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Wednesday, November 14, 2012

How are We doing Diwali 2012

Wishing all investors and readers a Healthy and Prosperous New Year!.. Let us start with the review of our performance.

First stock recommended as a buy was Venky's in May 2009. In all 28 stocks have been recommended and the average holding period of stocks is 794.71 Days (2yrs 2months and 5 days)

- On absolute basis we have earned a return on 10.78%.
- On annualized basis we have earned a return of 4.95% each year

Dividend reinvested the numbers look much better.
- On absolute basis stocks have returned 16.18% 
- On annualized basis stocks have returned 7.43% each year

Considering only recommended "Best Buy" stocks (dividend reinvested.)
- On absolute basis "Recommended Best Buy" stocks have earned 17.87%
- On annualized basis "Recommended Best Buy" stocks have earned 7.35% each year

Only dividend paying stocks the returns would have been much better (dividend reinvested)
- On absolute basis dividend paying stocks have earned:- 36.94%
- On annual basis dividend paying stocks have earned:- 16.51% each year.

A hypothetical condition.. if we had some how invested only in Profit making stocks(dividend reinvested).
- On absolute basis "Only Winners" stocks would have earned:- 63.25%
- On annualized basis "Only Winners" stocks would have earned:- 28.60% each year

A hypothetical condition ... if we had somehow invested only in "Loss Making" stocks
- On absolute basis "Only Loosers" stocks would have earned:- -ve30.90%
- On annualized basis "Only Loosers" stocks would have earned: - -ve 14.42 % each year.

Interestingly .. out of recommended 28 stocks 50% ie.14 stocks are reporting profit and 50% 14 stocks are making losses.. The Law of averages are catching up!!. but losses are -ve30.9% while profits are 63.25%.

Take Away:-  Looking at all the info..the best investment strategy is to do stock selection but invest in dividend paying stocks only.

Outlook :- I was listening to all the market pundits in TV channel..  it seems everyone is pretty positive about markets... Looking deeper it seems stock selection is the important point.. and there are bull markets and bear markets in sectors. Fundamental value investing with local consumption is the theme.

Personally I am not so optimistic.. and think this is the new "Normal" "Peak Energy" is the underlying reason.. Energy is no longer cheap which will encourage people to pick and choose what they want to do and what they dont want to do. A lot of industries will be much smaller in the future.. and hence we need to be very selective. BASEL III, ecologically responsive, Peak oil, minimalistic, Green .. all point to less consumption..

Property prices are sure to drop from these levels.. Gold is only for a complete breakdown of financial systems.. Stocks if properly selected is worth investing at these levels.. Personally I feel GAEL,Jayant NHPC and Tata Comm are all future ready stocks.

=happy investing


Anonymous said...

WhatsUP Ji,

One of the saner stock pundit on Diwali TV show pointed at five themes:

1. Consumption Story
2. Exports
3. Infrastructure
4. Energy
5. Financial Services

Looking at your Best Buy recommendation, I think you covered most of the bases. Perhaps Financial Services (including Banks) is missing.

Happy Diwali!


What'sUp Prahalad said...

Joo ji:

Happy Diwali to you too..
Basel III norms are going to reduce the amount of funding that can be done through banks..

as reserve requirements are going to increase
==========Sept 2012=================
Indian banks will require an additional Rs 1.75 lakh crore of equity capital over the next five-and-a-half years to conform to Base III norms, according to Reserve Bank of India estimates. RBI governor D Subbarao said this in his inaugural address at the annual FICCI-IBA Banking Conference in Mumbai
Most likely we will see rights issues.. and excess stock in the market.. so its best we remain out of banking investment

Insurance.. and mutual funds could be interesting plays..

=happy investing

Kalpesh said...

Hello sir...
gr8 analysis...
had picked couple of ur stocks n investd ...gained wid good returns..Thnx..been following regularly..gr8 wrk..

What'sUp Prahalad said...

Kalpesh ji:

Season's Greetings and thank you for your time..

=happy investing

Anonymous said...

got out of Jayant, Picked NHPC. Have to buy jewellery :( worried I have to buy at peak (not investment spending)

Sad I let go of Kaveri Seeds because of mmb (someone claiming Management is crooked) got scared and sold out its given 300% profit to investors since


What'sUp Prahalad said...

WishMeLuck ji:

Kaveri has been reporting higher profits but taxes paid is the same..

Year/Net Profit/Taxes paid

So personally I feel its good that you got out.. generally stock overshoot and undershoot.. their valuations on upside as well as downside.. very difficult to catch the peak or trough..
Jayant it seems will consolidate at these levels (140) before it gets the rest of the public out maybe as the stock approaches 200 levels..
export numbers for Oct for jayant were pretty dismal.. but its quite possible that the export happens through an intermediary..
Also my questions about the export FOB(Freight on Board) numbers not matching could have prompted the promoters to get into stealth mode..
Jayant is definitely under reporting its profits..
Year/Net Profit/Taxes(tax/netprofit %) (Consolidated)

If you get an opportunity you must keep a long term bucket of jayant Its a 10 bagger even from these levels..(140)

=happy investing