Lessons from January 2008: Udayan Mukherjee
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1550
Printed Date: 21/Apr/2025 at 4:17pm
Topic: Lessons from January 2008: Udayan Mukherjee
Posted By: valueman
Subject: Lessons from January 2008: Udayan Mukherjee
Date Posted: 22/Jan/2008 at 7:10pm
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Lessons from January 2008: Udayan Mukherjee http://www.moneycontrol.com/india/news/udayans-comments/lessonsjanuary-2008-udayan-mukherjee/19/30/322449 CNBC-TV18's Executive Editor, Udayan Mukherjee - The thing about life is that one makes mistakes. Many mistakes were made in the second half of 2007 and those sins have to be washed away by blood, such is the way of financial markets. Some participants will go down under and never be able to get back to the market again but most will survive. The pain will linger for many months, maybe years but lessons have to be learnt. Every such debacle has lessons for us and the sooner we forget them the more we suffer. The first lesson is not to let stock price performance become the sole reason for buying, a mistake which was made in abundance in the last 3 months. What couldn't be explained by fundamentals was credited to liquidity. The present lost all relevance as people chose to focus on the distant future, perhaps simply because the present could never justify those ticker prices; only a hazy dream of the future could. Traders and investors had no time for fundamental analysts, in many cases they were labelled "cribbing fools". Chartists became the most celebrated tribe on the street as only they could see and predict the one way run to glory for many of the hot stocks even as fundamental watchers cringed at valuations....till the music stopped. Don't get me wrong, charts do work in trending markets but once stock prices veer away completely from fundamental value, people need to get careful. But they never are. Now that the blinkers are off, people should ask themselves why stocks like RNRL, Ispat, RPL, Essar oil and Nagarjuna fertilisers have lost 50-70% of their value. It is simply because their stock prices had snapped all connection with underlying business fundamentals, earnings and value. Their stock prices became the only reasons for buying them which works for a while but not forever. The other big lesson, one which should have been driven in earlier in May 2006, is the danger of overextending oneself in the futures market. The lure of stock futures is easy to understand. Put in some margin, take a big exposure on a fast moving stock, make a killing when prices shoot up. Repeat exercise. Just that people forgot that prices may also come down and at a pace which noone can even imagine, maybe their friendly stockbrokers forgot to tell them that part of the story. The result : unbridled speculation that ran into lakhs of crores, excesses that we are paying for today. Even this fall will not cure investors of their love for futures speculation but if at least some amount of caution is injected it would have been a worthwhile learning. Futures are not toys for amateurs, they are time bombs in the hands of inexpert and inexperienced traders, it's only a matter of when the fuse runs out. The other learning which I hope will play out in the future, as it has in the past, is that it pays to be brave in times of panic such as these. If I was allowed to invest myself , which I am not, I would have no hesitation in deploying serious money into the market today, knowing fully well that prices may fall more tomorrow. And I would be standing there tomorrow to buy more of the same, till my money ran out. India is going to be a terrific stock market story for many years to come, even an intermediate bearish patch cannot shake that conviction of mine. At best, one will have to wait a bit for the returns to follow. That's alright. You are happy to put money in a bank FD and then wait for one full year to collect that measly 8%, aren't you? Then why does the stock market need to give you 20% every month? In the last one year, I haven't seen so many good stocks trade at such mouth watering levels. Forget trading, avoid the duds which were fuelled up by operators, just go out and buy those bluechips. They will deliver, even if there is a global market meltdown for a while, and if you are a bit patient you will be rewarded. But do remember January 2008, as history will repeat itself again in the future. Just that our memories tend to be too short and our greed too much. NOTE: This column was written at 2pm, even as the markets were trading. ------------- To achieve satisfactory investment results is easier than most people realize ; to achieve superior results is harder than it looks . Benjamin Graham. |
Replies:
Posted By: omshivaya
Date Posted: 22/Jan/2008 at 7:18pm
At last, one sensible thing he has said. Usually, by the end of his speeches one doesnt have an idea whether he is positive or negative on something. He usually keeps dilly-dallying between both ends till the finish. ------------- 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 |
Posted By: gcpradhan1
Date Posted: 22/Jan/2008 at 7:24pm
 ------------- Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years - Buffet |
Posted By: nitin_jagtap
Date Posted: 22/Jan/2008 at 7:24pm
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Thats true Om ..but one thing is whenever a fall of this magnitude takes place Udayan speaks sense ..but its after the fall and it doesnt really matter ------------- Warm REgards Nitin Jagtap |
Posted By: investor
Date Posted: 22/Jan/2008 at 7:33pm
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I agree totally. Normally he just blabbers on and on, but the moment i read this piece today afternoon, it seemed a good writeup, even sent it to a few of my friends who were panicking last 2 days.
