you imbibe discipline in your investments. On a given date of every month you buy the pre-decided index Benchmark. However, the amount to be invested every month keeps on changing i.e. It will be communicated by us every month. You don’t really apply your mind whether to buy or not. Just go ahead and do it.
Don’t worry about the timing
Say you like Reliance a lot. The price of Reliance on 01.01.08 was 1445 and on 01.01.11 it was 1065 down -26.30% over a period of 3 years. What we mean to say is since, we cannot track the working and performance of each and every scrip, therefore, we have decided to invest in Index Benchmark. Even if a company does badly in an economic downturn the component of other stocks in the Index Benchmark will take care of it.
When you fundamentally like a stock, you should like the stock more if the price falls, other things being same. But human psychology will ensure that you get jitters when the price falls. And expecting that the price will fall further you don’t buy. A further fall in price will validate your fears and you would wait for a still larger dip. One fine day the stock will bounce back, leaving you in a frown.
But a SGRG-SIP will ensure that your fear does not come in the way of your investment. This ability of SGRG-SIP to systematically buy at all levels ensures good returns in a volatile market. So honour the sanctity of a SIP.
A giant small step
The power of compounding will ensure that even small investments in early part of life will leave a giant footprint over a longer period of time. You don’t really have to save big. Small amounts every month will ensure that your dreams will realised with least efforts.
The stress is not on the amount, but on the need to start early. And even if you have lost considerable time, don’t worry. Today is a good day to begin !
Let us also dispel a myth that SGRG-SIP is only for beginners or for small investors. Nothing stops you from allocating even large sums for SGRG-SIP. In fact experienced investors would find it more useful.
Sculpt your returns
Become the master of your own fortunes. Write your own success story. Choose your own Index Benchmark, which you will be investing over a period of time.
It could even be the NiftyBEes, JUNIORBEeS, BANKBEeS or the GOLDBEeS. Or a combination of all of these. Since your returns will be function of what asset class you choose, ensure that you put in serious efforts in terms of understanding what you are investing in. Ensure that the Index Benchmark you choose match your risk stance and return expectations.
The common fear
One anxiety that an investor faces when he begins the SGRG-SIP is am I starting at the wrong time? Is it not the peak? Will it be fruitful?
In order to answer this most common query and placate any fears that investors may have , let me actually do some back testing.
Let me choose the worst possible month in recent history – January 2008 I Hope everybody remember this month.
So we baptize you with fire, by making you begin investing from 26th December, 2007, a sum of Rs 10,000 every month on the last day of the month. This you religiously do every month for 36 months i.e. 25th Decemeber, 2011.
Lets see how the Nifty faired. The Nifty that was 6070 on 26th December 2007 closed on December 26th 2011 at 6013. This is a fall of 0.94%.
Whereas the Normal SIP in the NIFTYBEeS might have given you the return of 26% on Total Investment but our’s SGRG-SIP actually gave A WHOPPING return of 50.68% on Total Investment basis. An Annualised Return of over 36%p.a. and a Compounded Return of over 28% p.a.
That should set at rest any apprehensions you may have on the subject.
So sign up for SGRG-SIP, choose what you want to buy (Nifty Bees, Gold Bees, Junior BEes or BankBEes) and take the first but meaningful step towards investing.
Be the master of your own fortunes.
Thursday, November 03, 2011
SGRG–SIP: A COMPOUNDED RETURN OF OVER 60% P.A.
RETURN FROM SGRG-S.I.P.:
BEeS COMPOUNDED RETURN ANNUAL RETURN
BANK BEeS 64% P.A. 468%P.A.
JUNIOR BEeS 100% P.A. 5000%P.A.
NIFTY BEeS 100% P.A. 5000%P.A.
A COMPOUNDED RETURN OF OVER 60% P.A. IN BANK BEeS SINCE JUN'2004 AND A COMPOUNDED RETURN OF OVER 100% P.A. IN JUNIOR BEeS SINCE MAR'2003 AND OVER 100% P.A. IN NIFTY BEeS SINCE JAN'2002. WE WOULD LIKE TO KNOW FROM U PEOPLE, WHICH S.I.P. IN THE MUTUAL FUND INDUSTRY HAS GIVEN SUCH A TREMENDOUS AMOUNT OF RETURN. THE BEST MUTUAL FUND IN THE INDUSTRY IS HDFC TOP200 EQUITY AND THAT TOO HAS GIVEN A COMPOUNDED RETURN OF JUST 23%P.A. SINCE LAUNCH IN SEP'1996 WITHOUT ENTRY AND EXIT LOAD. WITH ENTRY AND EXIT LOAD RETURN COMES DOWN TO 18% P.A.
