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 The Equity Desk Forum :Market Strategies :Fundamental
Message Icon Topic: The concept of "Free" shares. Post Reply Post New Topic
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basant
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Quote basant Replybullet Posted: 23/Sep/2006 at 6:17pm

My last purchase price in Tv 18 was Rs 234 (the company converted the warrants that I possesses). My average cost is around Rs 170. Now I would buy one big quantity at the price where I am not worried by the downside.I do keep buying and selling but that is first I sell a  bit and then buy a bit(less then 1% of my holding).If I have 100 shares of Tv 18 I will fiddle with only 1. Basically I do this and waste my time.

 Now in your case if you sell a bit at Rs 800 and buy something else profit is not being booked. It is all in the mental framework. profit will be booked only when you sell equity and get into debt! Change the asset class or else what ever you buy with your TV 18 proceeds will also sink with the market but you would be psychologically stronger since you will sit over some losses and some free shares.
 
Now I could not get into Educomp at Rs 150 since it  listed  well above Rs 200 but now irrespective of the margin of safety (which today looks big) I think that a growth stock if bought at the right kind of PEG is as good as buying value stock at near book value.
 
Finally we all have different ways of investing and that is what makes a market.Tomorrow if I fail then it was my own money and vice versa so getting on one -on one the way it started to happen took me by surprise.
 
See at Rs 377 we had people who said Educomp has no margin of safety (no malice intended please!) but what do you say now when it was locked at Rs 687?
 
Now pwople will say HFCL bhi badha tha and I cannot argue because I am not competent to decide whether Educomp will become an HFCL or an Infosys or remain an Educomp. In Investing there are no right answers upfront and just one right answer in hindsight.
 
The idea is not to have free shares but to invest wisely and with knowledge and conviction once that is done everything else will fall into place.ANd we will settle for free shares only when we do not know why it has gone up. That is what I have been repeating since the begining of this topic.
 
I apologize If I have been harsh in this post but I just wanted to communicate.
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Quote Equity Buff Replybullet Posted: 23/Sep/2006 at 6:25pm
Very good post Basant.
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basant
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Quote basant Replybullet Posted: 31/Aug/2007 at 2:21pm
Just went through this topic again and wanted to add that the concept of selling some shares or booking partial profits also arises because with static fundamentals the price going up reduces value in a stock and because value is directly propotional to conviction we have less conviction after a stock goes up with static fundamentals (expected results).
 
A lower conviction which is an offshoot of lower value would make an investor take some chips off the table because at a higher price the idea does not look as compelling as it did at a lower price.
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Quote aloksahi1971 Replybullet Posted: 21/Sep/2007 at 12:55pm
Basantjee,
1. Investing stratergy is great . Can you guide on booking profits.As profits need to be booked. I wanted to knoe if a stratergy where a sum of money is earmerked for stock investment say 50 laks and at each rise of 10% profits are booked and the profit deployed away from the market .Does this make sense???
 
 
 
 
 
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Quote basant Replybullet Posted: 21/Sep/2007 at 1:06pm

Book profits only when

a) the fundamentals deteriorate either because of  bad results or such a massive rise in price that the stock would never look cheap over the next 2 years no matter what they do.
 
b) When you have an alternative investing option better then the one you hold.
 
Blindly selling on a number game will never lket you keep a multibagger.
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Quote aloksahi1971 Replybullet Posted: 21/Sep/2007 at 1:26pm

  Basantjee,  It makes a of sense what you say but what about asset alocation.Also the statergy I have tried to explain is like STP but in reverse i.e profits skimed off the equity are directed to debt.

Also if one is having a monthly income of middle 6 figure what is the equity exposure she can take. 
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Quote smartcat Replybullet Posted: 21/Sep/2007 at 1:48pm
It is difficult to answer such questions without knowing all the variables. Is the six figure income stable (Eg: salary) or not-so-stable (business income)? What is her age? What is the current networth and what is the current asset allocation?
 
And since this is a public forum often visited by Mumbai underworld ka Bhai loag, you might get a couple of those dreaded phone calls if you reveal the above info here. 
 
The correct equity exposure can only be determined by a qualified financial planner (like.. ahem.. Kotak waley) or by yourself.
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Quote aloksahi1971 Replybullet Posted: 21/Sep/2007 at 4:26pm
Smart cat jee,
1. Kotakwale bol ke pound bhar koon kyon jalate hain!!!! Main waise hi blood donation camp me jau.
2. Stable income.asset allocation 70% Real estate other than primary residence all inc generating.  10% primary residence.5% gold .7% debt and secure paper.5% equity and 3% cash.
3.She understands that the equity portion is less but is this the time at so high a level to get into stocks even if they are TED recomended.
4. Mumbai wale ko Rakhi band degi!!!
 
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