Last week I bought some auto, and telecom stock. In case of Infra I am seriously looking but cannot decide what to buy. Have met a few promoters and know a couple of big companies too well – so touching becomes MORE difficult.

The toughest part of investing seems to be to change gears. Last 3-4 years I have invested in bonds – and touch wood they have given me good returns. Have also done some trades, and got reasonable returns.

The market is at a p/e ratio of 15 (I hate macro concepts like market p/e, but have to live with that, sorry). This actually means that the market is at a p/e of say 11-12 for 2013-4 earnings, and that to me is the NADIR.

Having said that go back to 2002 – the bond markets were giving super returns in mid double digits – 12 to 19% was easy, equities were bleeding, and super bleeding. Any body suggesting equities over bonds was seen as insane. However in 2004 and 2005, the guy suggesting equities in 2003 was God.

Similarly with US Gilt bonds at 1.5% yield (horrid negative real returns), the equity markets there are giving about 6% returns. In Indian conditions, interest rates may not come down so quickly, HOWEVER, the interest rates will NOT GO UP from here (oops such Subra arrogance never before).

Surely a happy buyer of the consumption story – telecom, banking (you know how choosy I am, right?), power equipment, power (i like only one power major), …to me look like good buys.

I AM A BUYER…and have been buying.

Decide what you need to do depending on YOUR risk appetite. If  a company is available at a p/e of 10, it HAS to be the nadir in a country where interest rates (for the crowded out private sector) is about 18% p.a.

To me, I may be wrong, but I am convinced that being in the market 6 months BEFORE The market goes up is a LESSER CRIME than coming after the party is 6 months old – you would have missed the steepest part 🙂

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  1. Subra – I have been looking at Action Construction for a few years…..have added recently……am convinced that it will be a good play on the infra sector……Since I believe you have good grasp on financial matters and overall putlook, have you looked at this stock? Only if yes, then please respond, if it makes sense to have a 15-20% weightage on this stock?

  2. My thought in infra in general is that its heavily political, for instance ,, use of Environmental issues as a political stick rather than as policy. So Infra companies with high leverages may not have enough cash to survive ‘uncertain’ times.
    I could be completely wrong, but see a couple of firms with good heritage lose out talent rapidly making their capacity to deliver getting very questionable…

  3. Infra? we do not want to pay right? Want Delhi airport, will NOT Pay Development fee…not easy being in India…and being in infra. Company with heritage is being run by a family heirloom..and will do so for the next 212 years….f…the heritage, that organisation is full of heirlooms. It ought to be put in a museum…along with many of the executives

  4. Subra.. the best thing I like is.. you keeping saying invest regularly..
    You are so experienced. so when you say equity will surely give us good return in long term… I dont think any of us has doubt on it..

  5. No Dheeraj I am saying ‘This has worked for me…so this will work for you’….It is OBVIOUSLY wrong – you need to be worried about my EQUITY bias – it is just too goddamn strong.

    Caveat.

  6. Yeah, I do Subra..
    Its well written that dont follow anyone blindly..
    But its always good to have someone showing the path, isn’t it?

  7. Hello Sir

    I know you don’t give out advice on stock names.
    I also know you had mentioned about colgate, coromandel etc

    I have a question – because I seriously need some reliable advice.

    I am looking for a long term (>15 yrs) investment and feel FMCG would be a good bet. I have FMCG MF.

    From
    Colgate
    ITC
    HUL

    what would you suggest.

    I am preferring HUL since it has most of the brands and people won’t stop buying detergents etc

    i am preferring ITC since people will still smoke and they have some brands (FMCG) as well.

    What do you advice? I am not sure about Colgate (only toothpastes compared to HUL but super stock) or Marico or Nestle or ……

    Please advice

    Thanks
    Nitin

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