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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  1. Than you Subra Sir.

    Can u pls clarify below?

    1. For trading, mostly do u use cash delivery or futures/options?

    2. What tools and techniques do u use for trading?

    3. Any good book on how to do trading and make money from trading

  2. Kumar

    Completely wrong person to ask trading related questions. I can at best tell u some wrong things!!

    1. Normally do not use F n O, because my scrips may not be liquid in the FnO markets.

    2. Largely delivery and full cash basis.

    3. Too many books – but I have not read them 🙂

  3. One of my friend has deep pockets and trades with Blue chips only. As he trades with 50 lacs to 1 crore amount, even 1% of profit turns out to be 50K to 1 lac on a successful day. He does not do F&O and also not believe in buying 10K worth of penny stock and wait for 10 years to multiply it by 10 times. He compares trading like a wholesale business and conventional investing like a retail business. In the last decade, volume growth has been the key driver for profits instead of pricing advantage. All the big chains (starbucks, McD to IKEA) are playing this game. Even the smart phone makers are not exceptional. Welcome to the new world of trading and business management. As this group grows, don’t expect the markets to go up.

  4. So Krish, retail investors who has a cash of 5-10 lacs do not have even 50% probability of making money from trading? what tools and techniques does such retail investors have for making small money from trading?

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