------------- The market is a place where people with money meet people with experience. The people with experience get the money while people with money get experience! |
Posted By: India_Bull
Date Posted: 22/Jan/2008 at 7:41pm
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That is a good one from Udayan,
And that is what I am doing since last week, buying the best stocks at the best prices which I dont think I would be able to see again. ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: tigershark
Date Posted: 22/Jan/2008 at 7:55pm
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great speeches are written after an event has occured.poweroff udyan babu on! ------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: SORUB
Date Posted: 22/Jan/2008 at 7:57pm
very nice article...its looks very easy to do but controlling the emotion is the hard part!!!!!  ------------- K.I.S.S(keep it simple silly) is the most easy management formula i ever came across!!! but it is very hard to follow!!! |
Posted By: PrashantS
Date Posted: 22/Jan/2008 at 8:50pm
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somwhow if u see sameer arora and udayan are too friendly ...in his big speech he says he doesnt buy stocks..hard to believe... |
Posted By: jain208
Date Posted: 10/Oct/2008 at 5:55pm
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http://www.moneycontrol.com/mccode/news/article/news_article.php?autono=360616&special=udayan_news - Worse slowdown yet to hit markets - Udayan ------------- ======================================= The more it changes, the more it’s the same thing. |
Posted By: Vivek Sukhani
Date Posted: 10/Oct/2008 at 6:41pm
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Excellent write-up.....thats why I hold Udayan in such high regard. He's better than any analyst I have ever come across on TV. ------------- Jai Guru!!! |
Posted By: jain208
Date Posted: 10/Oct/2008 at 6:45pm
Chalo kisi ne to reply kiya... I thought nobody was going to comment on this article... ------------- ======================================= The more it changes, the more it’s the same thing. |
Posted By: Vivek Sukhani
Date Posted: 10/Oct/2008 at 6:57pm
You know what....I believe we are very close to that stage where we shall be getting ready with the cash.
We are still talking of 5 p.c. growth at least, and pricing stuff as if we are heading for a phase of de-growth.
Now you may say i am ina state of denial, but I have been cautious all this while and its just now when I am hearing all gloomy kind of stuff that I am coming back to my senses.
However, all my stock purchases will go into high turnover cash rich mass consumption type of companies. Whether or not they have fallen 15 p.c. of 80 p.c, some companies have started to be nearing the prices which I have always waited for. ------------- Jai Guru!!! |
Posted By: jain208
Date Posted: 10/Oct/2008 at 7:09pm
Ya, I agree... Our favourite companies can still fall further and this panic selling can continue for weeks to come... The people are selling the stocks as if their company is going to shut its shop.. Lot of stocks are trading at around their cash per share and much below book value, many are yielding more than FDs.... Choices are numerous and its time to spot the right companies and get ready with cash.... I am holding some cash and will use it in another fall... But not infusing any fresh money as of now - will wait for some stability. Abhishek. ------------- ======================================= The more it changes, the more it’s the same thing. |
Posted By: shivkumar
Date Posted: 10/Oct/2008 at 7:19pm
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Udayan is the guy who said in January that he'd put half his money on stocks if his employers allowed him to. Now again he is flowing the with the tide. |
Posted By: Vivek Sukhani
Date Posted: 10/Oct/2008 at 7:21pm
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half his money naa.......people have put all the money and have sunk in the low tide. ------------- Jai Guru!!! |
Posted By: jain208
Date Posted: 10/Oct/2008 at 7:28pm
I am not defending him, but at that time everybody was thinking that the fall was temporary and just a correction... Even on TED members were recommending "safe" stocks with strong earnings visibility and trading at just 10-15 times FYXX Earnings.... ------------- ======================================= The more it changes, the more it’s the same thing. |
Posted By: master
Date Posted: 10/Oct/2008 at 7:37pm
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Most of what he's saying is in line with the macro trend. His take on corpoarte earnings, "While GDP growth will fall, I think the pace at which earnings might fall could be even more dramatic than GDP growth"
It looks generalistic in nature - i don't think we can broad-brush it, level of impact on earnings is a stock-specific call. But what is obvious is high PE stocks offering low margin of safety will come out heavily bruised out of this run.
------------- Someone’s sitting in shade today because someone planted a tree long time ago. |