The 1H2010 can be summarized as return of optimism, in economy, in stock markets, stabilization of global economy, and fears about euro zone. As an individual investor, should I care about macro economics, or should I even worry about what happens to Greece or to euro currency? Ambani brothers patch up and there are stories its good for markets and business! To me, being stalwarts in India Business world, instead of setting an example, it was idiotic for them to even fight and drag each other into courts. These are good academic discussion, but I doubt it is going to help in your own portfolio. I am taking stock of my portfolio.
My last progress update was for year end 2009. This post summarizes TIPBlog portfolio update and measures progress for 1H 2010. Continue reading rest of this article…
It has been very close to a year I have been writing on this blog. Almost on all occasions I have discussed about buying and holding my position. I have said multiple times that I tend not to sell my positions. There have been multiple questions about why not book profits? Why not sell profitable positions and invest in other opportunities? Before I discuss on selling any positions, let me clarify, I do not blindly believe that buy and hold is holy grail for long term investing. I have no misconception about “not selling” any positions. In any system (eco-system, car, machines, or even our body), there are multiple elements and each have a role to play. Similarly, in portfolio management process, selling a position is also very important, and hence it cannot be ignored. In my process description, I have captured this part as ‘exit plan’. Continue reading rest of this article…
Two readers of this blog left couple of intelligent questions in comment section on some of the articles. Both of these questions relate to what I term as rebalancing the portfolio (or profit booking). I wanted to wait until I posted articles on TIPBlog portfolio update and risk analysis. I wanted to discuss these two questions in the context of TIPBlog portfolio. It will help better understand the re-balancing and profit booking processes.
You may have read earlier post that discusses risk analysis. I made a comment that the portfolio has overexposure on few stocks like ONGC, LNT, etc. I also mentioned that I will not be selling any partial shares to bring down allocation. Many use the term profit booking for partial selling.
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One common question that I continue to receive is about the efficacy of long term investing. The notable factor is almost all of them use two specific examples to explain that long term investing is not a viable solution. These examples are (1) Stock market tanking in 2008; and (2) Satyam going kaput.
To begin with, it tells me that many do not understand what is investing. Folks who ask these questions do not understand long term investing. I keep wondering, how to best explain what is long term investing.
In general, first half of 2009 can be characterized as roller coaster ride. While we saw multi year lows, at the same time, we also saw historical one day rally. In my post bull running for red flag, I showed that majority of SENSEX companies are showing reduced earnings. And surprisingly, it is being rewarding by increase value. I continue to believe, there is no way any individual can predict the markets. So who bother wasting time on it?
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The Tale of Two Companies
This is about Satyam Saga. Most of the articles and comments I have read in business media focus on tangibles like revenue, profits, number of customers, etc. So in today’s post I am discussing my view of Satyam Saga. My focus is more on the intangible issues that are hidden and may not visible to common investor.
I would like begin with commending the authorities who made this transition smooth, swift, and without much ado. The use of word authorities here is a proxy for industry association, company law board, ministry officials, and other unknown institutions. I believe if this situation had prolonged and quick decisions were not made, Satyam would have went for a toss, and it would have had a negative impact on Indian outsourcing business. The short term implications would have been far reaching somewhat similar to Lehman Brothers.
One company is Tech Mahindra (TM). The other one is not Satyam. My personal viewpoint about Satyam is that it does not have wide moat in the supply chain. It operates on a business model which uses labor arbitrage as its USP. It is relatively easy and manageable for customers to shift the vendor and still not have any significant impact on their operations. I do not have any intention to offend Satyam folks. However, one has to be pragmatic and take into account how their customer base (i.e. international companies across the developed world) views them as a company. It is viewed as Wal-Mart of software outsourcing industry. The second company I would like to include here is Larsen and Toubro (LnT). Continue reading rest of this article…