Workmen's Long only trading in Equities
- Thread starter suri112000
- Start date
Hello Suri
Some variations to consider
1) Invest 4000 every Month
But only a part of the 4000 goes into equity MF of you choice as per the chart above
Rest of the remaining funds goes into a liquid debt fund
Inverse the investments i.e. debt to equity in the reverse order of the above chart . . .
for e.g. PE between 15 - 20 shift 2000 every month from debt to equity
below 15 PE shift 4000
This shift is in addition to your regular ongoing investments of 4000/-
Cheers
Happy
Some variations to consider
1) Invest 4000 every Month
But only a part of the 4000 goes into equity MF of you choice as per the chart above
Rest of the remaining funds goes into a liquid debt fund
Inverse the investments i.e. debt to equity in the reverse order of the above chart . . .
for e.g. PE between 15 - 20 shift 2000 every month from debt to equity
below 15 PE shift 4000
This shift is in addition to your regular ongoing investments of 4000/-
Cheers
Happy
This way our monthly instalment remains Rs.4000.
When PE is below 14, our monthly instalment of Rs.4000 goes to Equity MF. We convert whole of Debt units to Equity units when PE is hovering below 14.
When PE raised above 14, Rs.2000 goes to equity and Rs.2000 goes to Debt.
When PE raised above 24, Rs.1000 goes into equity on alternate months and Rs.4000 and Rs.3000 goes to Debt on alternate months. Additionally, we convert whole of Equity units to Debt units when PE raises above 24.
========================================================
As of today, PE is around 23. So, this month Rs.1000 goes to equity and Rs.3000 goes to Debt.
Hello
Converting the whole investment at a go, has huge implementation problems
Believe me, been there done that
Instead have a clear plan in place to convert the invest-able amounts in terms of % based on Historical PE values, because any kind of projections is just mind games . . .
Recently was involved in making a plan for a new investor (family member) where along with SiP a lump sum had to be invested . . .
Initially went in 100% to debt as we were around 22+,
started investing in MFs below 20 (that was the per-decided trigger)
The folio was being build for a young person, so risk taking capacity + time horizon was big
Below 20 specific amounts were moved to MFs periodically,
so here 2 things are in play, value as well as time.
As the markets did not stay down for long and moved up rapidly only about 40% of the Lump Sum funds could be invested. . .
In about 6/8 months funds with Motilal Oswal & ICICI are up by 20-22%,
Franklin Templeton 30% and Blackrock is up by 40%, average gains of 25+%
If we had waited for PE of 14, then keeping on the sidelines of a bull market becomes frustrating.
Anyway, we cannot make formulas that fit everyone,
But rule of thumb for an investor is to Buy Low and Sell High
And use historical ratios to decide what is High and what is Low
Make a fixed and elaborate plan and keep investing for wealth generation
Happy
Converting the whole investment at a go, has huge implementation problems
Believe me, been there done that
Instead have a clear plan in place to convert the invest-able amounts in terms of % based on Historical PE values, because any kind of projections is just mind games . . .
Recently was involved in making a plan for a new investor (family member) where along with SiP a lump sum had to be invested . . .
Initially went in 100% to debt as we were around 22+,
started investing in MFs below 20 (that was the per-decided trigger)
The folio was being build for a young person, so risk taking capacity + time horizon was big
Below 20 specific amounts were moved to MFs periodically,
so here 2 things are in play, value as well as time.
As the markets did not stay down for long and moved up rapidly only about 40% of the Lump Sum funds could be invested. . .
In about 6/8 months funds with Motilal Oswal & ICICI are up by 20-22%,
Franklin Templeton 30% and Blackrock is up by 40%, average gains of 25+%
If we had waited for PE of 14, then keeping on the sidelines of a bull market becomes frustrating.
Anyway, we cannot make formulas that fit everyone,
But rule of thumb for an investor is to Buy Low and Sell High
And use historical ratios to decide what is High and what is Low
Make a fixed and elaborate plan and keep investing for wealth generation
Happy
Hi,
Never underestimate the returns offered by Debt instruments.
Converting debt to equity when PE is below 14 is viable.
If you happend to see historical PE chart, it went to as low as 11 on some occasions especially in 2008. The pain of not having enough funds to invest during that time is more than loosing some minor swings.
