I am actually not sure whether Google and the internet in general has done good or harm! Also financial blogging throws up some very serious issues.
I was recently going through a link on value investing and found it very interesting. There was a big long ‘discussion’ on whether the Aditya Birla group has created wealth or destroyed wealth over say the last 10 years.
No, I am not naming that site nor getting into that discussion.
This not is not on that, it is on changing strategies. Once upon a time, long long ago ‘buy and hold’ worked. I am absolutely sure that it will work over the next 20 years too. However, a big change is happening. There is a huge churn among investors, mutual funds, as well as the FIIs. Almost every share shows a lot of gyrations close to their results. This actually means that almost every share gives you a chance for a 20% p.a. return over and above the annual growth. THIS IS NOT EASY TO ACHIEVE AND CAN HURT YOUR PORTFOLIO BADLY IF YOU ARE NOT CAREFUL.
Even dull boring scrips like Hindalco, Monsanto, Tata Steel, Cipla, Cholamandalam, Coromandel, – give you a chance to trade.
Normally, I am an anti-trading kind of a person. However in the past 4-5 years, my household expenses have been met by some violent trading in good quality scrips – like the ones mentioned above. Hindalco and Tata Steel would have been value destroyers in most portfolios ASSUMING you did not trade in them. However doing 2 transactions in a year in each of the shares HAS DRAMATICALLY improved the RoI for my portfolio. Is this value investing? I know not.
I am sure the puritans reading my blog do not think trading helps. I have no clue whether a Charles Munger or Warren Buffet think of this as Value investing. However one big value investor in India (big because of his brains which has created a networth close to US $ 1 billion in his lifetime) does. Had a long chat with his investment colleagues and found that he too has started riding the volatility.
The best transactions that I did have been in Reliance and Bharti Airtel – the kind of volatility that these 2 companies have provided has been phenomenal. Monsanto – never ever thought that it COULD give a 100% return in 5 months! Just too volatile a market.
How to play the Volatility card is NOT EASY AT ALL. However to be stuck with dogma of what is value investing is an academic luxury which practitioners cannot afford. So I do have money money in Franklin India Bluechip, Icici Pru Discovery, Franklin Prima, I Pru Discovery, I pru Balanced, I pru Dynamic, Hdfc Top 200, Templeton India Growth fund, Templeton India Equity Income fund, Hdfc Prudence, Hdfc Equity,…..
Mainly my money remains in Direct Equity, and is now managed very very differently from how it used to be managed in the 1980s,1990s.
Changing Tactics for Changing Times may not mean a departure in Strategy. You can only sigh for the Intellectuals who may not have the world of equity to experiment!
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