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smartcat
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   Posted: 28/Jun/2008 at 4:20pm |
Basant, this particular thread that you have started today - does it mean you think we are in a "proper" bear market with the index sliding down over a period of X years? We aren't going to see 30% growth companies trading at 30 P/E anytime soon?
| So companies growing at 100% CAGR could suddenly start growiing at 40% in a few quarters and then finally show degrowth. |
Of all the stocks I own, I sometimes wonder if Indiabulls Financials will be a good example for the above statement in this bull run.
In some of the examples you have given from the previous bear markets, there were genuine problems with the companies. Eg:
| but Tata Motorts fell from Rs 300 in 1999 to Rs 70 in 2001! |
Because Tata Motors closed FY01 with a net loss of Rs. 500 crores - it deserved to go down to 70 that time. Tata Indica single handedly pulled it out of the dumps later.
Now, coming back to 2008, are there any genuine problems with some of the stars of this bull market - the capital goods, real estate, power, NBFCs etc?
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basant
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Posted: 28/Jun/2008 at 4:45pm |
When the avrage stock has gone down 50% and the index has gone down 38% you cannot say that there is no bear around of course we can qualify that around by saying that it is a cyclical bear in a structural bull finally a bear is a bear.
To me a bear market is one when the companies that I own start reporting lower EPS growth but that is not how things work.
IBulls financials is just one example we will have several of these who would suddenly find that growth isn't so easy. That is why it is important to be with tested names who are in an industry that is growing so the breeze will push your car!
Tata Motors had that problem right, but the stock still fell down 80%; M&M fell 80%; markets knew that it was a one time loss but still the stocks did fall!
The reason for starting this thread is to share a thought that putting good money after bad in companies in a bid to lower acquisition cost can be dangerous.
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paragdesai
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Posted: 28/Jun/2008 at 4:58pm |
Originally posted by basant
2) Companies that are leaders in a bull market do not see their prices come for years in the ensuing bear market. For example ACC and Tata Steel in 1992 took a decade to see their old prices. Other 2nd line darlings like Lloyd Steel, Kakatiya cement, Swaraj Mazda etc are nowhere to be seen. Unitech and DLF could esist but I would like to see companies like Parsvanath, Purvankara etc many of whom will be wiped out. In 2000 we had DSQ, HFCL, Silverline, Pentamedia etc
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Basantji,
If I am not mistaken it was Mazda Industries and Leasing Ltd. which is very different from Swaraj Mazda Ltd.
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omshivaya
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Posted: 28/Jun/2008 at 5:07pm |
Basant jee, so assuming that someone is in cash...how does he go about identifying the next bull run leaders. In your opinion, which sector would be the leaders in the next bull run?
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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
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Ajith
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Posted: 28/Jun/2008 at 5:08pm |
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In bear markets one must stay alert to whats happening in the
world to ride the next trend-emerging opportunities irrespective of the
fact that currently these stocks are or are not in your portfolio.
Edited by Ajith - 28/Jun/2008 at 5:17pm
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Ajith
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shivkumar
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Posted: 28/Jun/2008 at 5:10pm |
Originally posted by basant
The big money will be made in buying companies growing at 40% and available at a PE of 10 to 12 times current year! |
Companies in my portfolio that fulfill this criteria are: Amararaja Batteries Kamat Hotels Hindustan Zinc Venus Remedies The companies that don't confirm to this criteria include: Voltas Punj Lloyd Blue Star Reliance Dish TV Axis Bank Yes Bank Cairn Suven Lifesciences I am exiting a few in the next rally to free some capital even though my holdings are minuscule: Tata Steel Infosys TCS ITC These are less volatile and have protected my capital, but I don't expect them to be great performers when the bulls return to play.
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kulman
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Posted: 28/Jun/2008 at 5:46pm |
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Markets teach new lessons to old investors & old lessons to newer ones. And it goes on & on.
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Life can only be understood backwards—but it must be lived forwards
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basant
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Posted: 28/Jun/2008 at 5:47pm |
Originally posted by paragdesai
Basantji,
If I am not mistaken it was Mazda Industries and Leasing Ltd. which is very different from Swaraj Mazda Ltd. |
I could be wrong since I was in 1st year Bcom and about 19 years in age
| Companies in my portfolio that fulfill this criteria are |
My argument was not a water tight classification but more generalised in nature. After all a 14 PE stock growing at 40% with better management is better then a 10 PE Stock growing at 40% with average management.
I was just trying to suggest that solid growth at reasonable PEs make more sense. After all we cannot let PE beocme the only guiding force.
| Basant jee, so assuming that someone is in cash...how does he go about identifying the next bull run leaders. In your opinion, which sector would be the leaders in the next bull run? |
Early to say that but multibaggers originate from low PE companies growing at stupendous growth rates. New sectors just help us in finding that criteria so it isn't that a multibagger will arise out of gaming or insurance or theme parks only.
A few older ideas that have become cheap also qualify for that potential.
Edited by basant - 28/Jun/2008 at 5:54pm
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