In the first two months of 2013, the markets have slumped 5% and individual stocks have lost much more. While naive investors are bemoaning their fate, the smart ones are withdrawing funds from fixed deposits and quietly deploying it in buying top quality stocks in a staggered manner.
If you want inspiration, then you must look at the videos of the time when the pessimism was at its peak and it seemed the uncertainty would never end. If you had mustered the courage to buy stocks then, you would have made a fortune by now. Also, if you read Chapter 8 of Benjamin Graham’s The Intelligent Investor, your mentality will change and you will actually rejoice when the markets are down.
If you are looking for good stocks, then a good place to start looking is Rakesh Jhunjhunwala’s Model Portfolio 2013. The fact that despite the carnage in the mid-cap stocks that saw them lose between 25% to 50% of their value, the stocks in the Model Portfolio have held their ground tells you volumes about their inherent strengths.
Stocks like HDFC Bank and Titan are stalwarts which provide the strong foundation for your portfolio to rest on. Others like Page Industries and Hawkins are seasoned warriors which are unaffected by disastrous budgets. Newcomers like Amara Raja and Cera Sanitaryware are also a force to reckon with thanks to their stranglehold over the market place.
In SpiceJet, I made a tactical mistake confusing what was essentially a short-term trading punt with a long-term investment. After I waxed eloquent about how SpiceJet was a great buy on 21st Nov 2012, it spurted to an all-time high of Rs. 51, giving me an incredible return of 36% for just a few weeks’ work. Then, the tide turned with Air Asia’s arrival and the Jet-Etihaad deal postponement, and I am now staring at a loss of 14%. Talk about snatching Defeat from the jaws of Victory!
However, this may well be a good time to tuck into SpiceJet because the Jet-Etihaad deal and the SpiceJet-Foreign Airline deal is something that will happen sooner than later. Also, the lower prices mean that there will be more left on the table for us to feast on when the festivities begin.
PSU Banks have also got pummeled badly thanks to the poor Q3 results, the new banking licenses regime and the Budget provision regarding subsidy on farm loans.
However, here again, there is an opportunity because the reaction is an over-reaction. PSU Banks are quoting at a price that is lower than their book value and offer a decent dividend yield. There is no “risk” in buying these stocks though the “uncertainty” has made everything look risky.
So, the best thing to do at the moment is to buy more of the top-quality stocks and average your purchase price.
S. No |
Stock |
Purchase Price on 17.01.2013 |
CMP on 04.03.2013 | Average |
1. |
HDFC Bank |
667 |
628 | 648 |
2. |
Titan Industries |
276 |
265 | 271 |
3. |
Page Industries |
3,402 |
3274 | 3338 |
4. |
Hawkins Cookers |
2,385 |
2122 | 2254 |
5. |
Supreme Industries |
302 |
304 | 303 |
6. |
Amara Raja Batteries |
296 |
289 | 293 |
7. |
Cera Sanitaryware |
445 |
418 | 432 |
8. |
IPCA |
511 |
484 | 498 |
9. |
Kotak PSU Bank ETF |
410 |
321 | 365 |
10. |
SpiceJet |
45 |
32 | 38.5 |
Disclaimer: This is an imaginary portfolio named “Rakesh Jhunjhunwala Model Portfolio” in honour of the Badshah of Dalal Street. The Badshah has nothing to do with this Portfolio. Rakesh Jhunjhunwala’s official & real-life portfolio is here
this is not good portfolio ever rakesh junjunwala is not a god that we follow him
Sir,
Thanks for the post but I am alarmed by the high valuations of all these companies. Do you think they can continue growing their earnings to command such a high P/E since there is no more chance of higher P/E re-rating. I think there will be a time correction in most of these. I would bet on mean reversion.