SO WHAT R U WAITING FOR, START UR SGRG-S.I.P. NOW AND ENJOY EXTRAORDINARY RETURNS. BUT TO GET EXTRAORDINARY RETURN UR TIME HORIZON SHOULD BE MINIMUM OF 3-5 YEARS. LONGER THE TIME PERIOD HIGHER WILL BE THE RETURNS.
WITH SGRG-SIP U CAN EASILY PLAN THE REQUIREMENT OF FUNDS AT THE TIME OF UR RETIREMENT, CHILD'S HIGHER EDUCATION, CHILD'S MARRIAGE ETC.
BEeS COMPOUNDED RETURN ANNUAL RETURN
BANK BEeS 64% P.A. 468%P.A.
JUNIOR BEeS 100% P.A. 5000%P.A.
NIFTY BEeS 100% P.A. 5000%P.A.
A COMPOUNDED RETURN OF OVER 60% P.A. IN BANK BEeS SINCE JUN'2004 AND A COMPOUNDED RETURN OF OVER 100% P.A. IN JUNIOR BEeS SINCE MAR'2003 AND OVER 100% P.A. IN NIFTY BEeS SINCE JAN'2002. WE WOULD LIKE TO KNOW FROM U PEOPLE, WHICH S.I.P. IN THE MUTUAL FUND INDUSTRY HAS GIVEN SUCH A TREMENDOUS AMOUNT OF RETURN. THE BEST MUTUAL FUND IN THE INDUSTRY IS HDFC TOP200 EQUITY AND THAT TOO HAS GIVEN A COMPOUNDED RETURN OF JUST 23%P.A. SINCE LAUNCH IN SEP'1996 WITHOUT ENTRY AND EXIT LOAD. WITH ENTRY AND EXIT LOAD RETURN COMES DOWN TO 18% P.A.
SO WHAT R U WAITING FOR, START UR SGRG-S.I.P. NOW AND ENJOY EXTRAORDINARY RETURNS. BUT TO GET EXTRAORDINARY RETURN UR TIME HORIZON SHOULD BE MINIMUM OF 3-5 YEARS. LONGER THE TIME PERIOD HIGHER WILL BE THE RETURNS.
WITH SGRG-SIP U CAN EASILY PLAN THE REQUIREMENT OF FUNDS AT THE TIME OF UR RETIREMENT, CHILD'S HIGHER EDUCATION, CHILD'S MARRIAGE ETC.
Tuesday, November 01, 2011
SEVENTH TARGET MET IN ORCHID CHEMICALS
TODAY WE RECOMMENDED TO BUY ORCHID CHEM AT CMP OF 159.50 WITH A STOPLOSS OF 156 FOR A TARGET OF 164.80, 166.40, 168.80, 170.40, 172.80, 174.40, 176.80, 178.40 AND 180.80. OUR SEVENTH TARGET OF 176.80 ACHIEVED TODAY ITSELF. BINGO AGAIN!
SO WHAT R U WAITING FOR? SUBSCRIBE NOW.
SO WHAT R U WAITING FOR? SUBSCRIBE NOW.
TEN RULES OF LONG TERM TERM INVESTING
Rule No. 1: Margin Of Safety – Buy Shares “Cheap” – Keep Capital Intact:
Q. How To Determine That The Price You Are Paying Is “Cheap”?
There are two practical ways to determine whether you are paying a reasonable price or an exorbitant one for a stock.
The first is to try and visualize the next five years earnings of the stock. If the total earnings of the stock in the next five years is lesser than the total purchase price of the stock, it is “cheap” and you can go ahead and buy it confidently.
The second is to compare the purchase price of the stock with the market capitalization of the company. & give a practical example of what they mean. In 2003, bought shares of Bharti Tele at Rs 25 per share. At that time, Bharti Telecom’s shares were quoting at a price equal to its book value. Its profits were about Rs. 1,000 crore and its market capitalization was Rs. 5,000 crores. says that he conjectured how the profits were going to move and thought Bharti Telecom would make about Rs 26,000-27,000 crores profit in next five years. At this rate, the price that was paying for Bharti Telecom was obviously “cheap”.‘s hypothesis was vindicated and Bharti Telecom actually made about Rs 30,000 crores giving his multibagger.
