Solid Points for Solid Wealth Creation

We have been receiving mails on "Is it right time for Investing”, “Market is on the Peak”, “Should i buy or sell” like & so.  Surely, this denotes that, they have not understood our theories well.  But i am happy that they admitted up front.. Asking is never a Crime, we encourage people to ask genuine questions.  I would like to add the following points now.


Current Market Situation

Market is closer to the Historical High of 21000.  But fundamentally, the NIFTY PE Ratio is still 30% below the peak.  Considering the overall economy & NIFTY PE Ratio, we believe market should not go Bear!   There exists UPMOVE potential for Blue Chips, Mid Caps & Small Caps.  But one should be cautious to see the VALUE PARAMETERS before investing in Blue Chips.  You can accumulate undervalue scrips with huge growth potentials.

Diversified Portfolio

I would like to iterate that there is no SINGLE INVESTOR in the world who made profit by holding JUST ONE STOCK!  We can find thousands of companies in the stock market, if we invest in all, we are just waiting for luck.. But using fundamental analysis, we can find the TOP 100, going with more analysis we can filter further 10.  Every year, buy 10 such stocks for long term. 

Through the quality iteration we are almost sure about Multiplying the investment.

Here is the fact: For a 10 year investment in 10 stocks, 2 of them can give 20 times returns, 3 of them with 10 times returns, 4 with 5 times returns, 1 may go bankrupt.  So on the average we can expect 10 times returns on 10 stocks invested with thorough analysis. 

We increase our chances through diversification, plus we decrease our risk through diversification.

When to sell?

Selling would be advised on:

  1. When your Buy Condition turned false:  For example if you decided to buy a stock as it’s Intrinsic Value was less than CMP, you can sell the stock when Intrinsic Value is greater than CMP
  2. Peak of NIFTY PE Ratio: Smart Investors who use NIFY PE Ratio for investing, will accumulate stocks when NIFTY PE Ratio is less than 20, they sell all stocks when NIFTY PE RATIO grows above 25.  Currently the NIFTY PE Ratio is around 18.

One should note that CRASH of stock price due to temporary problems with companies are not SELL signals, but chances to accumulate more.

Layers of Savings

We iterate that, if you are new to stock market, divide your savings into 3 layers. First one for real estate & preferably allocate 50% savings here.  Rest 25% in stock market & 25% in Liquid Savings.  The top liquid layer will always protect the underlying layer in case of emergencies.

Mindset of Wealth

After all, Wealth is a mindset, do not waste your time worrying about stocks, plan well, invest well & focus back on your core life activities.  Life is greater than Money 🙂

Our Current Holdings

Banking: Yes Bank, Jammu & Kashmir Bank

Finance: Bajaj Finance, Dewan Housing Finace, Manappuram Finance, Muthoot Capital Services

Consumer: Cera, Wim Plast

Information Technology: Infosys, Accelya Kale, Persistent Systems, eClerx

Author: JP, Futurecaps – Chief Analyst

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