The fall and rise of the market is always successful in changing the view points of the the investor.
The same Script......Market remains the same...just faces change...
(1) At 2 % Fall : It just a bull market correction...My goal is very long term
(2) At 5 % Fall : The monsoon is weak,but we have a strong government,
anyways my hold period is more than 5 years
(3) At 10% Fall : I should have had got out earlier,would have had made
handsome gains
(4) At 15% Fall : Bloody hell,I knew this was coming,the government is
faltering,the growth is down,global economy is in
doldrums.
(5) At 20% Fall: Now is the time to get out,China is in recession,
Europe is in crisis,the US jobs data has turned worse,
I need to preserve capital.
(6) At 30% Fall: The outlook is grim all over the world,will wait more
to reenter
(7) At 35% Fall: Yup as I thought but the Fibonacci series tells that
another 15% correction can be expected from here.
I need to be patient,will enter around that period.
(8) At 5% Rise: It is a dead cat bouncing,will revert back
(9) At 15% Rise: There is nothing in the economy to validate this rise,
it has to fall,the market is not aligned with economy
(10) At 25% Rise: The outlook is changing,the government is mending
its acts,the global economy is rising,I will invest
after a 5 % correction.
(11)At 40% Rise: Shit,I should have invested 35 % fall,but right now
also there is value,I can make X Amount,Anyways
I am a long term Investor.....
This scenario gets repeated again and again,An investor changes from having a long term view to tracking technical points and then again starts having long term view.The fall and rise of the market is always successful in changing the view points of the the investor.Only those investors make money who are still intact on their decision....
(1) At 2 % Fall : It just a bull market correction...My goal is very long term
(2) At 5 % Fall : The monsoon is weak,but we have a strong government,
anyways my hold period is more than 5 years
(3) At 10% Fall : I should have had got out earlier,would have had made
handsome gains
(4) At 15% Fall : Bloody hell,I knew this was coming,the government is
faltering,the growth is down,global economy is in
doldrums.
(5) At 20% Fall: Now is the time to get out,China is in recession,
Europe is in crisis,the US jobs data has turned worse,
I need to preserve capital.
(6) At 30% Fall: The outlook is grim all over the world,will wait more
to reenter
(7) At 35% Fall: Yup as I thought but the Fibonacci series tells that
another 15% correction can be expected from here.
I need to be patient,will enter around that period.
(8) At 5% Rise: It is a dead cat bouncing,will revert back
(9) At 15% Rise: There is nothing in the economy to validate this rise,
it has to fall,the market is not aligned with economy
(10) At 25% Rise: The outlook is changing,the government is mending
its acts,the global economy is rising,I will invest
after a 5 % correction.
(11)At 40% Rise: Shit,I should have invested 35 % fall,but right now
also there is value,I can make X Amount,Anyways
I am a long term Investor.....
This scenario gets repeated again and again,An investor changes from having a long term view to tracking technical points and then again starts having long term view.The fall and rise of the market is always successful in changing the view points of the the investor.Only those investors make money who are still intact on their decision....
Think what you are ....what you want to be...and what can get you there...
HOW Rs.10,000 BECAME Rs.500 CRORES
Mohammed Anwar Ahmed, 60, resides in the sleepy town of Amalner in district Jalgaon, Maharashtra. His father owned a large farmland in the 1970's. The father's untimely death in 1980 left the four sons to lead different paths in their lives. They sold the land and divided the proceeds of Rs.80,000 equally among themselves. Mohammed, the youngest of the four, then aged 27, was married for two years and had a year old son. On parting with his brothers, he was at crossroads and did not know the path he should choose for himself as all his working life he had worked on the fields. His one brother left Amalner while the two started their own shops.
WHAT'S SO SPECIAL ABOUT AMALNER?
In 1947, Chairman of WIPRO Ltd. and philanthropist Azim Premji's father Mohammad Hussain Hasham Premji set up the company's first plant here to manufacturer vegetable ghee, vanaspati and refined oils. It was then called Western India Vegetable Products Ltd. and had got listed on the stock exchange in 1946. Over the years many residents of Amalner worked at the plant and several residents were shareholders of the company. In 1966, Mr.Azim Premji became Chairman of the company.
