Investment Notes: Investing is not a group activity, its a lone wolf game better suited for socially isolated people.

Wednesday, 21 December 2016

Investing is not a group activity, its a lone wolf game better suited for socially isolated people.

Sensex Blues

Sensex has fallen only 10% but Financial stocks that I have been overweight have fallen anywhere between 30-50%, consequently my Indian portfolio has been down 30% from its highs.

Pendulum may be finally swinging in the depressed direction, but financial stocks are not going to recover in a hurry, not in the next 2-3 months at least.

I find the BSE SME market attractive, it has ~150 companies listed and a couple of attractive companies.

The great has been trolled with the average and the likely stocks to recover first will be Bharat Financial and Repco Home (currently not invested in either). New investors may say ‘I told you so’ with financial stocks, but I feel the money is mainly in this sector other than Pharma/Chemical/Consumer brands to be made. Manappuram for example which I started buying from 42 Rs in 2012 when from 22-105-60 within a 52 week period. Short term is hard to predict, who knows, it could go back to 30 Rs, but Long term, I believe it can be 300-500 Rs in 4-6 years, all going well. You have to diversify with financials and can’t afford a proverbial 3 stock Munger portfolio.

So, at this point like the Hospitals, Housing Finance companies (except PNB Housing ‘recency effect’), and unique micro / nano caps.

Good luck for 2017!

Cheers

9 Responses

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Thanks for sharing your views on Financials and wish you the very best for the new year.

As a new investor, I am curious how do you deal with 30% drawdowns? Is it not emotionally challenging? Whats your framework to look at these sort of things?

Abhishek

December 21, 2016 at 6:49 am

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- One has to pay this price to be in the markets. Even Berkshire has been down 50% twice. Goal is to survive. So, one can make from 1 to 5 and then lose a lot to get back to 2. Goal is to make higher lows and higher highs. It challenging and investing is not a group activity, its a lone wolf game better suited for socially isolated people.