This is too attractive a title for you not to read it, correct?

Welcome. I have no clue when this will happen, but it will surely happen. In 3 years, 5 years, 7 years….? no idea. We are in what is called the second phase of a bull market – and you can find skeptics saying ‘Market is overheated’ , ‘it is liquidity driven’, ‘liquidity can dry up’….blah blah blah.

Also nobody, nobody, nobody really knows how the market will behave on a day to day basis or worse on an hour to hour basis. When the DTC was announced, and LTCG stayed at zero, i announced that the next day will see a ‘200 point gap up opening’ it turned out to be a ‘178 point GAP DOWN opening’ . There are many people whom I respect (market players) and none of them attempt a day to day commentary. So to say ‘We are over investing in optimism, and the market is BOUND to fail’ is perhaps as foolish as saying ‘There is nothing happening in the Western world so Indian markets will not see any inflow’. We do not know, so let us accept that we do not know.

If you have bought a share for Rs. 34 last year and it has reached Rs. 129, it is a great share to sell immaterial of how sure you are that this would reach Rs. 2900. Not because it will not, but even leaving 500 shares for that eupohira is fine, at least sell the 4500 that you are holding. After all 500*2900 is not a bad number, is it?

To think that the market will open low because the American markets were low or the Indian markets will open low because the SGX Nifty is quoting at a discount is a fine thought, – but that is all pure speculation ..

Will the market cross 21k? will it cross its previous top? Not sure, but there is a lot of buying -by the FII for sure, there are 20 reasons to buy and 40 reasons to sell. The price/book value is not fair, the p/e s too high, ….all great reasons for the market to go down.

However there is a big joker sitting in the name of FII who is looking to get better than the treasury yields of the bankrupt US government. This joker has very close to zero cost of capital. He is happy if he gets 4% p.a. returns after adjusting for exchange rates, he is thrilled. You are looking for 24% return – that is the problem.

  1. “If you have bought a share for Rs. 34 last year and it has reached Rs. 129, it is a great share to sell immaterial of how sure you are that this would reach Rs. 2900.”

    I guess you didnt intend this as an absolute suggestion! Coz it depends on stock to stock. If it has gone to 129 but the company still has growth potential then I see no reason why I should sell a single unit of this stock 🙂

  2. This is a no brainer. Even if we consider 15% return YOY, the index will certainly reach 34k by Dec 2014. Your logic of selling stocks which spurt is very correct. Better to book profits and look for better value stocks. I prefer keeping some portion just to keep an eye on the company if I am interested in the sector. Just to buy again if the stock shows promise.

  3. Subra, Unfortunately the adage “You can never go broke taking a profit” is a double edged sword; especially when the 129 grows to 2000. Best to get out on a retracement, because you won’t know how long it will go before it goes kaput?

    Also that 34,000 could take forever to arrive, if it does. In the highs of the 2000 bull market (Dow 12,000?) the prints were “Dow 25,000”. Nikkei’s 35,000 highs twenty years back would have prompted cries for Nikkei 100K. That time also it was evident this will happen, but the Dow’s at 10K today and the Nikkei at less than 10K. People have been saying “Sensex EPS will hit 1,000 this year” since 2007 March (I keep a count) it is still sub 900.

    On the other hand, Henry Blodget says Amazon $400 when it’s half that, and in a short span of time, boom, $400 was there.

    Another adage fits the current scene: A bull market climbs a wall of worry. At some point when there is no worry left….

  4. hi deepak any study on Japanese market where the index not moved up but some value investor still make 20%+ annual compounded money , US market there are many studies already available

  5. Stock investing is very complex. You need these things for long term investing-
    1. Should be able to evaluate the business. Find its fair value and invest accordingly.
    2. Keep the stock till the business is doing as expected.
    3. Exit when there is some serious problems with the future of the business.
    4. Exit also when the markets are offering you super premiums over the fair value.
    5. If you cannot calculate the fair value….better invest based on your LUCK and Research reports from brokers.
    6. Much better take the “Mutual Fund” Route. It can make you extremely rich in around 15 years if you invest via SIP’s.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>