A CHANCE MEETING
As Mohammed Anwar Ahmed sat near a tea shop in Amalner, a young stock broker from Bombay (now Mumbai) named SatishShah stopped to ask a question. This meeting would change the life of Mohammed Anwar Ahmed. Satish Shah had come toAmalner to buy as many shares as he could on behalf of some clients in Bombay. The question that Satish Shah asked was : “Do you know anyone here who owns shares in that factory?” pointing to the WIPRO plant. Mohammed replied that the owners of the factory stays in Bombay. In short 15 minutes, Satish explained to Mohammed, how owning a share could make one a part owner in the company. This made Mohammed inquisitive and the meeting lasted for 30 more minutes. Mohammed helped Satish Shah go door to door to collect shares from willing sellers (in very small towns nearly everyone knows each other) and for himself bought 100 shares of Rs.100 face value, thus investing Rs.10,000 from the total of Rs.20,000 that he had. The rest, he invested in starting a trading business.
THE JOURNEY TO WEALTH
From then on Mohammed started to think himself as part owner of WIPRO (and rightly so) and vowed never to sell a single share till Mr. Azim Premji is at the helm. Here is how his initial investment of Rs.10,000 grew to over Rs.500 crores.
He had invested in 100 shares at face value of Rs.100 in 1980. The initial investment was Rs.10,000.
In 1981, the company declared a 1:1 bonus. He now had 200 shares.
In 1985, the company declared 1:1 bonus. He therefore had 400 shares.
In 1986, the company split the share to Rs.10. He thus had 4000 shares.
In 1987, the company declared 1:1 bonus. He hence had 8000 shares.
In 1989, the company announced a 1:1 bonus. Now he had 16,000 shares.
In 1992, the company declared a 1:1 bonus. By now he had 32,000 shares.
In 1995, the company declared a 1:1 bonus. He then had 64,000 shares.
In 1997, the company declared 2:1 bonus. He now held 1,92,000 shares.
In 1999, the company split the share to Rs.2. He now had 9,60,000 shares.
In 2004, the company declared 2:1 bonus. He thus had 28,80,000 shares.
In 2005, the company declared 1:1 bonus. He came to have 57,60,000 shares.
In 2010, the company declared 2:3 bonus. He now had 96,00,000 shares.
The current market price is Rs.500 per share. The shares are valued at Rs.480 crores.
Over the past 33 years, the company regularly paid out dividends and increased them almost every year. Cumulatively he received Rs.118 crores as dividend over the past 33 years. Thus by investing Rs.10,000, Mohammed gained Rs.598 crores.
He is now retired and donates freely to charity from the dividends he receives. His foreign educated children often advice him to sell the shares but he has kept his vow of not selling a single share till Mr.Azim Premji is the working Chairman.
This is a lesson - both in patience and conviction.
WHAT'S SO SPECIAL ABOUT AMALNER?
In 1947, Chairman of WIPRO Ltd. and philanthropist Azim Premji's father Mohammad Hussain Hasham Premji set up the company's first plant here to manufacturer vegetable ghee, vanaspati and refined oils. It was then called Western India Vegetable Products Ltd. and had got listed on the stock exchange in 1946. Over the years many residents of Amalner worked at the plant and several residents were shareholders of the company. In 1966, Mr.Azim Premji became Chairman of the company.
A CHANCE MEETING
As Mohammed Anwar Ahmed sat near a tea shop in Amalner, a young stock broker from Bombay (now Mumbai) named SatishShah stopped to ask a question. This meeting would change the life of Mohammed Anwar Ahmed. Satish Shah had come toAmalner to buy as many shares as he could on behalf of some clients in Bombay. The question that Satish Shah asked was : “Do you know anyone here who owns shares in that factory?” pointing to the WIPRO plant. Mohammed replied that the owners of the factory stays in Bombay. In short 15 minutes, Satish explained to Mohammed, how owning a share could make one a part owner in the company. This made Mohammed inquisitive and the meeting lasted for 30 more minutes. Mohammed helped Satish Shah go door to door to collect shares from willing sellers (in very small towns nearly everyone knows each other) and for himself bought 100 shares of Rs.100 face value, thus investing Rs.10,000 from the total of Rs.20,000 that he had. The rest, he invested in starting a trading business.
