I also dont know too much technical analysis and for long term investors , chart patterns and other intricacies are not much helpful. But what chart is made up of is, Price and volume action and it shows what other buyers and market players are doing with your stock. If their buying and selling is affecting the price of your stock and through that your wealth, then you need to give attention to it. So what part of technical is useful to us as investors ( and not traders) is…to see if our stock is in uptrend (as per stage analysis…in stage 2) , or downtrend (Stage 4) or in sideways that means neither moving up , neither down…
Why this is important …because of opportunity cost of your capital…As you dont want your promoter of Mold-Tek Packaging to mis-allocate capital into such avenues where return on capital is less, similarly you also dont want your own capital to get mis-allocated into such companies at such stages where they are not earning anything.
Few Examples
- Mold-Tek Packaging is a great company with great fundamentals but its price on January 2022 was 830 and after more than 2 years in march 2024, its at 796…During these 2 years, its between and around this price. 2 Years is a long period of time, where you could have invested your capital into some equally good and fundamentally strong company and price may have taken your capital into 60-70% up, considering the roaring bull market during these 2 years.
- Same is the case with equally superior Bajaj Finance with price at 7800 in october 2021 till today at 6910 , more than 2 and half years , price at that level…big opportunity loss for our small capital
- same is the case with SRF, PI industries , Divis labs, Tata Elxsi…all of these are A-grade blue chip companies but price has not moved over last 2 years and its a great mis-allocation of capital on our part in remaining invested in them during their down trend. We are not married to them or neither we have any personal interest in these promoters. Our sole goal is to enhance our capital at a decent rate of return , probably better than index. These are just instruments for us to increase our capital. They are not End point, they are just intermediaries to fulfill our financial goals, not goal in themselves…What say?
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