Equity Meltdown~Pulling out or Putting In!?

Equity Meltdown~Pulling out or Putting In!?

Answer this to define yourself ~ your Investment Mindset now &  your Risk Profile in general  ?

The Question should be surely in your Mind right Now as continuing Global Meltdown forces India Meltdown too with the Nifty & Sensex sinking over 3.3% today to go sub 7000 & 23000 respectively ~ down 23% in 11 months from the highs of  9119 & 30025  in the first week of  March 4,2015

Had warned you’ll in December 2014 that 2015 will be Volatile & Vulnerable and reiterated it several times in 2015….stated that 2016 looks more ominous

Worth reproducing this blogpost of mine of September 4,2015

At the time it was of concern that the Sensex had gone sub 25500 but I yet had declared it was not a Merciless Market yet!….that’s when you can get into serious wealth creation opportunities at lower risk for higher gain !

Here’s an extract from what we had communicated  privately in early September 2015

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Hi,

We have been quiet for a few months now for a good reason. Those who are on our fundamental wavelength know what we stand for. .Too frequent communications then would have served little purpose other than the danger of generating ‘Noise’… !

What we did assess with conviction was that FPI Inflows will ebb or even reverse in 2015 from the record inflows in 2014…another reason that should mute markets…as this was played out it was ignored by a frenzied midcap space market that justified it being balanced out by increased retail participation and absorption by increased Mutual Funds Investments 

On ET Now Prime time on March 31,2015 I had aired my fundamental views for the new FY 16 that was dawning to a wider audience than just clients.I had stated that the markets were running ahead of fundamentals

Yet the Smallcaps & Midcaps had raced away in a frenzied climb last six months too & we were being questioned  why we were being relatively more conservative with dependence on Core Scrips weightage as per Risk Profiling and Asset Allocation as a discipline and  refusing to trade in and out of markets furiously especially in scrips that were touted on the street or in stock chats or in networks or on the air by experts on popular stock channels and stock portals….most were justifying the run up and urging and seducing for more participation to those especially  who thought were missing the boat…The Young were inheriting Earth !   

There were Fundamental Reasons to hold the view that we did and  that is being only realised and acknowledged now…these were reiterated with reasons in a much appreciated NSE Training Workshop on August 8,2015 & a full house one on October 31,2015….it is safer to err on the side of caution…there will always be another opportunity or another boat to catch in case if we did miss one  

The Chinese Shock of last Monday acted as the trigger to unnerve global markets and currencies and set into motion a rapid decline and increased uncertainty and nervousness…the bearings don’t read good

Midcaps that had madly raced away have derailed quite pointedly and ecstasy has literally overnight turned to first bewilderment and now consternation for those who thought they had boarded a Rocket but which has turned out to be at best a Roller Coaster and at worst a Momentum & Sentiment Trap !…Valuation takes a backseat in such situations or is conveniently justified by multiple re-ratings or unrealistic growth assumptions …all leading to risky plays on the conclusion that value,existing or potential is not in the price yet. 

We do not yet believe the Markets are in a Merciless Zone where we shall get great multi-bagger value for the next few years…a great situation of ‘lower the risk,higher the gain’….we may not get there but we hope we do !  

We love Big Falls ! ~ We love Chaos ! ~ We love Panic ! ~ therein lie Opportunities

So what should be the Equity Portfolio Approach & Strategy now ?

• Sell now to buy cheaper equity later or to get on/back on track with asset allocation ?
• Start Averaging Buying Now ?
• Commit all Funds available for Equity right away to Buy ?
• Wait & Watch ?

What?  

We are not suggesting Timing the Markets…no one can or has done so with sustained degree of success over the years

2014 was wonderful ~ 2015 as expected is turning out to be choppy ~ How does one prepare in Equity for the second half of FY 16 and beyond

Of course we remain as always fully fundamental in our reasons for our Selections

Think Risk Profile ~ Think Asset Allocation ~ Think Fundamental ~ Think Investment ~ Think Long Term ~ Think Value ~ Think Contrarion when indicated

…and then Act to really create Wealth and protect it while doing so and  not just trade in and out all the time “

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Even sub 23000 Sensex today I yet do not think we are in Merciless Markets…but am keenly watching specific stocks price levels & am beginning to sniff !  ….like what I sold off at Rs 25 I’m now getting at Rs 12  inside months !….and what I yet hold I’ve assessed  ‘Value vs Price’ I’ve bought right & so am sitting tight even at  a loss & may not average downwards if it impacts portfolio weightage beyond a certain level of risk !

I know ! I know you guys want specific stocks !….Come On Guys !

What I can tell you is that when Outlook Business invited me in December 2014 I picked Shemaroo at Rs 159 as my Stock Select of 2015 & it’s returned over 100% crossing Rs 350 recently before correcting to Rs 250 levels today in a period when the Sensex & Nifty have given negative returns. I believe Strong Hands have recently entered it though I’m out

When they invited me yet again in December 2015 I  have given Astec Lifeciences at Rs 238 as the Stock for 2016 and beyond  ….it’s down to Rs 195 today

Oh! if you’re considering PSU Banks because you believe God cannot let them fall any further because of their NPAs just remember  you could turn into a NPA !

A friend who argued with me last March 2015,impressed by some expert recommending it on a stock channel, that Bank of India at Rs 250 then was available at an attractive Price to Book of just 0.5….today he’s a NPA with wealth destroyed with Bank of India at Rs 85 and at a Price to Book of 0.2 & Mkt Cap under Rs 7000 crs or  just a Billion Dollars !….you guys sense Opportunity !?….after all a Big PSU Bank cannot be allowed to go down under ! & Bankruptcy Laws to be introduced can be game changers…hmm!

One final thought  ~ Guys live  a Life beyond Equities to really live it ! ….don’t tell me you need Wealth from Equities to live it!….Rupee’s further dropped to Rs 68.31 to the US $ today… so take that overseas trip,you’ve been wanting, right away ! before you wake up to a Rupee past Rs 70…or Rs 72…or Rs 75!!!….ironically while Oil juggles around at record lows of US $ 30/barrel for an Oil Intense India

Cheers & let’s hope for Merciless Markets soon !