THE JOURNEY TO WEALTH
From then on Mohammed started to think himself as part owner of WIPRO (and rightly so) and vowed never to sell a single share till Mr. Azim Premji is at the helm. Here is how his initial investment of Rs.10,000 grew to over Rs.500 crores.
He had invested in 100 shares at face value of Rs.100 in 1980. The initial investment was Rs.10,000.
In 1981, the company declared a 1:1 bonus. He now had 200 shares.
In 1985, the company declared 1:1 bonus. He therefore had 400 shares.
In 1986, the company split the share to Rs.10. He thus had 4000 shares.
In 1987, the company declared 1:1 bonus. He hence had 8000 shares.
In 1989, the company announced a 1:1 bonus. Now he had 16,000 shares.
In 1992, the company declared a 1:1 bonus. By now he had 32,000 shares.
In 1995, the company declared a 1:1 bonus. He then had 64,000 shares.
In 1997, the company declared 2:1 bonus. He now held 1,92,000 shares.
In 1999, the company split the share to Rs.2. He now had 9,60,000 shares.
In 2004, the company declared 2:1 bonus. He thus had 28,80,000 shares.
In 2005, the company declared 1:1 bonus. He came to have 57,60,000 shares.
In 2010, the company declared 2:3 bonus. He now had 96,00,000 shares.
The current market price is Rs.500 per share. The shares are valued at Rs.480 crores.
Over the past 33 years, the company regularly paid out dividends and increased them almost every year. Cumulatively he received Rs.118 crores as dividend over the past 33 years. Thus by investing Rs.10,000, Mohammed gained Rs.598 crores.
He is now retired and donates freely to charity from the dividends he receives. His foreign educated children often advice him to sell the shares but he has kept his vow of not selling a single share till Mr.Azim Premji is the working Chairman.
This is a lesson - both in patience and conviction.
A Must Must read for non investors
“As it happens, retail investors are helping markets more by staying out than by investing in equities. So from a purely selfish point of view, we (current equity market participants) do not mind if you stay away from equities.
Keep your money in low interest bearing savings accounts and this will help banks raise cheap funds.
Then, while you earn taxable 9% per year in fixed deposits and 4% in savings accounts, we will continue to buy HDFC Bank, IndusInd Bank, Yes Bank and the like, which are up 3.5 times, 11 times and 5.9 times respectively since December 2008.
Also, remember to pay all your EMI installments on time so that retail loans made by private banks do not get into trouble and we can continue do well owing their stocks.
Indian retail investors are more or less completely out of equities and would rather buy gold instead. So keep buying gold so that we can do better than you by owning stocks in Titan Industries and other jewellery companies. You should not care that at all that while the gold you bought is up 2.8 times in four years, the stock of Titan Industries, which sell gold to you is up 6.9 times during the same period. If Rakesh Jhunjhunwala had bought physical gold instead of shares in Titan when he did, he would not be a billionaire today.
In fact, go ahead and buy real estate, taking mortgages from HDFC and LIC Housing Finance. How else we would have made 2.8 times and 5.7 times in these stocks in five years?
And when you do buy these apartment and houses, do insist on using the best construction material- cement, sanitary ware and so on. It is only because you do not buy equities and spend on real things that we could make 192% on ACC and 4.5 times on Hindustan Sanitaryware since 2008. A house is not done until it’s painted, so remember to keep a budget for decorative paints from Asian Paints (stock is up 4.8 times in four years)
Why should you invest in equities when you can buy insurance products? This world is interesting precisely because we think differently from each other- while you are happy buying insurance, we are happy owning shares in companies that sell you insurance. Thanks to you, shares in Bajaj Finserve are up 6 times in value and shares in Max India are up 2 times in the past four years.
Follow your heart and we will follow you.
If you like going to malls and spending time there, please do some shopping as well- some of us own shares in Phoenix Mills which is up 2.7 times since 2008. In fact, it may be times for you to upgrade your car.