As a long term investor, we should not miss such rare occasions because of lack of maximum funds if we tried to dry up funds in between by converting debt to equity.
Making a killing in the market is important and that is possible when we enter bulk below 14 and unload above 24.
No problems waiting for such occasions as Debt takes care of minimum required return.
Last PE swing low since 2009 not breached below 14.
However, we are not missing minor swings in PE by investing a portion of SIP into equity which we book out when PE above 24.
Lastly, it is upto individual to blend his portfolio as per his taste.
We can give only a broader guideline here.
Never underestimate the returns offered by Debt instruments.
Converting debt to equity when PE is below 14 is viable.
If you happend to see historical PE chart, it went to as low as 11 on some occasions especially in 2008. The pain of not having enough funds to invest during that time is more than loosing some minor swings.
As a long term investor, we should not miss such rare occasions because of lack of maximum funds if we tried to dry up funds in between by converting debt to equity.
Making a killing in the market is important and that is possible when we enter bulk below 14 and unload above 24.
No problems waiting for such occasions as Debt takes care of minimum required return.
Last PE swing low since 2009 not breached below 14.
However, we are not missing minor swings in PE by investing a portion of SIP into equity which we book out when PE above 24.
Lastly, it is upto individual to blend his portfolio as per his taste.
We can give only a broader guideline here.
Those of you who want to go for only Equity Mutual funds, follow the sequence.
16 - 19.5 PE - Invest 50% of instalment & save remaining 50% for pe below 12.5
below 16 - Invest 100 % of instalment
below 12.5 - Invest 100% of instalment and saved amount while pe between 16 and 19.5
Donot think of investing out of these periods. In other words, only saving in such periods.
PE above 22.5 - Gradually liquidate all positions.
Present PE is 23.6. You know clearly what you should be doing.
16 - 19.5 PE - Invest 50% of instalment & save remaining 50% for pe below 12.5
below 16 - Invest 100 % of instalment
below 12.5 - Invest 100% of instalment and saved amount while pe between 16 and 19.5
Donot think of investing out of these periods. In other words, only saving in such periods.
PE above 22.5 - Gradually liquidate all positions.
Present PE is 23.6. You know clearly what you should be doing.
So far, we have covered two methods of long term investing.
1. Equity direct investment through random SIP route. For example :- we have already invested Rs.12000 (apprx.), see earlier posts for details.
2. Mutual Funds. This is also a radom SIP route. Refer recent posts for details.
3. Trading intraday/Swing after gaining enough experience in above 2 routes.
This is to enhance maximum return on the total investment. People who have less than 3 years experience in trading, donot attempt this.
A model money allocation is already discussed for 1 and 2. If you have more capital, allocate proportionately.
3rd method, many of you are already trying your skills or learning at Traderji. If you trade Nifty futures allocate atleast Rs.1.50 lakhs for 1 lot. Keep another Rs.50000 in Debt MF for extra cushion.
1. Equity direct investment through random SIP route. For example :- we have already invested Rs.12000 (apprx.), see earlier posts for details.
2. Mutual Funds. This is also a radom SIP route. Refer recent posts for details.
3. Trading intraday/Swing after gaining enough experience in above 2 routes.
This is to enhance maximum return on the total investment. People who have less than 3 years experience in trading, donot attempt this.
A model money allocation is already discussed for 1 and 2. If you have more capital, allocate proportionately.
3rd method, many of you are already trying your skills or learning at Traderji. If you trade Nifty futures allocate atleast Rs.1.50 lakhs for 1 lot. Keep another Rs.50000 in Debt MF for extra cushion.
Hi
Old timers say that
"Time in the Market" is more important than "Trying to Time the market"
Well why not give equal importance to both . . .
Waiting for Years on end for investing at good PE Value may suit the temperament of only few people, they should definitely do that.
But for other majority of us . . . . just ask honestly con I do it . . . .
Then again as I said in the previous post personalize it to suit your situation, risk profile, needs etc.
Posting a snapshot of the MF folio i spoke about in the previous post.
Removed the amounts but retained the dates/rates and % Gain/Loss to give a overall comparison with debt options
For the above folio when/if the markets start going above 24, the systematic disinvestment plan will kick in . . .
Happy
Old timers say that
"Time in the Market" is more important than "Trying to Time the market"
Well why not give equal importance to both . . .
Waiting for Years on end for investing at good PE Value may suit the temperament of only few people, they should definitely do that.