Rule No. 2: Keep the “Long Term” In Mind:
It is implicit in & ‘s technique that they are only looking at the long-term prospects of the stock. Both & make it clear that the question whether you have bought the share “cheap” or not has to be decided today with regard to the future 5 year earnings or market cap of the stock. made this quite clear when he announced his purchase of Central Bank of India that while the stock may under-perform its peers in the short-term, he was confident that it would become a multibagger in 10 years time.
In this, one is reminded of the priceless advice given by Warren Buffett that “Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now. If you aren’t willing to own a stock for 10 years, don’t even think about owning it for ten minutes.”
Rule No. 3: Reappraise periodically the validity of the investment hypothesis:
That investors should not get unduly perturbed by short-term downward price movements in the stock. Quotational losses are notional losses and the investor should not lose any sleep over it, emphasize the investment gurus, so long as the underlying business prospects of the stock remains unimpaired.
But, that doesn’t mean that the investor should not reappraise matters and see whether the quotation loss is going to be a permanent feature say & gives the example of the investment he made in Float Glass. bought the shares at Rs. 40 and then it plummeted to Rs. 4. was forced to book his loss because certain events had happened in the company which changed the investment prospects of the company. calls booking the loss “such a gruesome business” but emphasizes that it has to be done periodically to spring-clean ones’ portfolio.
Rule No. 4: Focus On The Business – Buy A “Predictable” Business:
That the investor must be very careful of the business that he buys. If the investor is right about the business, then the other things don’t matter so much. Even if the price paid for the stock is high, a good business will ultimately bail out the investor emphasize &
Q: What is a “Good” & “Predictable” Business?
That a “good business” is one which is able to consistently generate more cash than it’s ever likely to need, but more importantly, it’s so scalable and the external opportunity is so large that it can actually consume that cash and continue to grow the volume of cash that it is generating.
With regard to “predictability”, the four investment gurus point A practical example is provided by Central Bank and Bharti Telecom where it is possible to have a sense of where the company will be in the foreseeable future.
On the point of “predictibility”, the three investment gurus , and give the example of Sun Pharma. Sun Pharma is a profitable generic company and it is run by Dilip Shanghvi, a competent manager. Given the nature of business that Sun Pharma is engaged in and the the level of competence in its management, there is the element of “predictability” that whatever the economic problems that the World may face, there will continue to be demand for the products such as chronic therapies, cardio vascular, anti epileptic drugs that Sun Pharma is engaged in.Sun Pharma is in a stage today where the products that it launched more than five years ago are generating two-thirds of its sales and these products are actually growing faster than the industry and faster than the Company’s entire core business.
For some businesses, don’t set your expectations too high:
A very important point about how investors must be wary of certain businesses and not set their sights too high. The textile business is one that the investment gurus warn about as being one where money is structurally sucked in from the investor for the reason that the cotton inventory that an average company has to maintain is over six months and the asset turns are probably struggling to beat one-month. The result is that the fixed capital deployment is equivalent of sales; margins are always highly competitive and yet you have to consistently put in money into capex to remain at the same level of production.
The Airline business is also another sector with high capital investment, intense competition and cyclical trend that one must be wary about.
Competition
On the question as to how to factor in competition when selecting a stock for investment, & point out that what the investor has to be careful about is that the business has a “moat” around it (such as a powerful brand e.g. Apple), and operating economics which are in its favor (such as a demand for its products). The company must have the technology to power its business. The trioka gives the example of Nokia which despite a great brand name and business prospects, lost out to Apple only because the latter had better technology at its disposal.
On the concept of “Good Businesses” one cannot do better than to echo what Warren Buffett said:
“We look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag.
A truly great business must have an enduring “moat” that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business “castle” that is earning high returns. Therefore a formidable barrier such as a company’s being the low cost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with “Roman Candles,” companies whose moats proved illusory and were soon crossed.
Our criterion of “enduring” causes us to rule out companies in industries prone to rapid and continuous change. Though capitalism’s “creative destruction” is highly beneficial for society, it precludes investment certainty. A moat that must be continuously rebuilt will eventually be no moat at all.
