EXIT: When to sell a stock?
Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Trading Psychology
Forum Discription: Discuss the psychological aspects of trading such as fear, greed and discipline. Why stocks are bought like perfumes and not groceries.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1454
Printed Date: 07/May/2025 at 1:20pm
Topic: EXIT: When to sell a stock?
Posted By: kulman
Subject: EXIT: When to sell a stock?
Date Posted: 14/Dec/2007 at 11:44pm
Basant jee & others please post your views on this issue.
I had read somewhere that selling decision could be taken when
------------- Life can only be understood backwards—but it must be lived forwards |
Replies:
Posted By: omshivaya
Date Posted: 14/Dec/2007 at 11:55pm
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For me selling simply would come when I feel that the growth of the company will come down from let's say 50% y-o-y to 30% year on year. It is based on a feeling and leads to possibly an early exit, sometimes maybe even losing some or a lot of possible gains from a premature exit.
This is what i can think of currently...shall update when I can think of some other reason(s). ------------- 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: kg
Date Posted: 14/Dec/2007 at 11:57pm
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hi kulman ji ..thanks for starting this thread... i guess the decision becomes difficult when u hv already made money in the stock ......where does the greed end ? is ------------- Lets rock |
Posted By: basant
Date Posted: 14/Dec/2007 at 1:02am
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My dream is to buy such companies which I never want to sell. Generally the points that i look for are something wrong in the business model maybe a competition, or management intgrity prob etc; mkt cap going to levels more then 25% of global leaders with dispropotionate valuations; PE exceediing 40 times forward irrespective of growth; better alternative ideas for that money with favourable relative risk reward scenario; couple of quarters with more promise and low delivery without adequate reason for low delivery of resulta; industry specific problems like export and dollar etc ~~ It is really very subjective and a combination of variouss factors. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: deveshkayal
Date Posted: 15/Dec/2007 at 4:21pm
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Black Swan may be one of the reasons to sell a stock. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: India_Bull
Date Posted: 15/Dec/2007 at 5:53pm
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A stk is a Sell when 1. Fundamentals of the company change drastically e.g. All of a sudden Govt brings some sector under regulation restricting growth of the company indirectly. 2.External factors such as Emergency e.g You are invested in ENIL,TV18,Times of India (not listed but e.g any other listed entity in the space) and Newpaper,TV,Radio are banned for a indefinite period. 3.When you have some other opportunity which is better than the existing one . e.g you r invested in a company which grows 25-30% yoy, and you find another comapny growing 50% yoy. Now it is a debatable question whether you sell HDFC Bank and invest in Kotak/Yes Bank which are growing faster, in this case it depends on the style of investing. Same thing can be applied across the sector if you believe in holding very few no of stocks. I take a review of every stock and compares with every stock in the portfolio on a quarterly basis (max 6 months ) and sell Laggards ...(A growing company cant be laggard for 6 months, if it is so, then it is not growing or doing well. ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: kulman
Date Posted: 15/Dec/2007 at 6:31pm
I think the example you gave is inappropriate.
I would rather think that would be an opportunity to buy some of those businesses at dirt-cheap beaten down bargain prices. Emergency like prohibition (of liquor) won't last long. Remember, Senior http://www.theequitydesk.com/forum/forum_posts.asp?TID=69&KW=Mallya&PID=49623#49623 - Mallya bought out many breweries during Morarji Desai's prohibition regime !
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: basant
Date Posted: 15/Dec/2007 at 10:07pm
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Govt. diktat can and has never finished any industry permanently so any such move should create buyinng opportunities for that capital which can be put in for temporary pain and long term gain. l ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: India_Bull
Date Posted: 15/Dec/2007 at 10:25pm
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Basantjee and Kulmanjee, Accepted your points with both hands. I am learning and refining my investment strategy as I always tend to rotate money and looks at opportunity cost as the single most important criteria ,so short term pains makes me uncomfortable. ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: smartcat
Date Posted: 15/Dec/2007 at 12:31pm
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I exit a stock when -
- I feel like doing it.
- When a stock price returns performance is lower than that of Sensex in the past 1 year/3 years. Underperformance with respect to index indicates lower investor interest in the stock/sector.
- When there is a big valuation difference between the stock I hold and the no. 2 player. That's why I got into Rel Com after selling Bharti six months back.
