Buying & Selling Strategies for Value Investing
Following is the Buying Strategy for Value Investing!
- NO Stop Loss
- NO Target Price
It is explained below.
Why NO Stop Loss?
The Value Investor is Buying based on Fair Value (30% of Intrinsic Value) compared with the Market Price.
Let us say a BUY Recommendation was made on Current Price of Rs. 100 for Manappuram Finance where the Intrinsic Value is Rs. 1000 and Fair Value is Rs. 700. The Buyer can Buy this as long as the Price is below Rs. 700!
It means if the stock price of Manappuram crashes to Rs. 70 levels – BUY IT!
It means if the stock price of Manappuram crashes to Rs. 50 levels – BUY IT More as it is now a Double-Multibagger!
How the Value Investor should BUY the multibagger?
A Value Investor keeps a 3-6 Month period for Accumulating the Multibagger!
On the first month he/she will buy around 50-70% on the Per Stock Portfolio Limit.
On the next few months OR corrections the remaining allocation is done.
Per Stock Portfolio Limit
If your yearly investment capital is 10 Lakhs & you are planning to buy 5 multibaggers then 2 Lakh is the per stock portfolio limit.
What to do when Stock Price crashes?
You should BUY MORE after evaluating the Intrinsic Value & Fair Value to ensure the Growth of the Company is there.
I was buying more of the Premium Multibaggers during the down times – hence my Portfolio returns was higher. The same is recommended for Premium Subscribers too.
Note: If you are a Premium Subscriber you do not need the Calculations – Just follow our BUY/SELL/HOLD recommendations as we are doing the Calculations in the background.
When to SELL?
If the Price gone up beyond the Intrinsic Value, then it is a Clear SELL Signal. But additional checks are required.
Are you holding less than 5 years on this stock?
If so then you are too early to sell.
Else you can sell if the fundamentals changed.
Why NO Stop Loss?
Stop Loss is a day-trader OR short-term investor term. They don’t become Rich through stock market. They are wasting time & money!
Warren Buffett does not use that in Long Term Investing! He is the Biggest Rich in Stock Market. Be like him!
Summary
In this post we have seen how to Buy & Sell in Value Investing way. Most of the Investors out there are not doing in the right way & hence I am writing this post. (Futurecaps Advisor)
Congratulations to All!
The 2019 recommendations Caplin Point & SRG Housing Finance are 100% up from the bottoms. Those who were following our Premium Subscription & Training were able to Capture these Low Prices confidently.
Repeating, trying to save money from Paid Subscriptions is going to Cost you more by Loss of Profits! The Profit which was Never Creates is the Biggest Loss!
Don’t waste time – Be a Premium Subscriber & Gain the Latest Multibagger Pick of Warren Buffett style.