But for other majority of us . . . . just ask honestly con I do it . . . .
Then again as I said in the previous post personalize it to suit your situation, risk profile, needs etc.
Posting a snapshot of the MF folio i spoke about in the previous post.
Removed the amounts but retained the dates/rates and % Gain/Loss to give a overall comparison with debt options
For the above folio when/if the markets start going above 24, the systematic disinvestment plan will kick in . . .
Happy
Dear Happysingh,
Your strategy looks like buy high and sell higher. Even that is not bad for some.
You had invested while PE is around 20. Now PE is peaked to 24.
I am afraid what would you do if PE tanked to below 14 after your investment. Donot feel you are struck. Just kidding.
Its possible that you are well experienced in timing the market as far as mutual fund investments are concerned.
My bias is based on this fact.
"The Great Depression (1929-1939) Although the United States had experienced several depressions before the stock market crash on October 27, 1929, none had been as severe nor as long lasting before "Black Thursday" struck Wall Street."
Your strategy looks like buy high and sell higher. Even that is not bad for some.
You had invested while PE is around 20. Now PE is peaked to 24.
I am afraid what would you do if PE tanked to below 14 after your investment. Donot feel you are struck. Just kidding.
Its possible that you are well experienced in timing the market as far as mutual fund investments are concerned.
My bias is based on this fact.
"The Great Depression (1929-1939) Although the United States had experienced several depressions before the stock market crash on October 27, 1929, none had been as severe nor as long lasting before "Black Thursday" struck Wall Street."
Dear Happysingh,
Your strategy looks like buy high and sell higher. Even that is not bad for some.
You had invested while PE is around 20. Now PE is peaked to 24.
I am afraid what would you do if PE tanked to below 14 after your investment. Donot feel you are struck. Just kidding.
Its possible that you are well experienced in timing the market as far as mutual fund investments are concerned.
My bias is based on this fact.
"The Great Depression (1929-1939) Although the United States had experienced several depressions before the stock market crash on October 27, 1929, none had been as severe nor as long lasting before "Black Thursday" struck Wall Street."
Your strategy looks like buy high and sell higher. Even that is not bad for some.
You had invested while PE is around 20. Now PE is peaked to 24.
I am afraid what would you do if PE tanked to below 14 after your investment. Donot feel you are struck. Just kidding.
Its possible that you are well experienced in timing the market as far as mutual fund investments are concerned.
My bias is based on this fact.
"The Great Depression (1929-1939) Although the United States had experienced several depressions before the stock market crash on October 27, 1929, none had been as severe nor as long lasting before "Black Thursday" struck Wall Street."
Would have been really pleased if the markets had kept correcting more . . .
but it turned up and 60+% of the funds could not move in . . .
but no feeling of being left out as everything is moving as per plan . . .
The Plan only talks about what if, not at all about when . . .
so no question about trying to time it, purely value based entry/exit
Over a period of time 15% Growth is assumed for our kind of economy . . . .
Now even with a very conservative 10% growth the effective PE will reduce by 10% every year . . .
Over a 10 years horizon . . . with compounding
an investment in a well managed fund even at PE of 25 will beat debt hands down :thumb:
Think of it like this when you are investing at 19, you are sacrificing interest for 2 years . . .
because at today's rates your investment is at PE of 14 two years down the line . . .
Now compare 8 Years of Equity invested at PE of 14/15 to 10 years of investments in Debt Funds/FD . . .
Debt is good when you have expenses lined up in next 5 years (education/marriages/buying house for self staying etc)
Be aggressive in investing and be very conservative in booking out.
Remember its more about "Time in the Market"
Cheers :thumb:
Happy
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Dear Suri & Happy bhai,
Good conversation posts....its really helping to understand how to handle MFs ...Thanks for these posts hope its too helpfull to whom newly enters into financial jungle.....youngsters are too lucky here they are getting all informations and guidence to start positively as we all started blown out our accounts multiple times without getting proper guidence ...Thanks to TJ too giving a platform to educate it
Good conversation posts....its really helping to understand how to handle MFs ...Thanks for these posts hope its too helpfull to whom newly enters into financial jungle.....youngsters are too lucky here they are getting all informations and guidence to start positively as we all started blown out our accounts multiple times without getting proper guidence ...Thanks to TJ too giving a platform to educate it