- When I finally realize that my reasoning for holding a particular stock was actually wrong (eg: TCS)
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Posted By: Vivek Sukhani
Date Posted: 15/Dec/2007 at 8:02am
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I believe its more to do with the opportunity factor. I generally enter and exit to improve my yield. When I entered Chambal @ 32 it was paying me more than 5 p.c. Now when I sold it at 84 and invested it into a Century Enka, I jacked up my yield to nearly 10 p.c.. The reasoning for this plan is as thus:
Suppose, I bought 1000 tickets chambal @ 32
Cost=32000
Dividend=1.8*1000=Rs. 1800
Now proceeds from selling this at 84=84*1000=Rs. 84000
No. of Century Enka bought=Rs 84000/160=525 shares.
Dividend recievable=Rs.6*525=Rs.3150
Now, my yield has actually moved up from 1800/32000 to 3150/32000.
I generally try to make my yield cross above 15 p.c. in a 2 years' timeframe. I have played many yield games so have develop a kanck for such things.
I am sure all the members will disagree with me but nonetheless I have spoken about when i plan to enter and exit.
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Posted By: shetty
Date Posted: 15/Dec/2007 at 8:23am
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Vivekjee that is really a great way of investing. As the market is booming and an average dividend yield of 1.5% no one is bothering about dividends.
But in the long run it is dividend that is most important. You could conider starting a topic on dividend yields, and the various stratergies that an investor can consider. |
Posted By: kg
Date Posted: 16/Dec/2007 at 12:53pm
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hi teddies thanks for ur contribution ....i got some clarity ..particularly the one thought wich basantji gave on not selling ever...and also the ones on opportunity cost but the dilemma which i have is as follows wich i want to elaborate ...
a) Lets say i had a stock NELCO / Neyveli Lignite - stock which did not move for last 1 years at all. Always stayed at the same levels irrespective of markets going to new highs. Then i saw the opportunity cost of holding it and decided to exit them and move to higher potential stocks....and then these stocks suddenly became rockets becoming 2 - 3 bagger in one or two months time
b) HEG similarly was moving good from 50 - 150 it went and then was stuck there for quite some time so i decided to exit and then suddenly there was a hidden power play story which unfolded and stock js multiplied.
c) Agrotech - one of RJ picks - again not showing much movement since i picked up ...may be a year and found again opportunity cost going down ..also read abt it sluggishness in past so sold it and since then it went up like rocket
d) Grasim - cement - govt intervention - prices getting peaked out ..so thought of exiting and since then it goes up by 25% in one mth
e) GSFC / GNFC - fertiliser company - suddenly govt changing minds / policy / govt intervention...
f) Tata chemicals - again not much movement - thought other stocks of the new age may add an edge ...again carpet bombed in this case .
f) In all above stocks i made decent profits ...the one in which i was making loss ...maharastra seamless ...trading opportunity ...i waited but then exited when the loss was mounting ...and this was really like bad luck i sold at 10:30 and the stock went up 10% the same afternoon....
Selling for me has always been difficult and though i tried exiting a lot of small qty holding in my portfolio i hv not been very successful.
One of the reason as i could understand was that i did not research all these stock well before exiting as i had too many a stocks in portfolio ..many of them being there for many years and not even purchased by me ...i agree to review of the exit price philosophy also but when targets are achieved in no time ...wat do u do ...others yet to figure out ...shd we think abt it a lot or jss leave it ...and move on .
Thanks. ------------- Lets rock |
Posted By: smartcat
Date Posted: 16/Dec/2007 at 1:06pm
Vivek, how do you predict the future dividend per share of a stock? By looking at its cash flows, past record etc?
The shift from Chambal to Century Enka seems like a good idea if Century actually gives a dividend of Rs. 6/share instead of Rs. 4 or 5. Also, what if Chambal raises their dividend to Rs. 2.4 per share (just an example)?
