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Discussion in 'Stock Advisory Services' started by Red Devil Manan, Jan 11, 2019.

  1. Red Devil Manan

    Red Devil Manan Member

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  2. Red Devil Manan

    Red Devil Manan Member

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    Hello All,

    How are you beautiful people doing this month.

    I want to address some rumors going on in the market.
    1) Everyone is talking of a quality bubble. Is it there yes? Is it a bubble. Hell no.

    This is the first wave of a bull run. Quality goes up always first because the smart money knows these are the best of the best stocks.All those who say it is a bubble are the ones who have not participated in it.

    The problem is there is a big discrepancy in the market. Good quality stocks are very expensive and the rest is all shit.There is nothing in the middle.Which means we have two scenarios.

    1) The good quality stocks people will take some money of the table which will bring the market a bit down.

    2) We get a big shake up where everything comes down.

    I am in in the favor of the first thing happening rather than the second because quality always remains expensive all the time. Always. This is the beauty of Indian markets. The problem is there very few unique businesses in India which are good. Trust me, i have been in markets since a long time. Out of 100 management meets i have gone only 2 promoters have interest of shareholders at heart.

    The remaining ones only want to make money for themselves. The point being,good becomes great and bad becomes ass.

    Anyways coming to the economic cycle i think the worst is behind us. Now with business cycle kicking in because of tax cuts, it seems things will be in motion.

    Sentiment is on a high right now so i do believe markets can consolidate a little bit.

    We can see levels somewhere of 11195 is my worst level. If this gets taken out the bull market is no more. I put around 5% probability that it wont.

    Right now if you want to make money you have to buy good quality businesses. I know that in the end of the bull market these companies make the least money but i promise you when a downcycle comes you will not loose money.

    So just relax , stick to what you know, keep learning. Markets will always do their own thing. Problem is you cannot control the outcome, only the process.

    Happy investing. Cheers.
     
  3. Red Devil Manan

    Red Devil Manan Member

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    Learn Something, this is the sole reason i did not buy Yes Bank. Keep learning.

     
  4. Red Devil Manan

    Red Devil Manan Member

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    Why PE is a bullshit metric in Indian markets.

    I have seen many investors keep saying oh the PE is so high how can you invest here. First of all, you cannot only look at half the information available like PE which says like only an inch of the entire story.

    PE is abused in India. The fact that PE is price to earnings tells us how much we wish to pay to pay for the earning of every share.

    The point being in INDIA, markets are forward looking. Which means if the market expects the earnings to improve, the price will move before the earnings. This happens all the time, markets discount tomorrows expectations today.

    Now the point being, PE is relative in the sense being, how can you judge a GROWING COMPANY BASED ON THE PE. This is where the art comes in investing and where many people get it wrong.

    When you buy into a growing company, the free cash flow generated is invested back to yield higher returns if opportunity presents. That is where you get growth.

    What is PE however= D(1+G)/R-g, which effectively means we are getting back the future cash flows paid out as dividend today. But here is the trick.

    Sometimes a growing company may not decide to pay dividends. You may argue that investors should get the dividend but what if the company finds greater opportunities to re invest then?

    The whole metric of PE is flawed right? IF you go by the text book formula.
    The point being PE is a great metric for mature companies like an HUL.

    For growing companies however i think PE is bullshit. We must look at different matrices to identify this. Because in this market many people have said we cannot enter as the stocks are at a high.

    The market is forward looking god dammit, if you do not enter now then when will you? Buy strong businesses and hold, you will make money but give it time.

    3- 6 months will not do anything. Your kid takes 9 months to come out, how can you expect to grow your capital in less than that time.

    Good companies, high quality management, good opportunity size with companies being leaders. Just hold these companies. Now on choosing the company this is where your judgement comes, where most people get it wrong.
     
  5. Red Devil Manan

    Red Devil Manan Member

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  6. Red Devil Manan

    Red Devil Manan Member

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    Hello people.

    I hope you guys are doing great.

    I wanted to share my thoughts on the Macro outlook of the world.

    Gold has given multi year breakout. This means there is an excess liquidity because of the lower interest rates around the world. Developed countries will have more bargaining power in the near future for the next 1 year. This puts pressure on developing markets. However that does not mean i am pessimistic.

    I am bullish on commodities. We have two options.

    India to counter the slowdown(internally) will reduce interest rates.However coupled with the world,we need to put a fine balance on both the forces from the developed markets and from the internal. This in the short term will push up commodities to higher levels for sure.

    I am bullish on commodities in India.This should do well.
    Coming to markets i strongly believe the charts are ready to push, with a high probability.

    Markets i do not believe will come down a lot. A lot of people are still scared. Till the time you are scared, very low probability the market will come down.

    How high the market will go i have absolutely no idea. This is like asking, if it is cloudy , how much is going to rain. So i know the market is most likely going to push, but how high, i have no idea.

    As long as interest rates do not reverse , we are all good.
     
  7. Red Devil Manan

    Red Devil Manan Member

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    Hello all,

    Today is again a beautiful day for people to realise, to stop buying loosers. You know, which one i am talking about.

    YES BANK.

    List of stocks which went down since last 2 years.

    PC jewellers, vakrangee, jet airways, dhfl, Yes bank, the list goes on.

    The problem is i know alot of retail people who averaged these stocks.

    THIS IS JUST WRONG!

    The market is usually right. You think you can outsmart the market. Hell no. There is a reason the prices are high of high quality stocks. You can keep arguing, but the market does not give a damn. The market is the collective wisdom of a lot of people.

    The crowd is generally right, 9 out of 10 times, it is wrong only 1 out of 10 times. You have to bet when it is wrong,then only you are rewarded. But this is where investing comes as an art. It is not a science where there is a process. What works yesterday, will not work tomorrow. What works today, will not work in the future.

    Market is all about change.It is an organism which keeps on changing everyday.But there are patterns which keep repeating. Like betting on loosing stocks is a sure shot way for loosing money.

    I wouldnt advise retail people to do it. By something good, pay a price for quality, you will not loose money.

    Everyone called Rana kapoor quality in 2017, but no one did their homework right.

    If you see his books, the NPA'S is lower than HDFC bank and was growing faster.

    Hdfc bank is working in this game since years and overnight RANA discovers he can beat the best?You think we are that fucking stupid? The best part is i know people who fell for it.
    This is where research comes in play. This is where it is an art. You may think you are right at that time, but over time you may be proved wrong.

    No one is right or wrong in the market. It is when you are right how right you are and when you are wrong how less wrong you are.

    If you are new in the market, do not get greedy, stick to the basics, you will have high probability of making money.
     
    Last edited: Dec 11, 2019 at 3:40 PM
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