Hitesh portfolio

@Vikky9995 There’s wisdom in the market cliche “Only two people can buy at the bottom and sell at the top – one is God and the other is a liar.” This means even the smartest guys in the room can’t sell at the top or buy at the bottom, every single time. They may get it right a lot of times but not always. For example, Hitesh bhai was able to exit Laurus around 650 levels last year, when practically everybody was Gung-ho about the stock all over social media.

That being said, the practical way of dealing with this problem is to build conviction in companies by working hard on them. This is to be followed by buying the stock at opportune times when the whole market is in a pessimistic mood, like what happened a few weeks back when almost everybody and their dog thought the sky was falling due to problems caused by the Russia/Ukraine war, inflation, Fed rising interest rates, etc. At such times, provided you have pre-built enough conviction in a company + you don’t foresee structural problems in the company’s business model in the near term + the stock has fallen to reasonable levels from where it can be expected to deliver decent returns, then one can buy in a staggered manner on the way down, without worrying too much about interim paper losses.

Technically, one can try to buy near support levels but even those levels don’t hold too well during free falls and one just has to bear the temporary pain that comes with drawdowns.

So if I had strong conviction in a given company’s business and it had good near to medium term earnings visibility and it’s price had fallen say from 1000 to 800 and I had pre-decided to buy at 700, I wouldn’t wait for the stock to reach 700. I would instead start buying in installments at 800, then at 750, 700 and so on. That way if the stock turns around from 710 and starts goes up towards 1000 and beyond, I would have no regret because I was able to catch at least some part of the move.

Another thing to note is that stocks that are in strong momentum + good near term earnings visibility usually don’t correct more than 20-25% from the top. Again like everything else in the market, nothing is infallible. The one rule of the market is that it never follows rules.