An old joke most of you would have heard in school…

There are two guys walking on the road…one of them sees something on the road, and is interested. The other guys says ‘Man this is shit’. The first guy goes near it and says ‘It looks like shit’, then he scratches it, smells it and says ‘It smells like shit’, then he tastes it and says “O M God, it is shit’.

If you think this is a joke, ask yourselves how many times have you done it? The stock exchanges take a lot of trouble in classifying shares into A, B, C, T to T, and Z categories. People go to a Z group stock HOPING that it will suddenly start doing well. The rule is, it will not. Those shares that are likely to do well are already in the other categories.

Why do smart people go and buy this shit? Because somebody sells them a story..see MRF it is at 9500 it can never become 19000 over night, however, this piece of shit is at Rs. 9.5 it can become 19 in 2 weeks…so your money can actually double….

so we fall. We do not realise that profit is:

Price change X probability of price change X volume of shares bought. In a shit share the probability of price changing is SO LOW that it is not even worth considering. Now MRF may go from 9500 to 19k in say 4 years time – this means you have got 18% return + dividends… L OL…

If at 20,000 index (actually at any index this is true!) you have a look at your portfolio and find some shit, just sell it off. You do not have to smell it, scratch it, taste it to know it is shit. If it is making a cash loss for the past few years, if you do not trust the management, if the reason why you bought is lost (the guy whom you trusted has quit the board), …many reasons…JUST SELL WHATEVER YOU HAVE. You may not make money but you will release some precious capital which can be used elsewhere.

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  1. Well Said on this.
    I’ve seen lot of people holding non-performing shares hoping to outperform one day.
    Psychologically, we don’t want to “lose” in Stock Market.

  2. Why lot of people I am holding on to Arvind Trading, Moschip, H K Finechem – first and second because the story seems to be delayed rather than finished. The third because I cannot sell. Luckily no other kachra in my portfolio..

  3. Problem with most peoples is that they will sell GOOD stocks if they get hardly 20% appreciation, but will continue to hold BAD stocks even at 50% loss. This is really shit style of investing (cant even call investing — fooling oneself).

  4. Interesting.

    In the recent upsurge in the stock market, I have sold out my Kachra and believe me – the feeling is like being relieved of constipation.

  5. Subra Sir: Yes, the above post reminds me of nothing but HUL (the worst shit I ever came close to). Who would have thought of HUL as shit? LOL.

  6. This might be an off topic. But i want to know why HUL is a failure for shareholders?. In the retail stores, I see HUL products in all segments. I always wonder why its not as an investment. Is it because things like soaps etc (where they have 80% market share) is already penetrated to even remote villages and hence we cant expect much growth?

  7. Tejas: Good companies can be too expensive to be good investments. Look at NHPC – great stock, horrendously overpriced.

    Subra, are you hearing people running to Z companies? I look for that as a signal of a potential peak – the volumes in the smaller cos don’t seem to reflect the madness…

  8. no Deepak that is not really true. People buy shit along the way…as the market gets higher they wait to sell. Suddenly when the market falls, volumes disappear :).

    Gold and shit both are yellow…one floats one sinks..when the tide is high, …

  9. Very timely post. It may be the best time to wash away your sins not continue holding on to the mistakes one does in a weak momentary lapse of judgement.

    Reading some talk of HUL as Shit, I disagree. It depends on when you bought the stock & how long you are holding. HUL is one of the good old stocks I am holding. Dividend return is great and the company continues to be market leader. Not as spectacular as in past but a steady rewarding company.

  10. Hi Subra,

    I enjoyed reading your article and also the comments from other people.
    Very timely and eye-opening 🙂

    Thanks
    Siva

  11. You mention LOL a lot in your articles. Which one of the flg abbreviation you mean?

    Lots Of Love
    Laugh Out Loud
    Loss Of Life
    Little Old Lady
    Lots Of Luck
    Lots Of Laughs
    Looking On Line
    Lords Of Legend
    Lemon Or Lime
    Lots Of Liquor
    Life On Loan
    Lame Old Loser
    Love Of Life

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