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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.

 

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

 

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.

 

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.

 

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.

 

This will be last Post for 2019. I have learnt a lot this year and i do also know i don't know a lot as well and i have to learn more.

My biggest learning is simple.Just stop listening to other people.

No one in the bloody world knows where the market will go. But i do know people think they know. And what they think is already in the price. Which means, the opposite usually happens.

I do not think small and mid caps will run in the next year unless we get a kick ass budget. That does not mean not to buy small caps and mid caps. This is actually the time to buy, but you will under perform.

Do not feel bad, because you are thinking different.

I do know that the stock making highs right now will keep making highs. We need to be in right businesses because these are the ones who are killing it in a shitty economy right now, when times are better these ones will be even better!

Happy 2020 everyone, lets hope be better,smarter, more humble. Markets are mostly right 9 out of 10 times.

Markets are only wrong in times of extreme pessimism or extreme optimism. We are no one in the middle.

 

Hello Dear Friends,

The only thing i hear right now is very simple. Market niche aa raha hi nahi hai.

This tells me everyone wants to buy, but everyone is waiting. And when everyone waits, i know what happens, it mostly goes up.

This is not the retail participants i am speaking off. These are proper market participants who have been in the game since a while.

The good part about the deal is if the retail has not even participated, then we have a good way to go.

The news is still awful. I think this budget will put a lot of pressure on the FM minister. If they deliver i think we will see a good rally, since many people have a negative sentiment. I cannot say what will happen , i am too nascent at this stage, but i know not a lot of many people give a shit and when that happens usually markets push higher.

Whoever had balls of steel last year , will hopefully be happy this year, depending on the quality of the stocks in mid caps and small caps. You have to be in good quality stocks where there is earnings growth.

We need proper growth to push the markets higher, all the news is so negative that its actually a little demeaning. But chin up, whats the worst that can happen.

I do not believe we can go into more trouble, i do not believe we can go below here.
I think the room is only upward, time is only when.

Mid caps and small caps have started rallying since sometime. Now hope is coming in and i do not like it when hope comes. The slower the markets go up the more money you make. The faster markets go up the more probability you have to loose.

I hope markets go up slowly, but now the participation has increased.



I get really scared on the fact that interest rates are negative, i really do not know how to think and interpret this. Good for liquidity, boosts commodity prices, however for how long can it sustain, too much is also bad.

To counter this India needs to grow, i assure you we will see so much flow of capital, people will not resist.

However China is there as well.

USA has a GDP of 24 trillion dollars, market cap is 50% of the world.

China has GDP of 18 trillion, market cap of only 15% of the world.

India has GDP of 2 Trillion dollars, market cap less than 2 % of the world.

Point is investors will move to china depending upon social economic regime, however the base of India is lower, so the delta in equities can be higher.

Lets see what happens, no one knows the future. Just focus on good companies, do not get greedy. Wealth is always created in the long run.

 

Hi All,

Hope everyone investing is going good. Markets doing good right now but very selectively. You again need to be in the right stocks.

I have seen one bad mistake what people do. Everyone thinks markets is the past. Like right now ITC, the full world is screaming buy. I agree its at a cheap valuation, but it docent mean you have to BUY!
Even if you do, you need to manage risk, it can under perform for the next 3 years also. Who knows.

If you see the below 2 interviews,see what the fund managers are saying. Hear them out.

These are the guys making money. They are not Idiots. The news paper is the idiot making us biased saying that oh this is expensive this is cheap.

HDFC BANK MADE A LOF OF MONEY , INSPITE OF BEING EXPENSIVE. SO DID DMART, SO DID A LOT OF STOCKS.

Valuation is relative, get it in your head. You do not make money on getting valuation, you make money betting on good business, inspite of valuaion.

The below is the list of best performing fund managers in 2019. I am sure, they will do well going forward, because they did it in 2019 , which was a stock pickers market. Congratulations to them.



https://investoracademy.in/best-pms-in-india-portfolio-management-services/

 

Good morning people,

Please do read. A man who made all his money in this stock has now dumped it.
LESSON: NEVER EVER GET EMOTIONAL.

Do read this blog as well. Superbly written.

https://www.stallionasset.com/blog/most-discussed-question/

 

Hi Everyone,

CORONA CORONA CORANA.*UCK THE NEWS.

This is the only thing i care about is the business growing or no.We focus on such crap sometimes it is unbelievable what can happen.

I am little in green, most of my gains were whiped out but thats fine right. Bad investors look at a drawdown of 10% with 30% upside, while mature investors look at 30% drawdown with 300% upside.

Markets are pricing in today Corona will spread. I am calling its bluff. Of course i can be wrong because anything happens in life, but i am calling the bluff. I do not believe an all out pandemic will happen.

But i think this will not subside so easily.

All i know one thing,if you wanted a dip you got it. Do not be scared now. You got your dip, go ahead and do your shopping on good names. When i say good names good stocks, high quality stocks not bad ones. The market is getting cleansed, again good quality stocks will perform.

Just buy good companies, you will make money in the long run.

 

Hello All,

How was your week. Guessing everyone was really bad, the number of hits on this link has reduced so i guess the crowd is reducing which is good.

If you survived 2018, you will survive 2020. Relax , you are in the right stocks. If your portfolio goes below the amount in 2018, then get out of your current stocks, the market does not agree with you.

Take this opportunity to churn your portfolio. Get out of the junk. Accept your mistakes and move forward. We are here to make money not be philosophers. Leave that for the guys who dont wanna make money.

My views are simple.

1) Coronavirus is discounted by the market.

2) Use this volatility to your advantage, it is here to stay for the next 3-6 weeks.

3)Deploy funds easily slowly no hurry.

THAT'S ALL.

Do not focus on anything else. You do not need to wait for the economy turn, for corona to go away.

USE THIS DIP,SLOWLY.

You will thank yourself next year.

 

For all people who are scared of Corona, here you go, please pick your companies and buy them.
See what both these fund managers are saying. Both funds delivered the best returns in 2019.

stallionasset.com/attach_sendgrid/Stallion_Update.pdf