Five Good Stocks for Long Term Investor

I am a believer that our environment, surroundings, and our education shape our thought process. Knowingly or unknowingly our thinking will demonstrate what we have been through in past. It is applicable to every living being including us humans and present Indian population. Still there are very few who think and visualize beyond their surroundings. And it is these few who evolve and succeed over long term.

Our present 20s and 30s generation, of which I am part of, is very vibrant, inquisitive, and very progressive and has a desire to succeed in one way or the other. As they say, life is very fast in today’s India! The IT generation is very impatient which reflects the IT domain’s continuous changes in short one year. What is new today is considered to be obsolete in 2 years. Unfortunately, we fail to understand it is not same in investing.  Here are few interesting tidbits:

  • We folks in 20s and 30s simply want to get things fast. We fail to realize wealth does not come fast. You can have an acquaintance at fast past, but friendship takes long time to build.
  • Remember the euphoria of 2006 and 2007 where SENSEX zoomed to 21000 and easy 20%+ returns. We thought it will never go back to 9000. It did. The higher you go, the harder and faster is the fall.
  • We focus on 40%+ returns since March 2009. But we fail to realize it is still 25% below its late 2007/early 2008 peak.
  • After continued lows of 2008 and Satyam fiasco, many of the 20s and 30s investors have lost trust in long term investing. But we fail to realize, a failed ones are still in market albeit in different form. SENSEX is still there, players and experts are still there, and even Satyam is still there. If fundamentals are strong then it will continue to exist.
  • We always talk about risk, but fail to really quantify it for our individual scenarios.
  • Very few traders, trade with their own money. Most of the time it is other people’s money.


Over the past 10 years, markets have given an average 15% compounded return. However, we ignore 15% sustained return in our quest for that allusive one time 20 to 25% in short time. History shows that probability of trading returns are usually in very low single digits.

A slow and conservative strategy focusing on high quality, low risk stocks should (and will) significantly out-perform the short term approaches. Based on my analysis following are five low risk companies for a long term investor who is willing to look beyond 5 or 8 years.

  1. NTPC
  2. ONGC
  3. Pidilite
  4. Asian Paints
  5. Hero Honda


The 20s and 30s investors must realize that the fast pace investing (or trading) does have potential high returns in a very short time. However, it also comes with very low probability of success and very high risk.









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24 Responses to “Five Good Stocks for Long Term Investor”

  1. Interesting picks. How many stocks do you feel are necessary to build out a long-term portfolio?

  2. Nice picks!

    I have no other picks in mind than yours.

    Thanks

    • TIP Guy says:

      MIP,

      I am sure, you can come up with few more!

      Best Wishes,

      • 🙂

        I hold some of these in very large positions but liquidated all.
        You may want to have a look
        1)Grindwell Norton
        2)Hydrabad Ind.
        3)Lakshmi Machine Works
        4)Cheviot Company
        5)Thermax
        6)SKF India.
        7) Revathi CP

        All of these are quite stable & good dividend payers.

        I am also Interested in
        1)Foseco
        2)Vesuvius
        3)Hawkins
        4)SRF

        I have read all the letters to shareholders by Revathi’s chairman, Abhishek Dalmia. I am big fan of him.

        regards

        • TIP Guy says:

          Hello MIP,

          And you were saying you did not have anything else on your mind ;-).

          Thanks for the list. I do like Grindwell Norton, Thermax, and LMW.
          On Foseco, I did complete my analysis and was not impressed for my objectives.

          Best Wishes,

  3. Shanmuham.S says:

    It ( your blogs) shows that some FEW (like you) are there in the 20s and 30s (age group) to think wisely and invest more cleverly in the market. Sharing the thoughts is the most impartant and interesting thing about you people. Thanks for the same . infact am following your blog but write rarely to you. Share trading needs patience ( which is lacking with the investors irrespective of Age). there should not be any emotional buy or panick sell. right?
    you have to watch (in my opinion)15 to 20 stocks and invest in 7 to 10 companies. you may have options and add or delete cos as per their performance. I think you may add Shriram Transport Finance co one of the leadig Truck fin co.consistant dividend paying co. please analyse and write about this co.
    Thanks.
    shanmuham.s

    • TIP Guy says:

      Shanmuham,

      I agree with your thought process and one has to be patience. Thank you for your good words.