Additionally, this criterion eliminates the business whose success depends on having a great manager. Of course, a terrific CEO is a huge asset for any enterprise, and at Berkshire we have an abundance of these managers. Their abilities have created billions of dollars of value that would never have materialized if typical CEOs had been running their businesses.
But if a business requires a superstar to produce great results, the business itself cannot be deemed great. A medical partnership led by your area’s premier brain surgeon may enjoy outsized and growing earnings, but that tells little about its future. The partnership’s moat will go when the surgeon goes. You can count, though, on the moat of the Mayo Clinic to endure, even though you can’t name its CEO.
Long-term competitive advantage in a stable industry is what we seek in a business. If that comes with rapid organic growth, great. But even without organic growth, such a business is rewarding. We will simply take the lush earnings of the business and use them to buy similar businesses elsewhere. There’s no rule that you have to invest money where you’ve earned it. Indeed, it’s often a mistake to do so: Truly great businesses, earning huge returns on tangible assets, can’t for any extended period reinvest a large portion of their earnings internally at high rates of return.”
Rule No. 5: Invest According To Your Temperament and Act Within Your Circle Of Competence:
That investing is a test of psychology and character and of intellect and that an investor has to invest depending on his particular temperament and should not forcefully copy a style of investment only because someone he admires adopts that style.
The investment legends give the example of Warren Buffett for whom the investment mantra was a “concentrated portfolio” and “Buy and Hold Forever”. Warren Buffett was immensely successful in that strategy. However, Peter Lynch, also a successful investor openly declared that “he never saw a stock he didn’t like” and had as many as 1,400 stocks in the Magellan Fund which he managed. Similarly, as against Warren Buffett‘s “Our Holding Period Is Forever”, George Soros philosophy was “Everything is a buy or a sell depending on the price.”
So, what & point out is that the investor must invest in the way that he understands best depending on his temperament. The investment gurus also point out that there are certain businesses or industries where one may either instinctively have a better understanding or where one may have absolutely no idea. An example is that of Warren Buffett who did not invest in Google because he did not understand the nature of the business and where Google would be in ten or twenty years. Warren Buffett lost out on a fabulous multi-bagger but that is no reason to regret. As a principle, one should not venture into businesses that one has no understanding about emphasize & .
Rule No. 6: Don’t Get Carried Away By Public Euphoria – Never Buy A Stock Only Because It Is Popular & Everybody Is Buying It:
This is probably the single most important piece of advise given by & . & caution that markets sometimes take a fancy for a certain type of stock or a certain sector and investors get carried away. gives the example of dotcom stocks in the 1990s when the public euphoria was so great that there were many companies trading at Rs 70,000-90,000 crore kind of market cap. points out that even Infosys, whose profit then was Rs. 500 crores was trading at a market capitalization of Rs 130,000 crores. It is only after the bubble burst that investors realized that they were paying for Infosys about 5-6 times more than what was its correct valuation.
That while Infosys continued to be a great company even after 10 years of the euphoria, a number of other stocks like Global Tele and Himachal Futuristicwent to absurd valuations and today they are literally penny stocks.
A more contemporary example of how getting carried away with public euphoria can ruin an investor. They point out that in the recent real estate boom a number of real estate companies such as DLF and Unitech spun plans on how they would be selling 15-25-30 million square feet and making a lot of profits. Their story was very plausible and easy to believe selling. They claimed that they were like FMCG companies and that the Country had the ability to absord such high priced real estate.
Unfortunately, when the bubble burst, the investors were left holding the shares of real estate companies at completely extravagant valuations. & forcefully bring home the point that when the crowd gets charged, it becomes completely irrational.
Rule No. 7: Never Hesitate To Buy A Stock Only Because It Is Unpopular & No one Is Buying It:
This Rule is the converse of the earlier Rule. In the earlier Rule, & cautioned investors against buying a share only because it was popular and everyone was buying it. In this Rule, & caution investors against hesitating to buy a stock which meets all the criteria only on the ground that nobody else is buying it.
The priceless advice given by , India’s greatest investor, who candidly says “Never in my life have I not made an investment because the stock is not popular. In fact I like to make the investment when the stock is not popular.”
There are several examples that , and give in support of their proposition. The first is public sector banking stocks that at one time were totally ignored by the public at large. These stocks, though of fundamentally strong companies, were ignored by the investor community in the misconception that these PSU companies were inefficient and no match for their private sector counterparts.