Why buy equities when you can spend the same money on a new car or motorcycle? Let us do the more boring job of continuing to own stocks in Maruti and Bajaj Auto which are up 2.9 and 10.8 times respectively since 2008. Why not add your name to the waiting list for an Enfield this year while we own shares in its manufacturers, Eicher Motors which is up 12 times since 2008?
Life isn’t just about making and investing money; it’s important to enjoy life’s little pleasures.
So go and watch a movie at the multiplex and munch some popcorn while you’re there. Meanwhile, we’ll buy shares in PVR (up 3 times in 4 years).
You’d rather spend time in front of the telly? We’ll still love you- shares in Zee Telefilms and Sun are up 3 and 3.5 times because of loyal viewers such as you.
Call for Pizza delivery at home. Jubliant Foodworks, which owns Domino’s, is up 5.4 times since its IPO in 2010.
When you’re in mood to be sinfully self-indulgent, don’t make any resolutions to give up smoking or drinking. You may not want to invest in equities but spare a thought for investors in these stocks. Your actions so far have helped these investors make 3.8 times in ITC, 10.3 times in United Breweries and 2.2 times in United Spirits in 4 years but they still look for your continued patronage of these businesses.
We wish you a very happy and healthy 2015. If, God forbid, you have to visit a hospital, remember that as stake holders in Apollo Hospitals (stock up 3.8 times) we will be thanking you from the bottom of our collective hearts.
And if you do fall sick in 2015, take comfort in the fact that you are helping investors in stock of companies such as Dr.Reddy’s (stock up 4 times) and Cipla (stock up 2.3 times).
Keep your money in low interest bearing savings accounts and this will help banks raise cheap funds.
Then, while you earn taxable 9% per year in fixed deposits and 4% in savings accounts, we will continue to buy HDFC Bank, IndusInd Bank, Yes Bank and the like, which are up 3.5 times, 11 times and 5.9 times respectively since December 2008.
Also, remember to pay all your EMI installments on time so that retail loans made by private banks do not get into trouble and we can continue do well owing their stocks.
Indian retail investors are more or less completely out of equities and would rather buy gold instead. So keep buying gold so that we can do better than you by owning stocks in Titan Industries and other jewellery companies. You should not care that at all that while the gold you bought is up 2.8 times in four years, the stock of Titan Industries, which sell gold to you is up 6.9 times during the same period. If Rakesh Jhunjhunwala had bought physical gold instead of shares in Titan when he did, he would not be a billionaire today.
In fact, go ahead and buy real estate, taking mortgages from HDFC and LIC Housing Finance. How else we would have made 2.8 times and 5.7 times in these stocks in five years?
And when you do buy these apartment and houses, do insist on using the best construction material- cement, sanitary ware and so on. It is only because you do not buy equities and spend on real things that we could make 192% on ACC and 4.5 times on Hindustan Sanitaryware since 2008. A house is not done until it’s painted, so remember to keep a budget for decorative paints from Asian Paints (stock is up 4.8 times in four years)
Why should you invest in equities when you can buy insurance products? This world is interesting precisely because we think differently from each other- while you are happy buying insurance, we are happy owning shares in companies that sell you insurance. Thanks to you, shares in Bajaj Finserve are up 6 times in value and shares in Max India are up 2 times in the past four years.
Follow your heart and we will follow you.
If you like going to malls and spending time there, please do some shopping as well- some of us own shares in Phoenix Mills which is up 2.7 times since 2008. In fact, it may be times for you to upgrade your car.
Why buy equities when you can spend the same money on a new car or motorcycle? Let us do the more boring job of continuing to own stocks in Maruti and Bajaj Auto which are up 2.9 and 10.8 times respectively since 2008. Why not add your name to the waiting list for an Enfield this year while we own shares in its manufacturers, Eicher Motors which is up 12 times since 2008?
Life isn’t just about making and investing money; it’s important to enjoy life’s little pleasures.
So go and watch a movie at the multiplex and munch some popcorn while you’re there. Meanwhile, we’ll buy shares in PVR (up 3 times in 4 years).
You’d rather spend time in front of the telly? We’ll still love you- shares in Zee Telefilms and Sun are up 3 and 3.5 times because of loyal viewers such as you.
Call for Pizza delivery at home. Jubliant Foodworks, which owns Domino’s, is up 5.4 times since its IPO in 2010.
