Hello,
I want to ask long time investors that as i see the figures of last 1 year, that time and the time of BSE: 13k-14k there is a lot of change, almost all shares are down as compare to the last year and the rates of 2years and current are also same so why should one go for long time?
My known ones all suggested me to start long time as I was a beginner and now I see I am loosing too much, I entered at 13-14k levels and now its 8k
Thanks.
Well if you look at indices and then enter a stock , you are likely to suffer loss. Indices have different dynamics than individual scrips.Normally in Bull run all stocks would run up quite a bit.So you end up making a profit on your investment even though what you got into is not worth the price.Long term investment is trying to find best value for stocks and you have to be patient with them .You will find them in Bull run and bear run as well.Chances of finding them in bear run is more than in Bull run. But again you have to see red colour in your portfolio for some time, and nobody likes that.
I will give examples of few scrips, though they don't prove anything by themselves.They just stress on a point, Look into individual stocks, see their worth. Like any other way of investing, here also you run the risk of loss.
HLL , now HUL. In crash of 2006 this stock came to 95-100 range and was a laggard in the ensuing bull run. This , like ITC , was one of the frontline FMCG company, fallen on hard times.However its present market price is 236 , nearer to 52wk high rather than Low.
Bharti Airtel. During 2006 this was around 250 or so. Currently it is in 650 range.Down from its highs quite a bit. Entry to this stock was opined at Rs 40, looon time ago) and at 140, thereafter at 250.( certainly not by me at those times, but it did come to my notice during 250 when someone was being interviewed about his investment.)
L&T. Many would have forgotten that L&T and Ultratech are two shares out of old L&T shares.(Ratio I have forgotten now) After split new L&T was available at 450( pre bonuses).Rest is history.
Yes Bank. It was issued at rs 40 in IPO. at the height of Bull run. Ran up to 250-280. Came down to 50-60. Still in green.
I was never a fan of DLF or Unitech, but many have made lots of money when they got in and got out at right time. But more would have been trapped, just like some of the reliance group shares, especially those with ADAG .( the reason being , everybody was thinking of them as another Unitech in the making. Remember Unitech was Rs 15 in 2003 and it joomed to astronomical heights pre split. Same was case with Jaiprakash Associates where , if I remember correctly, then it was pointed out by someone that promoter is a friend of Anil Ambani. What a rationale for investment. But who to point out at the height of Bull run when going is so good.Similarly in Bear run even fundamentally sound companies are done in, battered and bruised.)
There are many examples where portfolio would remain in green but one would fine more example of portfolio getting into red. That is because one thinks that long term investment is like marrying to a stock and not booking profit.As there is a cyclical movement, it is always a good idea to recover part of the profit or capital.In any case of total investment one should allocate 40-80 % ,depending on risk profile, to stocks.
Somewhere in the old posts, there are two or three lists of stocks right from 2005 and I believe that most of the stocks have surpassed their returns when compared to indices.Some of them have not done well but that is only to be expected.
Peak of Bull run is characterized by excessive greed and peak of bear run is dominated by excessive fear. Both act to prevent you from making money.The situation is now that of excessive fear.Perhaps one, in his long life, has seen too many crashes and lost his bearings.Or simply one waits for Godot to arrive, indefinitely.Its not simply the indices, but the stocks one should look at.The problem is when all this is over, it may be too late for Long term investment, for some period of time.
So , if you made loss , it is because of your lack of discipline in managing your portfoli
ne benchmark to keep you sane is to invest in one stupid stock in very small quantity and keep it in red. It will remind you that your portfolio could turn into red anytime unless you manage it. And never give into excessive greed or fear.Judge stocks on their own merit.
pk