He took advantage of this misconception in the public’s mind and bought huge quantities of PSU stocks like Shipping Corporation of India, Bharat Electronics, CMC, BEML etc. Likewise, bought huge quantities of PSU Bank State Bank of India. Both and bought the PSU stocks at a fraction of their fundamental value. When the inesting public realized that the PSU companies were quite efficient as well and started paying a premium for the shares, and got their multibaggers.
Other examples of stocks that are undervalued by the market because nobody likes these shares even though there is nothing fundamentally wrong with them. VIP Industries is one example that is never tired of giving. The stock of VIP Industries was quoting at Rs. 65 15 months ago when bought it (see & VIP Industries: Best Stock Pick!). Today, VIP Industries is quoting at Rs. 650 and that means has got himself a ten-bagger!
Another example that & like to give is that of United Brewerieswhich was languishing at a market cap of USD 40 million or Rs. 160 crores even though it had 50% share in the Indian liquor market and a great brand name. Similarly, McDowell was available at a market cap of Rs 200 crore. United Breweries held 40% of McDowell at that time. So it was clear as rain that United Breweries was grossly undervalued but somehow the company was not fancied by the investor public.
The example of Bharti Telecom which was langusihing at Rs. 25. recalls that all his well-wishers were so convinced that he had made a mistake in buying Bharti Telecom that they virtually forced him to sell a large part of his shares. However, such was ‘s conviction in Bharti Airtel that even after he succumbed to the advice of his well-wishers and sold out, he bought back a large quantity. The rest is history because made a huge fortune from the multi-bagger that Bharti Airtel became shortly thereafter.
Rule No. 8: Never Accept Anything At Face Value – Do Your Homework:
In formulating this Rule, & have been inspired by Warren Buffett‘s timeless maxim “Only when the tide goes out, you discover who is been swimming naked.”
The example of Satyam to highlight this Rule. At the peak of the scam, Satyam was seen to have several big marquee clients like GE and State Farm. Satyam‘s founder Ramalinga Raju was even awarded the “Businessman of the Year” prize by Ernst & Young. However, it soon turned out that everything was a fraud. The clients disappeared, the employees were non-existent and the business was just a bubble.
There are several other examples like Enron and World Com that should caution the investor that what he sees and what he gets may be two different things say & .
Rule No. 9: Buy What Is. Not What Will Be:
Be cautious against getting carried away with forecasts and projections of future profitability. This happened at the time of the Dot-com boom and again at the time of the Realty Boom when euphoric investors started making irrational and unrealistic assumptions about where profits were headed and where share prices would go.
Investors must have their feet firmly planted on the ground and err on the side of caution emphasize & . This makes sense, when read with the other Rule regarding preservation of capital.
Rule No. 10: Better To Have A Small Holding In An Excellent Company Than A Large Holding In A Mediocre Company:
For those investors who are constantly scouring for penny stocks in the hope that they will turn into multi-baggers overnight by some mysterious process. & advice that the investor is better off in investing in quality companies rather than in mediocre companies. This way, not only is the capital safe but the investor is assured of a reasonable return.
If one thinks about it, there is a lot of merit in the advice that & are handing out. If a company’s earnings are growing at say 25% p.a. (not an unreasonable assumption) and the share price grows at the same pace, in five year’s time, the investors investment would have tripled. In 10 years time, the investment would have grown 9.31 times. At the end of 20 years, the investment has grown 86.73 times. In other words, if Rs. 10,000 is invested in year one and allowed to compound at 25%, at the end of 10 years, the investor has Rs. 93,100 and at the end of 20 years, the investor has Rs. 867,300. You have your own “multi-bagger”! Of course, the income by way of dividends is extra!
Q. How To Determine That The Price You Are Paying Is “Cheap”?
There are two practical ways to determine whether you are paying a reasonable price or an exorbitant one for a stock.
The first is to try and visualize the next five years earnings of the stock. If the total earnings of the stock in the next five years is lesser than the total purchase price of the stock, it is “cheap” and you can go ahead and buy it confidently.