When you’re in mood to be sinfully self-indulgent, don’t make any resolutions to give up smoking or drinking. You may not want to invest in equities but spare a thought for investors in these stocks. Your actions so far have helped these investors make 3.8 times in ITC, 10.3 times in United Breweries and 2.2 times in United Spirits in 4 years but they still look for your continued patronage of these businesses.
We wish you a very happy and healthy 2015. If, God forbid, you have to visit a hospital, remember that as stake holders in Apollo Hospitals (stock up 3.8 times) we will be thanking you from the bottom of our collective hearts.
And if you do fall sick in 2015, take comfort in the fact that you are helping investors in stock of companies such as Dr.Reddy’s (stock up 4 times) and Cipla (stock up 2.3 times).
We invite you over to our side in 2015 but still love you for choosing instead to be loyal customers of the businesses we own. Now it’s up to you to decide who you would rather be – part owners of Indian companies or just their loyal customers.”
POWER OF PHARMA !!
Period (2008-2015);
WEALTH CREATION!
WEALTH CREATION!
Few LARGE CAP Pharma Cos and their performance, since 2008
1. DR REDDY – Rs 387 in 2008 to now CMP – 3547.90.
So investment of Rs 10,000 in 2008 would be today – Rs 91,677 !! ( More than 9 times in 7 years !! )
So investment of Rs 10,000 in 2008 would be today – Rs 91,677 !! ( More than 9 times in 7 years !! )
2. SUN PHARMA – Rs 890 in 2008 to now CMP – Rs 972.95. Meanwhile, stock split from FV 5 to 1 and bonus of 1:1 in 2013; So, if you bought 1 share at Rs 890 in 2008, you would have 10 shares at Rs 972.95 today.
So investment of Rs 10,000 in 2008 would be today – Rs 1,09,320 !! ( Almost 11 times in 7 years !! )
So investment of Rs 10,000 in 2008 would be today – Rs 1,09,320 !! ( Almost 11 times in 7 years !! )
3. LUPIN – Rs 430 in 2008 to now CMP – Rs 1833.25. Meanwhile, stock split from FV 10 to 2 in 2010; So, if you bought 1 share at 430 in 2008, you would have 5 shares at 1833.25 today.
So investment of Rs 10,000 in 2008 would be today – Rs 2,13,168 !! ( More than 21 times in 7 years !! )
So investment of Rs 10,000 in 2008 would be today – Rs 2,13,168 !! ( More than 21 times in 7 years !! )
If LARGE caps can return about 10-20 times in 7 years, then WHAT ABOUT SMALL/MID CAPs ?
1. TORRENT PHARMA – Rs 112.15 in 2008, TORRENT PHARMA was a 950 CR market cap Co to now CMP – 1208.70 today. So if you bought 1 share at Rs 112.15 in 2008, you would have 2 shares (bonus 1:1 in 2013) at Rs 1208.70 today.
So investment of Rs 10,000 in 2008 would be today – Rs 2,15,550 !! ( More than 21 times in 7 years !! ).
So investment of Rs 10,000 in 2008 would be today – Rs 2,15,550 !! ( More than 21 times in 7 years !! ).
2. GRANULES INDIA – Rs 28.20 in 2008, GRANULES INDIA was just a 57 CR market cap Co to now CMP – 83.80 today. So if you bought 1 share at Rs 28.20 in 2008, you would have 10 shares (split from FV 10 to 1 in 2015) at Rs 83.80 today.
So investment of Rs 10,000 in 2008 would be today – Rs 2,97,163 !! ( Almost 30 times in 7 years !! )
So investment of Rs 10,000 in 2008 would be today – Rs 2,97,163 !! ( Almost 30 times in 7 years !! )
3. NATCO PHARMA – At Rs 38 in 2008, NATCO PHARMA was just a Rs 128 CR market cap Co !! to now CMP – 2213.70 today. No stock split or bonus meanwhile.
