When it comes to investing in equities, it is nice to have a lot of rules. This means your full portfolio behaves to certain rules. Rules can be made for:
– Stock picking, Stock review, Portfolio balancing, re-balancing, diversification, ….
HOWEVER IT IS ABSOLUTELY NECESSARY TO KNOW why it was made in the first place. If you know this, you will be able to BREAK the law for a short period of time. For e.g. I did a recent transaction where I was selling one company and buying the parent. It made little sense – but for the industry play – and hey it worked.
Then there are times when you are taking a proxy play on an industry – and you are better of buying a couple of main players instead of buying the index. FMCG and Banking are such examples. In both these industries I like players who are not significant in the index.
I have a rule that I do not pick equity of companies based in Hyderabad as well as New Delhi. Have I broken the law?
Yes I have traded in Dr. Reddy’s Lab and Ranbaxy – with kind of longish trading position – I mean in terms of time I may have held it for almost a year before I sold.
Normally I keep money only in the savings bank account especially if I am hoping to get some good bargain buys. Recently I have been keeping it in debentures and my returns are better than FMP returns and with great liquidity – given by the listing. I have not yet sold it, but the returns are good as of now – and am sure it will improve with time.
I normally buy and then sell. Recently the volatile market allowed me to sell a few shares and then buying it back. However I do not do stock lending – just do not feel that the safeguards are enough. It is a personal call.
Regarding stock picking, I am convinced that knowing 3 smart people is superior to spending 3 days poring over some excel sheets…..Management intention may take time to percolate downwards.
I spoke to a BROKER recently about some issues in the debenture issue. He was very optimistic about the issue. Great, a broker should be. I spoke to a banker, he said, throw away the form….I had said that on FB too…:-)
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