Blog meant for 1 Jan 2018 Monday
Dear Friends
Indian stock markets and global stock markets had a great year in 2017. Nifty index was up around 31% from the beginning of 2017. Many Individual stocks have appreciated by a much higher percentage than the Nifty.
Nobody knows what the year 2018 has in store for all of us personally or professionally. Lets hope that whatever happens, we are able to deal with it in the best manner possible with the knowledge, information and skills we possess.
The analysis for Short term as per technical analysis is as follows:
Nifty is in Hold zone.
The indications for individual stocks are –
THE HOLDS ARE- MARUTI, INFOSYS, TITAN, HDFC BANK, ITC, VEDANTA, HINDALCO, YES BANK, M&M, AXIS BANK
BUY – HDFC, ASIAN PAINT
SELL – RELIANCE
THE DON’T BUYS – SBI
TOO LATE TO BUY / HOLD – TCS
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Question from a Participant of our Workshop –
“What will happen if the stock market crashes ? Is it possible to make profit in down times. What will happen to your bluechip stocks?”
Answer –
This is a very good question when you look at it from an new investor’s angle. This kind of question is usually asked when an investor is quite new to the market and is understanding how stock markets operate.
Any investing we do can be classified as –
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Long Term Investing
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Short Term Trades
1. Long Term Investing – investors invests one time lumpsum or invests regularly every month (SIP) or does both. This is with expectation of getting a good return on invested amount over a period of 10-15-20-25-30 years etc.
When we invest in leading companies such as the ones we have suggested during the Workshop for long term, we need to primarily ensure that –
a. The handful of companies which we invest in continue to grow their business (sales & profits) at a decent or good percentage every year and their market share in their respective industries increases or stays as high as it is now.
b. The companies’ products/services will be required in the forseeable future of at least 5-10-15 years or even more and hence the industry as a whole also grows due to the demand for the products or services.
As long as we ensure this now and in the coming months and years by regularly monitoring the Profit & Loss Account of the company and generally read all the news about the companies we have invested in, we are quite certain to get good returns over a long term.
The theory can be summarised as –
Select good companies – Invest regularly or one time in them – monitor the business performance once every 3 months or so – decide whether any changes to be made – Sell the company if and only if there is a major, permanent deterioration in the future prospects of the company – otherwise continue to hold – Sell at the end if and when you need money for your life goals such as retirement, children marriage etc.
Any short term fluctuations in price of the bluechip stocks generally need not be taken seriously since stock markets always move and up in short term mainly due to investors’ sentiments.
Even the best companies in the world go up and down in the short term when the market sentiment is negative. It does not mean that the company has suddenly become bad. You must always observe ‘Financials’ of the company to see its actual performance of the company.
Hence, in the long term, all companies do well or badly mainly due to its profitability and standing in the market.
If there is a correction in the markets in 2018, all stocks will fall. The bluechips and larger companies usually fall lesser than the smaller and loss making companies. But since we are long term investors, we will continue to invest and also hold existing bluechip shares and hence when we sell many years later, we would have got returns from our portfolio compared to any other option available such as Real Estate, FDs etc.
2. Short Term Trades – the investor buys with the intention of selling a few days or months later at a profit. This is purely based on the technical analysis graph. Even when the markets fall, it does not fall continuously and hence even when there is market crash, there are always uptrends which can be utilised to make sufficient profits in the short term.
Discipline of following the graph and buying and selling as accurately as possible is most important in short term. Most people make the mistake of not selling when the sell indication arises thinking that the stock may recover the next day but many times it falls again, and then we regret not selling as per the Sell indication.
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Apart from other things, we sincerely hope and wish that our Participants read our blog daily so that it will help them be in control over their investments. We get many questions through emails where we feel that the person has either not read the study material given during the Workshop or has not been reading the blog regularly and hence the question.
Kindly ensure that you read the study materials multiple times so that you understand many basic aspects of stock markets. Only if you have not understood after that, then email your question.
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