Reader: Sir is Hindalco a good company?

Subramoney: Yes, of course.

R: Good i bought it at Rs. 240.

S: Hmm good. What is the price of the share now?

R: Such a good company sir, I thought you would know the price! It is Rs. 174 now…(not sure about the date – a few days ago)

S: Oh! so you are at a loss….

R: No sir I further averaged at Rs.180…so my cost has gone down…and this time I bought 200 shares.

S: What is the price now?

R: Sir the price is Rs. 147, I bought another 200 out of my last 2 months salary and by selling some Reliance Industries shares..I have bought some more at 124…now my average cost has come down quite dramatically.

S: so you at least made money on Reliance?

R: Sir you must be joking. I bought Reliance Industries at 1243…and sold it now at 834 Rs.

S: OMG….why did you sell Reliance?

R: Sir it is not increasing at all.

S: what is your time frame for Hindalco?

R: Sir long term sir…I will be invested for 2 years sir. My first purchase I am already holding for one year. I am sure in 3 more years at least, I will be able to sell on a no profit no loss basis.

R: Sir I listened to all that you said – a) bought a good company with good management.

b) As you have been recommending averaging (SIP) I have averaged also.

c) I do have a long term horizon – more than one year. (My CA and my broker told me that < 1 year is short term and > 1year is long term).

Still I am losing money……………what to do sir?

Readers willing to answer are welcome….I will share my reply after a few days..

  1. Mr reader need to know sector knowledge and valuation basics. Average reader who do not know basic valuation methods and sector knowledge ahould not induldge in arbita.ry purchases of stock

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