Hello,

The September quarter was mixed by TED’s standards. While some of the new ideas introduced like Kotak Bank  Reliance Capital really hit throuygh the roof. In fact all financial stocks seem to have become a new flavour with anticipation of slackening interest rates and a flood of liquidity.

In this connection we initiated a change in the TED XI and  Yes bank replaced Suzlon Energy in TheEquityDeskXI  . While a couple of other TED stocks seem due for replacement we would look at fit candidates in smaller capitalised companies – Sector no bar!

Companies in blue are members of our The Equity Desk XI

The simple average returns of the stocks in this report card because of the collective wisdom of all the members has been    81 %.

Media remained a rank underperformer and but these companeis were not bought with a 3 month perspective though with the recent valuations the fizz seems a bit over done these companies are still potential multibaggers in their own ways.

As we embark on that journey to 35k-40k on the sensex the inherrent need for not being oversmart is the highest today. Let me elaborate this. Now if we pick up a stock and suggest that its value will be unlocked in 3 years and meanwhile the sensex just braces past the opportunity cost would be just too high to be ignored.

For starters it is best to put money in Reliance and HDFC bank if they cannot think of anything else, These companies will continue to outperform the sensex(hopefully) but if we became smart and bought that 40 rupee stock from the B1 category and it refused to move in the next 12 months we could be wasting wealth in terms of not creating it.

Concentrated portfolios could diversify a bit because in the last leg of a rally (that is if we are in the last leg – always debatable there) everything except a few will move and surely we do not want to be in the few!

My personal portfolio has seen a tinge of  diversification with banking been the new mantra.Year 2009 seems to be the magic word in the Private banking space and as the country gears up for that date what we need is a few IFCI’s to set the bidding process in motion and the excitement at its pinnacle!

Question is IFCI was not discovered until it was a 3 bagger and even then a  person could have made a 5 bagger thereafter – I learnt it by not partcipating in it. Just reinforces a hindsight word of wisdom “It is never too late to buy”.

So if we enter 2009 and we see a XYZ bank being open for bidding we could buy the same at 3 times its 2008 price and still make money – as people did in IFCI – At least that is what one experience showed us. I have never chased returns like that but it is never a bad feeling to make money in a jiffy. Sure these bets come with their share of risk so we cannot bet enough and unless we bet enough there is no fun in playing the “game”. Sounds too complicated Surely Buffet said “Investing is simple never easy”.

Regards,

Basant