The second is to compare the purchase price of the stock with the market capitalization of the company. & give a practical example of what they mean. In 2003, bought shares of Bharti Tele at Rs 25 per share. At that time, Bharti Telecom’s shares were quoting at a price equal to its book value. Its profits were about Rs. 1,000 crore and its market capitalization was Rs. 5,000 crores. says that he conjectured how the profits were going to move and thought Bharti Telecom would make about Rs 26,000-27,000 crores profit in next five years. At this rate, the price that was paying for Bharti Telecom was obviously “cheap”.‘s hypothesis was vindicated and Bharti Telecom actually made about Rs 30,000 crores giving his multibagger.
Rule No. 2: Keep the “Long Term” In Mind:
It is implicit in & ‘s technique that they are only looking at the long-term prospects of the stock. Both & make it clear that the question whether you have bought the share “cheap” or not has to be decided today with regard to the future 5 year earnings or market cap of the stock. made this quite clear when he announced his purchase of Central Bank of India that while the stock may under-perform its peers in the short-term, he was confident that it would become a multibagger in 10 years time.
In this, one is reminded of the priceless advice given by Warren Buffett that “Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now. If you aren’t willing to own a stock for 10 years, don’t even think about owning it for ten minutes.”
Rule No. 3: Reappraise periodically the validity of the investment hypothesis:
That investors should not get unduly perturbed by short-term downward price movements in the stock. Quotational losses are notional losses and the investor should not lose any sleep over it, emphasize the investment gurus, so long as the underlying business prospects of the stock remains unimpaired.
But, that doesn’t mean that the investor should not reappraise matters and see whether the quotation loss is going to be a permanent feature say & gives the example of the investment he made in Float Glass. bought the shares at Rs. 40 and then it plummeted to Rs. 4. was forced to book his loss because certain events had happened in the company which changed the investment prospects of the company. calls booking the loss “such a gruesome business” but emphasizes that it has to be done periodically to spring-clean ones’ portfolio.
Rule No. 4: Focus On The Business – Buy A “Predictable” Business:
That the investor must be very careful of the business that he buys. If the investor is right about the business, then the other things don’t matter so much. Even if the price paid for the stock is high, a good business will ultimately bail out the investor emphasize &
Q: What is a “Good” & “Predictable” Business?
That a “good business” is one which is able to consistently generate more cash than it’s ever likely to need, but more importantly, it’s so scalable and the external opportunity is so large that it can actually consume that cash and continue to grow the volume of cash that it is generating.
With regard to “predictability”, the four investment gurus point A practical example is provided by Central Bank and Bharti Telecom where it is possible to have a sense of where the company will be in the foreseeable future.
On the point of “predictibility”, the three investment gurus , and give the example of Sun Pharma. Sun Pharma is a profitable generic company and it is run by Dilip Shanghvi, a competent manager. Given the nature of business that Sun Pharma is engaged in and the the level of competence in its management, there is the element of “predictability” that whatever the economic problems that the World may face, there will continue to be demand for the products such as chronic therapies, cardio vascular, anti epileptic drugs that Sun Pharma is engaged in.Sun Pharma is in a stage today where the products that it launched more than five years ago are generating two-thirds of its sales and these products are actually growing faster than the industry and faster than the Company’s entire core business.
For some businesses, don’t set your expectations too high:
A very important point about how investors must be wary of certain businesses and not set their sights too high. The textile business is one that the investment gurus warn about as being one where money is structurally sucked in from the investor for the reason that the cotton inventory that an average company has to maintain is over six months and the asset turns are probably struggling to beat one-month. The result is that the fixed capital deployment is equivalent of sales; margins are always highly competitive and yet you have to consistently put in money into capex to remain at the same level of production.
The Airline business is also another sector with high capital investment, intense competition and cyclical trend that one must be wary about.
Competition
On the question as to how to factor in competition when selecting a stock for investment, & point out that what the investor has to be careful about is that the business has a “moat” around it (such as a powerful brand e.g. Apple), and operating economics which are in its favor (such as a demand for its products). The company must have the technology to power its business. The trioka gives the example of Nokia which despite a great brand name and business prospects, lost out to Apple only because the latter had better technology at its disposal.
On the concept of “Good Businesses” one cannot do better than to echo what Warren Buffett said:
“We look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag.
A truly great business must have an enduring “moat” that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business “castle” that is earning high returns. Therefore a formidable barrier such as a company’s being the low cost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with “Roman Candles,” companies whose moats proved illusory and were soon crossed.
