Farming & Investing


I realize that many things determine if a stock is a wise buy. But I have learned that during a depressed stock market, if you can get a cost position in a stock’s bottom price range it will forgive a multitude of misjudgments later.

During a market rise, you can sell too soon and make a profit, or sell on the way down and still make a profit. So, with so many profit probabilities in your favour, the best cost price possible is worth waiting for.

This is an old article from Fortune Magazine published in 1978. It is so simple in its approach that it looks plain vanilla common.

But it makes money.

What are the stocks and sectors in the dumps today?
Auto is beaten down to the ground. Banking & Financials is getting a beating. The top auto stocks would be Maruti, Bajaj Auto, Eicher and Hero Moto.

What sectors are flying today?
Pharma & 'Specialty' Chemicals

Should you be investing in these sectors?
I think the best time is behind us. Some investors have even booked profits and moved on. Maybe a prudent strategy. I personally have exited few chemical and pharma stocks.

Should you even be investing now?
This is something I am very concerned and confused about. I do not want to build a big position of say 10% of networth in a single stock now. Also money management rules don't allow this kind of aggression I feel.

Will they be at a relatively higher level 5-7 years from now?
The beaten down sectors should be quite higher probabilistically speaking.

Will analysts talk about higher target prices today?
No. Most talk nonsense any way. Better to use their reports for data gathering than analyzing their opinion on that data.

Anyways the Fortune article is below.


Comments

  1. Could you also share your thoughts on how much the insiders sale of a stock should bother us (if at all) when my investment horizon is long term?

    ReplyDelete
  2. Hi Ashutosh. Yes insiders selling/buying must be tracked diligently even when long term horizon is 5 years or so. This is my personal take.

    ReplyDelete

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