So investment of Rs 10,000 in 2008 would be today – Rs 5,82,552 !! ( More than 58 times in 7 years !! )
So investment of Rs 10,000 in 2008 would be today – Rs 5,82,552 !! ( More than 58 times in 7 years !! )
4. AUROBINDO PHARMA – At Rs 101.60 in 2008, AUROBINDO PHARMA was a Rs 588 Cr Co !! to now CMP – 1374.95 today. The Stock split from FV 5 to 1 in 2011. So, if you bought 1 share at Rs 101.60 in 2008, you would have 5 shares at Rs 1374.95 today.
So investment of Rs 10,000 in 2008 would be today – Rs 6,76,648 !! ( More than 67 times in 7 years !! )
So investment of Rs 10,000 in 2008 would be today – Rs 6,76,648 !! ( More than 67 times in 7 years !! )
5. AJANTA PHARMA – At Rs 48.50 in 2008, AJANTA PHARMA was just a 57 CR market cap Co, to now CMP - Rs 1579.65 today. Meanwhile stock split from FV 10 to 2 and a bonus of 1:2. So if you bought 1 share at Rs 48.50 in 2008, you would have 7.5 shares at 1579.65 today.
So investment of Rs 10,000 in 2008 would be today – Rs 24,42,757 !! ( More than 240 times in 7 years !!!!!!!!! )
So investment of Rs 10,000 in 2008 would be today – Rs 24,42,757 !! ( More than 240 times in 7 years !!!!!!!!! )
Great deliverance! !
Invest in equity mutual funds through SIP
A real life example will drive home the benefit of continuing with SIPs when the market dips. Say, in the go-go days of January 2008, you started investing ₹1,000 each month in ICICI Pru Value Discovery, one of the top-rated equity funds.
Even when the bears ran amok in late 2008 and early 2009 as the global financial crisis hit, you gritted your teeth, continued the SIP, and kept investing through market ups and downs till January 2015. Your perseverance and patience would have paid off handsomely.
The ₹85,000 invested over the years would be worth more than ₹2.42 lakh today giving you an annualised return of 26.72 per cent.
But what if you, unnerved by sharp market falls, stopped your SIP between October 2008 ánd March 2009, then between August and December 2011, and also between June and September 2013? Your total investment of ₹70,000 in this case would be worth about ₹1.81 lakh today — translating into an annualised return of 24.57 per cent.
That’s a significant 2.15 percentage points lower than if you had stuck with the SIP even during the market downturns. That is, if you had timed the exit and re-entry so precisely, which is never easy. Also, consider the case if you invested the entire ₹85,000 in January 2008 in ICICI Pru Value Discovery and held on so far. Your investment would be worth about ₹2.46 lakh today, higher than the current value under the SIP.
But your annualised return at 15.35 per cent would be far lower than if you had taken the SIP route. Of course, if you had invested lumpsum when the market scraped the bottom in March 2009, it would have translated into higher annualised returns than going the SIP way. But then again, it is very tough to time the market; many an investor has lost his shirt trying to do so.
Ergo, it makes sense to invest in equity mutual funds through the disciplined SIP way and continue with them even when the market mood sours. This will help you build significant wealth in the long run for your various goals in life.
Can Investors Trust The P/E Ratio
Nifty PE ratio measures the average PE ratio of the Nifty 50 companies covered by the Nifty Index. PE ratio is also known as "price multiple" or "earnings multiple". If P/E is 15, it means Nifty is 15 times its earnings. Nifty is considered to be in oversold range when Nifty PE value is below 14 and it's considered to be in overvalued range when Nifty PE is near or above 22. The market quickly bounces back from the oversold region because intelligent investors start buying stocks looking to snatch up bargains and they do the exact opposite when Nifty P/E is in the overbought region.
Check out what Professor Bakshi (a famous Indian value investor ) has to say about Nifty P/E. Recent research done by my firm shows just how dangerous it is to remain invested in an expensive market. Since NSE started, every time when Nifty's Price/Earnings ratio exceeded 22, the average return from Indian equities over the subsequent three years became negative.
Source - sanjaybakshi.net
History clearly tells us that if you are a passive long term investor you should buy stocks when P/E reaches 15-16 and stop buying when P/E goes above 22. If you are not comfortable buying individual stocks then you should buy Nifty Bees ETF. Nifty Bees is like a mutual fund which tracks the NSE Nifty Index.
Nifty PE Ratio
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