Whenever people see me in a group gathering, they come and talk to me about equity markets. I am not sure why they do it, but it is very useful for a guy looking for topics to write on.

So a few people will come and tell me “I lost money in 1992 and then stopped investing” or “My father lost money in Harshad scam…”

Of course some people come and say “My father/ grandfather bought Asian Paints, Britannia, Colgate, ….” and we made a lot of money. They will also say…”Only last year we found that my Grand dad has/had lots of Nirlon, Power cables, Mysore paper, Shaan interwell, etc…..and we lost a lot of money.

Normally one Wipro or one Reliance, Hdfc, Infosys…would have covered all their mistakes. If they have (had) been lucky to hold on to one of these, then their views are different!

Once upon a time I used to react in horror and argue. These days I am searching for fodder for my blog, so I keep quiet. Sometimes I tell them, well I do not know what you will do, but it helped me fund my retirement and allows me to live a simple life.

No financial planner or wealth manager can tell you what you should do in the markets. You need to meet a lot of people, talk to them, read research reports, balance sheets, etc. BUT STILL BE ABLE TO COME TO YOUR OWN conclusions. That is the beauty of the market.

The next thing people do is to ask for ‘tips’. This is a bigger danger for you. Let me tell you why.

I recently (5 months back) bought some shares of EiD parry at 150. Then I had the mortification of seeing it drop to 103. So technically I could have saved 50 Rs. per share. If you had bought with me, and kept a stop loss of say 105, it would have been triggered off! I actually BOUGHT more at 118. Now the price is back to 153…

Now why is it RISKY to ask somebody for a tip. Let me explain my position in EiD parry:

1. I bought this company for the first time in 1986

2. I have never gone to zero holding in this scrip, but have sold many times – even in the 330s.

3. I have sold at much higher levels from where we are now and covered it later on.

4. For me the dividend income from EID is attractive on a cost: yield basis.

5. Fairly obviously, I am biased and I have major interest in the share price going up.

6. My margin of safety is now huge and a 30% fall in EiD will not kill me. In fact I may be buying more.

Now for the share itself:

1. It is the holding company for Coromandel International – which now includes Liberty and Sabero Organics.

2. Am surely expecting sugar prices to improve – taking the EPS higher.

3. UP government mismanaging the sugar in their state, and Maharashtra’s inaction will improve sugar profits for South based companies.

4. The play on commodity companies is very very different from regular companies. You buy shares of a comm company when the commodity prices are low and sell when the prices are high.

———-could be many many more’

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  1. Hi Subra, in one of your previous post you said keep stop loss of 25% on all of your investments… now if you bought shares at 150 and it fell to 103 now that is fall of ~32%.. so going by the investment rules one should have sold the shares the booked losses… or these rules themselves are driven by the scrip one is investing in.. happy investing

  2. in most of the scrips ALREADY in my portfolio the average cost would be much much lower than the price at which I buy today. In case of Eid it would be in the region of 4-5 Rs. a share 🙂

  3. if we offset previous gains by present purchase, then it will become cyclic. it is the thought clearly told in ” Wolf of Wall street movie”. People think that they are rich but only on paper. I am novice and confused about mixed signals. so stop loss can be reduced with previous gains.

  4. The problem with retail investors is that they do not have time, energy, resource and understanding to evaluate the stocks. So they generally ask for “tips” on investing. If they are lucky enough they will make some money but on an average they will lose and burn their hands & will ultimately go away from Equities. They may go to fund managers, but again in this case they need to evaluate fund manager again for which they do not have time, energy, resource and understanding. You never know when a star manager of that time will just vanish from the market. Don’t you think to avoid all these and to at least get average return of equity as an asset class it will be worth investing in to low cost Index Funds or Index ETFs?

  5. Y’day I was looking at my late father’s notes, entries from 1982, 1983…for every Usha Rectifier and NS Duncan (what a damn shame about the land now bought by Lodha)– there is an Asian Paints or Sesa to even out… the point is to stay in the game… not something one can explain to someone who wants “tarat daaan maha punya” as we say in Gujarati.

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