27th Wealth Creation Study.pdf (1.1 MB)
The theory of Ramdeo Agrawal is that the stocks may be divided in two categories, the consistent and volatile.
I have not yet read the study, but we also know that there are stocks which are clearly cyclical. Peter Lynch for example mentions the Auto sector as cyclical. In our case, sugar and metals we have seen going through cycles.
Then there may be stocks which are rising because of certain news, for example, sugar because of ethanol, paint companies because of decline in the petrol prices.
It would seem that once the news has been factored in, the stock would lose its momentum.
That is not to say that among these two there may not be consistent compounders which have come through many cycles, like Asian Paints.
Infra, I am afraid, is also going through one such cycle where everybody and his uncle would be invested in these stocks. And then there will be people who would enter these stocks, having heard of it late, mostly seeing on channels that the stock is rising 5%/10% everyday, and will get singed.
So, may be this may be one idea. There are stocks which one would buy and forget, and then there will be some which come like a season fruit.
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