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Posted By: us121
Date Posted: 16/Dec/2007 at 1:13pm
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Dear KG, i have also experienced the type of situation u have narrated. But what i have learned with time, with lots of reading and also from TED is... - concetrated portfolio helps to fight this. the reason being we do not loose sight from the smallest thing happening with this company/ industry/ management and so on... -second thing i have learnt is to have absolute clarity for what reason one enters the stock. when those reasons are clear to our mind, the price movement do not de focus you. Buffett has said some thing like: write down the reasons u are entering the stock and review them periodically and do not sell if those logics have not changed or if you do not have other compelling better opportunity. -in the bull market the price movement may prove one wrong for some time, but u always come across a point where fundamental/ true trigger story wins. When? is a puzzle, but that is what market is!! However, in bearish market one will never have feeling of being left off. i have faced the situation like you have described in patel engineering, kemrock ind, elecon, voltas etc. But any way, have learnt lessons from that which is helping now. ------------- ABILITY will get u at d top. CHARACTER will retain u at d top |
Posted By: Vivek Sukhani
Date Posted: 16/Dec/2007 at 5:52pm
Hi Smartcat,
Predicting dividends is a very difficult task. I have a concept of break-even yield which I use to work out how much a fall in downside in DPS can keep my dividend receivable constant. Its some sort of a scenario analysis which I apply on my portfolio. Most of the times, because I apply so much negative thinking onto my portfolio that the stocks I get into increase the DPS. I have played the yield game so many times in GE shipping, Thirumalai Chemicals, ONGC, Tata Chemicals etc.
There are someimportant points to remember for yield mongers.
1.Never and never expect/hope that the high yielding stock's price go up. If you ask me the question, whether I will like to see century enka @ 200 or @ 150, I will always like it to see it at 150. I will never tire of accumulating stocks like Century enka etc.
2.Be as conservative as possible. Never and never expect the stock you are getting into will jack up dividend. Always have room for positive surprises but provide for all possible shocks. Once I was preparing the questionnaire for dad regarding century Enka and i remember I wrote whether the fixed assets have a exit value as the wdv in the balance sheet. My dad was so angry and he called me the most arrogant man he has ever seen in his life but then I have had a knack of asking extremely horrible questions which can drive people mad.
3. Do smart churning and at right point. I have a thumb rule...I generally do a churn when in the process i increase the dividend by a thousand rupees. I look at it like this...in case I do such a thing for 365 days a year, i can increase my income by 365000 a year. And that too tax free in most of the cases.
4.In order to be sure-footed always consider book-value into account while you do a yield enhancing churn. I didnt say that you should pocket Ultramarine for a chambal although in case that churn would have been done the yield could have been significantly enhaced. try to always jack up the book value of your portfolio whenever you do a churn.
5.Keep in mind the BSE group to which a stock belongs when you do a churn. Dont sell your ONGC for a JK Paper to enhance the yield. But dont be a bit reluctant to dispose of your reliance Energy for an ONGC.
6. Most and most importantly, whenever you play such a game, close your ears and open your eyes. Dont fall for the temptation of trying to make a right exit and forgetting about making the right entry. You will be labelled as a notorious trader/investor, but ignore such trash.
7. Work out your calculations on a neat sheet of paper whenever such a churn is done. Build up scenarios and have a fall-back option. Always be prepared to reverse trades, in case the yield game becomes a bit too much favorable.
Although i am an amateur in this field, yet this is all what i have been doing all this while......
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Posted By: kulman
Date Posted: 16/Dec/2007 at 6:15pm
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Vivek bhai....interesting post.
One thing which stands out & is undisputable:
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: Vivek Sukhani
Date Posted: 16/Dec/2007 at 6:26pm
| hahaha.....very true. |
Posted By: basant
Date Posted: 16/Dec/2007 at 7:39pm
Very reasonable argument. I faced this problem between October 2003 and Jan 2005 when TV18 moved in the range of Rs 145 ~ Rs 240 several times (pre demerger )and though it went up 10 ~20 times post depending on when an investor got in I could really overload on the stoc because : 1. The co was a small cap and relatively undiscovered except Reliance MF no other fund owed it. 2. Each quarter's result showed increased profits and robust growth. Co initiated new developments and was aggressively moving towards a full fledged media co from a single channel stock mkt commentator. 3. The main thing was change each quarter the stock became cheap and the management added new business verticals so we were investing in change i.e stock becoming cheap every 3 months. If the stock does not become cheap every 3 months at stable prices or the co does not add revenue lines then the stock needs to be sold and any subsequent stk price movement should be taken as a matter of chance. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: rakeshmehta48
Date Posted: 17/Dec/2007 at 2:41am
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Dear Vivek
I have seen this thread now only.
In my 30+ yrs experience of Indian and International markets, I have seen lots of ups and downs. bulls and bears markets with CAPITAL "B"
I agree with your philosophy on dividend yields.
