Everything Seems Buoyant

It’s a “Modi-fied” country these days and the markets are still buoyant and feeding on the euphoria. The promise of a stable and pro-business government is something that the government likes.

 

While this does mean sustained daily increases in portfolio value – it also means that there is unbridled enthusiasm and extremely positive bias amongst investors. Everyday people are looking at other people making money and are trying to get in now so that they can get a piece of the pie.

 

The BSE index today is at 25k and yes there are predictions that it will soon touch 45k in a few years.It is extremely hard to go against the sentiment and tell my friends that I am not thinking of buying any stocks in this market. I mean the general feeling is that only a fool would miss investing in this rally.

 M&B quotes

But I’ve burnt my fingers and hands many times and I will stick to My “M&B” – Marks & Buffet as I like to call it.

[box] “Be Fearful when others are greedy and greedy when others are fearful” – Warren Buffett[/box] [box] “When things are going well and prices are high, investors rush to buy, forgetting all prudence. Then, when there’s chaos all around and assets are on the bargain counter, they lose all willingness to bear risk and rush to sell. And it will ever be so.” – Howard Marks.[/box]

 Cutting the MultiSaggers loose

One of the reasons, I believe that I have done relatively better in the last 3 years than the prior decade is the trying to avoid disaster and eliminate gross mistakes. During the past decade before I read my M&B – I still regularly managed to pick good winners, some of then –  MultiBaggers. But along of the way I also picked up many “MultiSaggers” – which lost me more money than I made on my winners. These MultiSaggers helped maintain the equilibrium in my portfolio and never allowed it to rise above the water.

It a was a cruel day or should I say week about 3 years back when I decided to cut loose. I sold all the niggling stocks in my portfolio where I realised I had been making mistakes and put my best foot forward. It did wonderfully well for my portfolio. I had a penchant for turnaround stories. After reading up what my gurus had written, I realised that “Turnaounds seldom turn”.

I then tried to painstakingly follow their wisdom, go against the grain and pick up few boring but in my opinion undervalued stocks. While I didn’t have the “circuit breakers” – stocks hitting upper circuits on a regular basis – I had the consistent locomotives, nibbling up slowly a percent here or two and the occasional 5 pc or 10pc spike.

Returns per unit of Stress” as Professor Bakshi puts it were relatively low.

However my guru Marks tells me that “Trees don’t grow to the sky” and “Cycles always prevail eventually”. So while I am still enjoying the purported fruits of this up-cycle, I am anxiously awaiting the downturn for two reasons.

  •  To check if I have been skinny dipping. (Warren Buffet said –“When the tide goes out, you know who’s been skinny dipping)
  • To put in my next bunch on investment bets in what may hopefully be the beginning of the next upcycle

 

I always wonder thought that by the time my so called investment horizon is over (15-20 years) if I have made the wrong calls –will there be any time left over to correct the errors.

Hopefully the one thing I will endeavour to consciously steer away from are the  MultiSaggers!