      I will look into Shriram Transport Finance Company

      I encourage you to leave your comments. I would be interested in knowing your counter arguments against my thought process and stock analysis.

      Best Wishes,

  4. shanmuham says:

    you may write about “long Term”.You may conduct a poll also.
    After the 2006 to 2008 northward graph, long term is 3 months for the new gen investors.
    you may be aware of this, as you have access to more investors.
    Also,(please correct me,if am wrong) you have to book profit in your long term holdings and sit on cash and buy again when there is an opportunity. is it rigtht and possible?

  5. Ankit Arora says:

    Dude,

    your article is good.
    I myself am a staunch believer of LONG TERM investing. But i cant think of staying in market for more than 1 yr

    Last yr, i got some Blue chips during jul-aug. which blue chips ? Well, TCS, RNRL, RIL, BHEL, BHARTIAIRTEL, DLF and 2-3 more.

    Except bhel n TCS, all my stocks are still in -ve territory !

    Now, there can be long discussions on what really is “LONG TERM”, but dont do feel that staying for 5 yrs is too big a time.

    so, if you can advice me some bluechips which i can get out in next 9-10 months, that would be great.

    Feel free to add me on gmail chat ( onlinearora@gmail.com) and we can discuss about long term investing

    Good day !
    – Ankit
    http://www.ankitarora.net

    • TIP Guy says:

      Hello Ankit,

      Sorry no tips form me. All the stocks that you purchased (except DLF) will give you very good total return in 10+ year of time. Why are you frustrated with them, do you really need the money that you have invested in them? If not that continue to hold it.

      Best Wishes,

  6. I feel the same like Ankit, 10+ years is out of reach. How knows what happens in 3 years forget of 10 years.

    long term can be a never ending discussion.

    • Arun says:

      ah-ah! The tree to be nurtured for 25 years…? 😉

      And 10 years is too much?!

      There is an interesting theory by Schumpeter which was also referred to by Chetan Parekh in the article I referred to in the other post.

    • TIP Guy says:

      Krish,

      Yes, long term is a never ending discussion. It depends upon how you look at it (or what you wish to look at). The best way is keep it simple, whatever definition works for you it is good.

      Best Wishes,

  7. Karthik says:

    Hi Krish,

    In value investing there are many ways to go about.. One of them which I follow is to buy the stock below the Intrisic Value and then sell them when it crosses the IV and becomes expensive. It might take many years for this gap to close or this happen in the span of few months. The IV keeps increasing as long as the company keeps doing well.
    The other way to calculate the value of the business and then hold it forever, as long as this value doesnt diminish. Remember that you are buying a business.Why would you want to sell the business which is profitable unless you find another business which can give you even more returns at the same level of risk?

  8. Chirag says:

    NTPC is a very slow growth stock. It have a movement which is negligible.. I prefer REC over NTPC!
    Whats your take Tip Guy ?

  9. Khushbu says:

    Can you please tell me sumthing abt my portfolio which includes:
    stovac (504959), castrol (500870), basf (500042),clariant (506390), axonoble (500710) and BOC India (523457)
    AND CAN YOU PLEASE SUGGEST SOME MORE GOOD TIPS FOR LONG TERM.. THANK YOU..

    • TIP Guy says:

      Hello Khushbu,

      I do not provide tips or any individual review/comments. Good Luck!

      Best Wishes,

      • Khushbu says:

        Tip guy i didnt gve you tips but I asked you about my portfolio…

        N I even asked to gve sum gud tips from your side..

        anyways thnkz…

        • TIP Guy says:

          Hello Khushbu,

          I neither give tips nor engage in individual portfolio suggestions.

          I hope you read comments properly and take some time to understand them.

          Good luck.

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