The choices may be different. ------------- Fund Management is Most Important |
Posted By: rakeshmehta48
Date Posted: 17/Dec/2007 at 2:54am
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10 baggers, 20 , 50 or 100 baggers.
I believe that notional profits must be encashed at some stage. What ever criteria one may have.
I have seen lots of slip between cup and lip, in my trading experiance. ------------- Fund Management is Most Important |
Posted By: xbox
Date Posted: 17/Dec/2007 at 6:55am
 ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: vip1
Date Posted: 18/Dec/2007 at 3:39pm
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In my 30+ yrs experience of Indian and International markets, I have seen lots of ups and downs.
There are only a Few investors who have survived/been there in the market for so long. Obviously it shows your perseverance.
Please also share with us any valuable lessons learnt ?
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Posted By: omshivaya
Date Posted: 18/Dec/2007 at 4:09pm
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Yes, absolutely I concur.
I would highly recommend Rakesh jee to share your stuff. TED is synonymous with long-term and it is your duty to share everything with us.
Here, let me help you get started:
Take a range of 10 years from the time you started and describe what all you bought and what all you felt while the market was moving from the point A(1st year) to point B(10th year).
Take 10 years at a time...and share whatever experience you had during that 10 years. Then let people ask questions and then answer those queries. Once you feel that the queries have been exhausted to some extent, then move onto the next 10 years.
WE NEED THOSE EXPERIENCE NUGGETS THAT YOU LEARNT THRU EACH 10 YEAR PASSAGE!! ------------- 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: Vivek Sukhani
Date Posted: 18/Dec/2007 at 5:43pm
Sure, the choices should ideally be different. Although I am in no way as experienced as you are and am not even 30 years old but somehow I have an inkling that so long as what you intend to accumulate goes on going down and what you incline to dispose of continues to spurt up, there's nothing to worry. I will like to give an example....I am delighted when I see a Larsen going up because I have to sell them off but my pulsation goes up whenever I see ONGC making a big move.......for me, prices are totally irrelevant, I simply go for yield arbitrage, and so long as high yielders drop commensurately with low yielders, I have no regrets whatsoever....my problem starts when the high yielders firm up and low yielders continue their downward march.
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Posted By: basant
Date Posted: 18/Dec/2007 at 6:05pm
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Vivek can you list your top 3 yield plays in order of preference? ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Vivek Sukhani
Date Posted: 18/Dec/2007 at 6:37pm
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At this moment, in the order of grouping I am listing my favorite yield games:
A-Group
1.Century Enka
2.ONGC
3.BASF/Castrol
B-1
1.Thirumalai chemicals
2.Foseco India
3.Kabra Extrusiontechnik
S- Group:
1.Plastiblends India Limited
2.Ultramarine and Pigments Limited
3.Albert david
There can be intermittent opportunities as well. Say for instance, a JK Paper or a Varun Shipping. Some of my yield games have done well enough not to no longer qualify as yield games like a GE Shipping or a Tata Chemicals or an Advanced Micronic Devices. MNC pahrma companies are also good yield plays but somehow the fear is a bit too high there. The same goes for auto anciliarries like a Sundaram Brake, Rane Brake,Sundaram Clayton. Even a stock like hero and Ashok Leyland may qualify as a dividend play now.
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Posted By: smartcat
Date Posted: 18/Dec/2007 at 10:15pm
All your stocks have scary names.. Kabra.. Albert David.. sounds like Shakaal and Mogambo.
Why bother investing in low yielders? Is it comparable to a growth investor investing in a few 25% growers and lots of 50% growers?
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Posted By: Vivek Sukhani
Date Posted: 18/Dec/2007 at 8:03am
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scary is a wrong term, I suppose. Both of the companies have maheshwari managements, both the companies are extremely honest in their reportings, both of them comply very well with all the regulations. Infact, Kabra extrusiontechnik was the first company I actively tracked during my college days. And withing a few day of my tracking, Kabr declared a bonus. That was the time when stocks used to sleep and Kabra doubled in no-time. Albert david as a stock pick was located by my dad......he got it at 14 when it just started paying dividends and has been holding it since then and that too when pharma has been such a dog.