Our criterion of “enduring” causes us to rule out companies in industries prone to rapid and continuous change. Though capitalism’s “creative destruction” is highly beneficial for society, it precludes investment certainty. A moat that must be continuously rebuilt will eventually be no moat at all.
Additionally, this criterion eliminates the business whose success depends on having a great manager. Of course, a terrific CEO is a huge asset for any enterprise, and at Berkshire we have an abundance of these managers. Their abilities have created billions of dollars of value that would never have materialized if typical CEOs had been running their businesses.
But if a business requires a superstar to produce great results, the business itself cannot be deemed great. A medical partnership led by your area’s premier brain surgeon may enjoy outsized and growing earnings, but that tells little about its future. The partnership’s moat will go when the surgeon goes. You can count, though, on the moat of the Mayo Clinic to endure, even though you can’t name its CEO.
Long-term competitive advantage in a stable industry is what we seek in a business. If that comes with rapid organic growth, great. But even without organic growth, such a business is rewarding. We will simply take the lush earnings of the business and use them to buy similar businesses elsewhere. There’s no rule that you have to invest money where you’ve earned it. Indeed, it’s often a mistake to do so: Truly great businesses, earning huge returns on tangible assets, can’t for any extended period reinvest a large portion of their earnings internally at high rates of return.”
Rule No. 5: Invest According To Your Temperament and Act Within Your Circle Of Competence:
That investing is a test of psychology and character and of intellect and that an investor has to invest depending on his particular temperament and should not forcefully copy a style of investment only because someone he admires adopts that style.
The investment legends give the example of Warren Buffett for whom the investment mantra was a “concentrated portfolio” and “Buy and Hold Forever”. Warren Buffett was immensely successful in that strategy. However, Peter Lynch, also a successful investor openly declared that “he never saw a stock he didn’t like” and had as many as 1,400 stocks in the Magellan Fund which he managed. Similarly, as against Warren Buffett‘s “Our Holding Period Is Forever”, George Soros philosophy was “Everything is a buy or a sell depending on the price.”
So, what & point out is that the investor must invest in the way that he understands best depending on his temperament. The investment gurus also point out that there are certain businesses or industries where one may either instinctively have a better understanding or where one may have absolutely no idea. An example is that of Warren Buffett who did not invest in Google because he did not understand the nature of the business and where Google would be in ten or twenty years. Warren Buffett lost out on a fabulous multi-bagger but that is no reason to regret. As a principle, one should not venture into businesses that one has no understanding about emphasize & .
Rule No. 6: Don’t Get Carried Away By Public Euphoria – Never Buy A Stock Only Because It Is Popular & Everybody Is Buying It:
This is probably the single most important piece of advise given by & . & caution that markets sometimes take a fancy for a certain type of stock or a certain sector and investors get carried away. gives the example of dotcom stocks in the 1990s when the public euphoria was so great that there were many companies trading at Rs 70,000-90,000 crore kind of market cap. points out that even Infosys, whose profit then was Rs. 500 crores was trading at a market capitalization of Rs 130,000 crores. It is only after the bubble burst that investors realized that they were paying for Infosys about 5-6 times more than what was its correct valuation.
That while Infosys continued to be a great company even after 10 years of the euphoria, a number of other stocks like Global Tele and Himachal Futuristicwent to absurd valuations and today they are literally penny stocks.
A more contemporary example of how getting carried away with public euphoria can ruin an investor. They point out that in the recent real estate boom a number of real estate companies such as DLF and Unitech spun plans on how they would be selling 15-25-30 million square feet and making a lot of profits. Their story was very plausible and easy to believe selling. They claimed that they were like FMCG companies and that the Country had the ability to absord such high priced real estate.
Unfortunately, when the bubble burst, the investors were left holding the shares of real estate companies at completely extravagant valuations. & forcefully bring home the point that when the crowd gets charged, it becomes completely irrational.
Rule No. 7: Never Hesitate To Buy A Stock Only Because It Is Unpopular & No one Is Buying It:
This Rule is the converse of the earlier Rule. In the earlier Rule, & cautioned investors against buying a share only because it was popular and everyone was buying it. In this Rule, & caution investors against hesitating to buy a stock which meets all the criteria only on the ground that nobody else is buying it.
The priceless advice given by , India’s greatest investor, who candidly says “Never in my life have I not made an investment because the stock is not popular. In fact I like to make the investment when the stock is not popular.”
