I have not written for a very long time now. Nov 2018 to Sept 2019. “Vaise toh amaavas 15 din ki hoti hai, lekin is baar bahut lambi thi…nau baras lambi thi naa…” just remembered this line from Aandhi, movie, when Sanjiv Kumar meets Suchitra Sen after a long hiatus. (Loosely translated, although the no moon night recurs every 15th day but this time the no moon night extended for 9 years, a pretty long time isn’t it?)And it is applicable to me too. The reasons were two — firstly there was some technical issue with the servers of my website host, and as I tried to update the widgets and plugins thinking the look of the web page will improve some glitch happened. Secondly, I was also travelling and on a new assignment which put me on a back foot. But those are just reasons. I am sorry for the break, readers.
Not too much has happened, actually. The sensex when I last wrote my blog on 29 Nov 2018 was at 36170. And on Thursday, 19 Sept 2019, it closed at 36093. So, basically I slept through a non event kind of thing in absolute terms. Seems like someone in the Finance Ministry also realised this and combined with the macro economic slowdown, it was time to give a booster dose to the stock markets and lo behold! On 20 Sep 2019, the Sensex jumped by 1920 points. In percentage terms, a jump of approx 5%. In a single day, that’s a big jump. Otherwise in an overall context nothing much.
So what are we supposed to do now. I have a very simple advice, continue buying good quality businesses at every dip and wait for the tide to turn, which it will. When, I do not know. But turn it will. I know that.
Let me put some statistics to explain what I mean, I had recommended Godrej Consumer Products at a price below 730 or so. If an investor had continuously bought it at every 5% dip with 10% of investible capital (say Rs 1 Lakh was your investible capital), one would have bought as follows:-
Rs 730 — 13 shares
Rs 694 — 15 shares
Rs 660 — 15 shares
Rs 627 — 16 shares
Rs 595 — 17 shares
That is a total investment of Rs 50,000/- and with that 50K one would have bought 76 shares. At the closing price of Rs 684/- yesterday, the value of investments would be Rs 51984/-. A positive return of about 4%. Not too bad, seeing the markets were generally flat. But I can bet a bottle of single malt 16 years old, that not more than TWO readers would have followed such a strategy or conquered their emotions to execute it. I myself finished my capital at Rs 650/- or finished my patience. Either way, I missed out the sub 600/- purchase price. The best investor would be the intelligent and patient investor who had his entire 50000/- invested at Rs 595 giving him a 14.96% return on investment or an annualised return of 18.21%.
And this process could have been repeated with any of the Mutual Funds/individual stocks. Just hold your horses for the time being, do not punt now. A lot of short covering by the bears may happen and prices may rise a bit more on Monday before they correct again. Giving you an opportunity again to buy.
By the way currently ITC at a dividend yield of 2.5% and a price of Rs 234/- is one stock which did not participate in Ms Seetharaman rally. But if you were to rationally think of it, ITC would also benefit by all the corporate sops. So in the long run, ITC from current level should also give you above 12% returns. Go buy it at Rs 234/- before the mob gets after it.
With a promise to write at least once a week from now onwards…..Hasta La Vista.