Of the 9 names I have given, 4 are maheshwari managements, 2 are MNCs, 1 is a PSU and 2 are South Indian managements. I generally try to limit myself in these four spaces along with companies located in gujarat and Maharashtra. True, this list will change if you ask me for it a month later depending upon their change in yields. Its becoming very tough to ignore Abbott India, Merck india and Novartis now. Even a HUL is now very much on my radar alongwith a Colgate and a glaxo Consumer. But for the moment, I will be backing these 9 companies for yield with an Abbott as the 10th man.
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Posted By: basant
Date Posted: 18/Dec/2007 at 10:31am
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Mohan
Date Posted: 18/Dec/2007 at 11:20am
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If this list changes a month later, does it mean that you have switched positions. In such a scenario , you are not waiting to receive Dividend payout but, using the yield as a measure to identify stocks to trade. Please clarify. ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: rakeshmehta48
Date Posted: 19/Dec/2007 at 12:07pm
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VIP & Omshivaya Ji
In times to come, I will definately share my experiences with all.
SPECIALLY MY FAILURES
because I believe that one learn more from failures than successes. ------------- Fund Management is Most Important |
Posted By: omshivaya
Date Posted: 19/Dec/2007 at 12:32pm
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Thanks very much for that initiative Rakesh jee. You are right!! I am looking forward to it! ------------- 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: rakeshmehta48
Date Posted: 19/Dec/2007 at 9:04pm
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. [/QUOTE]
somehow I have an inkling that so long as what you intend to accumulate goes on going down and what you incline to dispose of continues to spurt up, there's nothing to worry. [/QUOTE]
Re Yield Play:
I will suggest a safe way of easily doubling your yield returns without any extra risk. You may play with your excisting stocks.
Any one can adopt this system but it may suit more to your trading style.
I will make a write up in a day or two. Just wait pl.
Sorry, I am bit slow at responding. ------------- Fund Management is Most Important |
Posted By: Vivek Sukhani
Date Posted: 19/Dec/2007 at 8:18am
Generally high yielders are a difficult sell. But you will always have to worry about en masse exit of yield mongers. Plastiblends and thirumalai and JK Paper will always suffer from the yield mongers exit syndrome. So, whenever you get a better balanced opportunity you have to make an immediate exit in your holdings and enter into new found names.
For us, dividend receipt is not as important. We want higher yields. For us, every transaction should lead to higher dividend from the same amount. Dividend is what we will get at the end of the year. If by churning I have jacked up my yield to 15 p.c.p.a.the last company which I am holding will give me that 15 p.c. The 2 things which I generally try to hunt the information about, is the repayment schedule and the dividend payout related information. I go for companies where the promoters exercise ultimate control, there is no creditor stake and the management believes in milking dividends, though not at the cost of the fixed assets and working capital requirements.
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Posted By: Mohan
Date Posted: 19/Dec/2007 at 11:25am
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For us, dividend receipt is not as important. We want higher yields. [/QUOTE]Thanks. Thats what I was looking for. ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: rakeshmehta48
Date Posted: 22/Dec/2007 at 12:11pm
somehow I have an inkling that so long as what you intend to accumulate goes on going down and what you incline to dispose of continues to spurt up, there's nothing to worry. [/QUOTE]
Re Yield Play:
I will suggest a safe way of easily doubling your yield returns without any extra risk. You may play with your excisting stocks.
Any one can adopt this system but it may suit more to your trading style.
I will make a write up in a day or two. Just wait pl.
Sorry, I am bit slow at responding. [/QUOTE]
Dear Vivek
I suggest you may consider writing covered calls for the stocks you are holding for yield purpose. There's no extra risk involved. As you had written, the presumption is that:
So why not earn extra buck on this stock. I do not know the exact rates in India, but I believe the strike price premium for one month call should be in the range of 4-5% and premium at 10% away should not be less than 2%(You may kindly check and inform) You may consider selling calls of a strike which is approx 10% above market price and earn premium. Now if the stock goes up by more than 10%(Your strike price) your underlying stock will be delivered at higher price plus you keep the premium.
If the stock price comes down or doesn't go up more than 10%, you keep the premium collected.
