Mehraboon Irani of Nirmal Bang was asked the question a few days ago whether the time is opportune to buy stocks or one should wait for more correction to come by. This is what he said:
“There is a list of stocks that have fallen so much. It is not that I am saying that investors should be sitting on cash. One can never sit on cash. Even if you know that the market would fall by 3-5 per cent, why should you sit on cash? My experience with investor is that they never buy a stock when it comes down.
Suppose you sell a stock at Rs 200 and now it has come down to Rs 170. You will talk of Rs 160 or even Rs 150 levels. When the next leg of the bull run will start — which I am quite confident it will — you will end up buying the same stock at maybe Rs 200 or or even higher. But the point is, you end up buying stocks where you feel things have become all over attractive.
A classic name is IndusInd Bank. At Rs 940, my favourite private sector bank announced numbers. There was nothing wrong in the numbers, there were no complaints either. But, the stock has come down to Rs 820 levels. Somewhere around Rs 780-800, it qualifies as a good buy.
Can the stock be a Rs 1,000 in the next 12 months? Certainly yes. It is giving me a 23-24 per cent return from here. Why should I wait for Rs 780 and why should I wait for the Nifty to correct further by 3-4 per cent more. So, you make a list of 20 companies and write down abnormally low prices which you always tempted to buy, but in the end you misses out.
Even if five of those 20 stocks come to those level, I would advise you to just go and buy into them. This is the practical way to look at the market. I remember, everybody was talking about MRF, but no many did buy the stock. At Rs 42,000, people loosely said, it is a Rs 50,000-stock. Right now, it comes around Rs 32,000-33,000, then I will surely buy it. It is already at Rs 36,000; it was at Rs 42,000 two weeks ago. The Rs 42,000-stock has become Rs 36,000-stock, how long will it take to come to Rs 32,000?”
Phil DeMuth of Forbes offered similar advice in his piece “High On A Mountain Of Cash? What To Do Now”. He said:
“The problem is, we can cool our heels for decades waiting for the right entry point. When it arrives, say, in 1929 or 2000 or 2008, it doesn’t feel like investing time. It feels like the eve of destruction. The people who are by definition the most nervous are the least likely to pull out their wallets and empty their mattresses. They will miss it every time.
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the next best thing is to stay in the market and stay diversified on that glorious path to our financial objectives at a risk level we can stomach.
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I recommend wading into an appropriately diversified portfolios of stocks, bonds and alternatives one step at a time …. A better plan is to dollar-cost-average them in over the next year or so, taking their temperature along the way. If there is a significant pullback, then accelerate the process.”
So, if you do have the resources, it is time to start nibbling on stocks is the expert advice.
May 4 (SeeNews) – Indian billionaire Dilip Shanghvi and Suzlon Energy (BOM:532667) will form this year a 50/50 joint venture to install 450 MW to 500 MW of wind parks at home while Shanghvi will also provide working capital for 1.2 GW of projects.
Kirti Vagadia, Group Head-Finance at Suzlon, told the Hindu Business Line that Shanghvi and the Indian wind turbine maker will each pour INR 4 billion (USD 63m/EUR 57m) in the joint venture. It will build wind parks in four Indian state over the coming two years.
As regards to the other 1.2 GW of projects, Vagadia has declined to give financial details.
In February, the Shanghvi family signed a definitive deal to take a 23% stake in Suzlon in exchange for an INR-18-billion equity investment. Dilip Shanghvi is the founder of drugmaker Sun Pharmaceutical Industries Ltd (BOM:524715)
Speaking of acquisition deals, US buyout firm Centerbridge Partners LP last week announced the completion of its takeover of German wind turbine maker Senvion SE from Suzlon. The roughly INR 70 billion in cash from this transaction will help the Indian company repay debt and support its growth plans.
Vagadia told Business Line that Suzlon will also be selling non-core assets such as component manufacturing businesses, old manufacturing units and office buildings to “right buyer”.
(INR 100 = USD 1.577/EUR 1.415)
Hey guys. Hey yo. It’s me the D man. Good article and good points. An investor will always invest when he sees the trend has been good for the past 2-3 years. No investor will invest in the exchange when they see it falling for a couple of years. They will rather say wait for it to climb up, then I will join. Sure market corrections will erode stock values at certain times, but use these opportunities to buy more, or use these opportunities to remind yourself that as long as the company centric philophosy holds strong, then you will never loose your money. Never. I have continuously made money in the stock market using simple principles. I do not teach my ways to anyone else because everyone has their own circumstances. One common amongst us all however, is that we all look at the same details before investing. Remember that. There is no greater advantage then the logic of a positive mind. Look at the fundamentals. PE, cash flow from operating activities, debt to equity and even currently liability to current assets ratio. Potential triggers, promoter holdings, and management confidence.
PMS people always talk very confidently…
logic. others money
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we see lots of analyts and market pundits.
why they donot get rich if they know of stocks
instead they survive on others fees to surive…
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talking is easy in market what is easy in paper difficult in practise
hence we see lots of pundits and analysts than investors
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when market start falling new bottom is idenitifed… till then rampage for new top
god bless us
Salzer Electronics result is on 13th May. Expecting very good results.