This is one of the longest bull runs – from 2009 to 2019 – from 9000 to 40,400. What happens when there is a long, slow bull run people start believing that equity markets are PPF on a steroid. Sadly for people like me, there seems to be less choice now, than I had earlier.

I look at my portfolio and I know I have some terribly over valued stuff. Let me pick Hdfc Amc. If the FAIR value of a mutual fund is say 2% of its assets – on an asset base of Rs. 350,000 crores, it should be valued at Rs. 7000 crores. It is currently valued at more than Rs. 75,000 crores. Of course all of us have a solid story to tell – huge margins, annuity business, low employee costs – the stars maybe over-paid, etc. but at the end of the day you know it is over-valued. For employees who sold the price rise must be shocking. For fund managers it is a must have – I guess that is reason enough for all the funds to chase Hdfc amc, Rnam, L&T finance holdings, Aditya Birla Money -who serve as a proxy.

My portfolio has more culprits…Nestle, Hdfc standard life, Hdfc, Hdfc bank, Colgate, Siemens, Cummins, Gillette, …it is a long list. However if I do look at it over a long time, these have ALWAYS been over-valued. Then there is sellers regret. If I sell off today, will I be able to buy it back later on. So even in shares like Cholamandalam I do trade – but in quantities like 2% of the total holding is at stake at any point in time!

So navigating between booking profits, FOMO, portfolio rebalancing, asset allocation, sellers regret, etc. navigating a portfolio is not very easy. We quickly become a concentrated portfolio holder (esp if there are ESOP), have many loss aversion candidates, etc. At least I do. It is far more emotionally difficult than what people think it is. Look at some of the conventional “must do”. Should you sell TaMO now that it is off the sensex or should you buy now because it is at an attractive value to buy? Do not look at me…I myself do not know.

Think of it in another way  – sell and do what? If I sell Nestle – what do I do with that money? buy REITS, buy ridiculously over-priced US Stocks, ridiculously priced Indian bonds? Beaten down shares in India…?

For me it is TINA – there is no alternative. I have to sell Nestle to buy real estate?, or REIT, OR…or….I do not know..

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  1. pricing can be debated but some of the US Stocks seem to grow bigger and bigger in Future. which ones – tough to predict. There is a term relevant here: 4th industrial revolution

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