The stock markets are going through a volatile and uncertain phase. Government decision making is paralysed due to the Mulayam-Karunanidhi salvos. Business houses are struck with a double whammy of increase in cost of doing business in India and consumer disinterest due to rising costs.
The greatest challenge for the investor is seeing his investment getting eroded. But if you are an ‘ investor’, that is your greatest strength too. The investment perspective of investing in tough times seems a curse rather than a blessing until the sell off ends and some semblance of stability returns.
Remember, ultimately the vicious cycle of poor economic growth will be broken and neither securities nor the economy will go to zero, just as they did not go to infinity in the heady days of 2008. Buying early on the way down looks a great deal wrong, but it isn’t. As Seth Klarman of Baupost Group says, “If you look to Mr Market for advice, or if you imbue him with wisdom, you are destined to fail. But if you look to Mr Market for opportunity, if you take advantage of the emotional extremes, then you are very likely to succeed over time.”
Historically, little volumes transact at the bottom of the curve. Therefore, an investor should put money amidst the throes of a bear market, appreciating that things may get worse before they get better.
Success in stock markets comes to those who follow a process and do not sway with the moods of the market. It is very difficult psychologically to operate in an uncertain and unsure environment.
In one of the previous blogs I had written about Parag Parikh Financial Advisory Services(PPFAS) launching a mutual fund. It is a fund house which has a process in place and should do well for a patient, intelligent “investor”. They are about to announce the New Fund Offer(NFO) dates. One can directly get in touch with them to invest rather than through an agent or a distributor at http://amc.ppfas.com
in these volatile times, one of ur earlier recommended stock, PEL appears to be holding out rock solid.There are two other companies of this group,Piramal Glass and Piramal Life Sciences.What is ur take on these two
I have not studied Piramal Life Sciences and Piramal Glass in detail. I would suggest buying IL&FS Investment Managers around Rs 20.00. You will get a dividend of 7.5%. An investment which is better than an FD. Please invest in PPFAS Mutual Fund for the long term. Your money should grow. I am still very confident of Noida Toll Bridge, hold on to it or accumulate more. Its a business with a wide moat. 70% gross profit margins on an almost debt free business.
dear sir,
you have been bullish on IIFL for some time. However, the business model ( Carry applicable only if return > 20% in long term, Revenue generation by launching new funds) has resulted in slower growth in recent times. Also, it is hy invested in real estate ( over 2 billion of total 2.7 billion assets). Pls give your views on this ( An interesting blog on same – http://www.safalniveshak.com/ilfs-investment-managers/ )
Dear Anshul,
I look at the past more than the future. The whole economy has been non performing, especially exit routes for new companies through stock market listings have dried up which is generally the game of PE funds. In such a scenario margins of ILF&S Investment managers would also be under pressure. When I buy a share of this company, I am buying a bond which will pay me 7% for ten years and in between when I get capital appreciation, I would exit. The expenses are limited and predictable, revenues even at present levels are enough to pay dividend of 7% yield as there is no debt on balance sheet. Even Noida Toll Bridge is not performing. Is it the test of a value investor? Or is it a value trap? Only time will tell.
I hope I have been able to answer your query. Sorry for the delay, I was on a vacation and as a thumb rule I do not get on the net or my mobile when I am vacating…..my mind.