There are several examples that , and give in support of their proposition. The first is public sector banking stocks that at one time were totally ignored by the public at large. These stocks, though of fundamentally strong companies, were ignored by the investor community in the misconception that these PSU companies were inefficient and no match for their private sector counterparts.
He took advantage of this misconception in the public’s mind and bought huge quantities of PSU stocks like Shipping Corporation of India, Bharat Electronics, CMC, BEML etc. Likewise, bought huge quantities of PSU Bank State Bank of India. Both and bought the PSU stocks at a fraction of their fundamental value. When the inesting public realized that the PSU companies were quite efficient as well and started paying a premium for the shares, and got their multibaggers.
Other examples of stocks that are undervalued by the market because nobody likes these shares even though there is nothing fundamentally wrong with them. VIP Industries is one example that is never tired of giving. The stock of VIP Industries was quoting at Rs. 65 15 months ago when bought it (see & VIP Industries: Best Stock Pick!). Today, VIP Industries is quoting at Rs. 650 and that means has got himself a ten-bagger!
Another example that & like to give is that of United Brewerieswhich was languishing at a market cap of USD 40 million or Rs. 160 crores even though it had 50% share in the Indian liquor market and a great brand name. Similarly, McDowell was available at a market cap of Rs 200 crore. United Breweries held 40% of McDowell at that time. So it was clear as rain that United Breweries was grossly undervalued but somehow the company was not fancied by the investor public.
The example of Bharti Telecom which was langusihing at Rs. 25. recalls that all his well-wishers were so convinced that he had made a mistake in buying Bharti Telecom that they virtually forced him to sell a large part of his shares. However, such was ‘s conviction in Bharti Airtel that even after he succumbed to the advice of his well-wishers and sold out, he bought back a large quantity. The rest is history because made a huge fortune from the multi-bagger that Bharti Airtel became shortly thereafter.
Rule No. 8: Never Accept Anything At Face Value – Do Your Homework:
In formulating this Rule, & have been inspired by Warren Buffett‘s timeless maxim “Only when the tide goes out, you discover who is been swimming naked.”
The example of Satyam to highlight this Rule. At the peak of the scam, Satyam was seen to have several big marquee clients like GE and State Farm. Satyam‘s founder Ramalinga Raju was even awarded the “Businessman of the Year” prize by Ernst & Young. However, it soon turned out that everything was a fraud. The clients disappeared, the employees were non-existent and the business was just a bubble.
There are several other examples like Enron and World Com that should caution the investor that what he sees and what he gets may be two different things say & .
Rule No. 9: Buy What Is. Not What Will Be:
Be cautious against getting carried away with forecasts and projections of future profitability. This happened at the time of the Dot-com boom and again at the time of the Realty Boom when euphoric investors started making irrational and unrealistic assumptions about where profits were headed and where share prices would go.
Investors must have their feet firmly planted on the ground and err on the side of caution emphasize & . This makes sense, when read with the other Rule regarding preservation of capital.
Rule No. 10: Better To Have A Small Holding In An Excellent Company Than A Large Holding In A Mediocre Company:
For those investors who are constantly scouring for penny stocks in the hope that they will turn into multi-baggers overnight by some mysterious process. & advice that the investor is better off in investing in quality companies rather than in mediocre companies. This way, not only is the capital safe but the investor is assured of a reasonable return.
If one thinks about it, there is a lot of merit in the advice that & are handing out. If a company’s earnings are growing at say 25% p.a. (not an unreasonable assumption) and the share price grows at the same pace, in five year’s time, the investors investment would have tripled. In 10 years time, the investment would have grown 9.31 times. At the end of 20 years, the investment has grown 86.73 times. In other words, if Rs. 10,000 is invested in year one and allowed to compound at 25%, at the end of 10 years, the investor has Rs. 93,100 and at the end of 20 years, the investor has Rs. 867,300. You have your own “multi-bagger”! Of course, the income by way of dividends is extra!
ALL THREE TARGETS MET IN TTK PRESTIGE
TODAY WE RECOMMENDED TO BUY TTK PRESTIGE AT CMP OF 2582 WITH A STOPLOSS OF 2550 FOR A TARGET OF 2638, 2653 AND 2668. OUR THIRD TARGET OF 2653 ACHIEVED TODAY ITSELF. BINGO AGAIN!
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