You may do it month after month. The end result will be
If your asset is yielding 10%PA you may easily add 15-25%PA via this route. This scheme will act better with active and liquid stocks. NOTE: YOU MUST CONSULT YOUR BROKER BEFORE YOU TAKE ANY POSITION IN DERIVATIVE MARKET. ------------- Fund Management is Most Important |
Posted By: omshivaya
Date Posted: 22/Dec/2007 at 3:07pm
Wow!!! Sab uppar se nikal gaya! My ignorance, not your fault at all Rakesh jee ------------- 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: rakeshmehta48
Date Posted: 22/Dec/2007 at 3:50pm
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I will try to explain with an example.
Suppose you own a stock "X" and market price is RS.100
You may sell 110 call for say RS.2 for one month (Which will expire on last thursday of that month)
-On expiry if the price is over 110, your original shares will be deliverd. You will get 110 sale price plus 2 premium. Total 112. (Means, your original share which was at 100, on the day of deal, is now sold for 112)
- If on expiry the price is less than 110, your original stock remains with you and you pocket premium of 2 for that month.
- Then next month you can do the same thing. And continue doing same month after month or till stock is deliverd (Sold) at a price higher than the price of day of trade.
PLEASE NOTE THAT IF YOUR STOCK GOES UP TOO MUCH DURING THAT MONTH, LET'S SAY 100 RS. STOCK GOES TO 120 OR 130 RS. IN THE SAME MONTH(BEFORE EXPIRY OF OPTION) YOU WILL ONLY GET PREDETERMINED PRICE, WHICH IN ABOVE EXAMPLE IS 110 + 2 = 112
You may select any strike price and period. In this case say 105, 110, 115 etc. and for 1, 2 or 3 months. The premium will vary accordingly.
Derivative markets are very complex. There are hundreds of permutation and combinations available.I have tried a simpler model.
I take it this way: It's like earning interest on your stock holding.
OFCOURSE YOU MUST TAKE NOTE OF THE PRESUMPTIONS MADE IN MY EARLIER MAIL.
------------- Fund Management is Most Important |
Posted By: us121
Date Posted: 22/Dec/2007 at 7:02pm
Today only i read following quote in outlook money of 31st dec p.46 in 'WIDE ANGLE' article by uma shashikant. and i was thinking to post the same under exist strategy thread.... but thought posting here in response to the words of wisdom stated by basantji...... "Most of us, perhaps, seem to have boarded the train without knowing where we want to go. Obviously, at every stop we panic as there is a buzz of people coming in and going out, and we begin to ask around if we, too, should get off" ------------- ABILITY will get u at d top. CHARACTER will retain u at d top |
Posted By: basant
Date Posted: 22/Dec/2007 at 8:30pm
Allso we need to understand how much we are betting on the running trains as a peercentage of our portfolio because unless the bet is significant all that we can derive is excitemet. Also it is the running train that gets converted into a burning train and unlike the silver screen a happy ending is never guaranteed here. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: us121
Date Posted: 22/Dec/2007 at 8:48pm
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Very true. That is mantra of concentration being alert every moment and ignoring the noise. ------------- ABILITY will get u at d top. CHARACTER will retain u at d top |
Posted By: Vivek Sukhani
Date Posted: 22/Dec/2007 at 9:44pm
| Yes, many of my friends have advised me regarding this. But in case the stock price falls down then at the end of the month I will be holding cash and no stock. Sure, there can be premium of the call sold but I dont want to encash my investment. I am interested in churning but not encashing. As I have always indicated that I sell only when I have to buy something else and I buy something else when I have sold something as well. Kindly note, for me the yield is more of a barometer. There are many a times when I churn without the receipt of the actual dividend. All I am trying to do is to increase the yield of my portfolio. I learnt this trick from my grand-dad and my dad and am merely continuing the trade although I am considered to be quite aggressive in my churning. |
Posted By: rakeshmehta48
Date Posted: 23/Dec/2007 at 5:38pm
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That's absolutely wrong. If you sell a call and the stock price falls, you will be holding your stock and not cash as mentioned by you. REPEAT: YOU WILL BE HOLDING YOUR STOCK ------------- Fund Management is Most Important |
Posted By: Vivek Sukhani
Date Posted: 23/Dec/2007 at 10:48pm
| Yes, I agree I was wrong. I am so much out of touch with F&O nowadays......but, Mr. Rakesh, what if price moves up. In order to cover for my call , dont I have to pare stocks. |
Posted By: rakeshmehta48
Date Posted: 23/Dec/2007 at 2:02am
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yes Vivek, if price moves up(above your call) your stock will be delivered(sold) at higher price.
I have mentioned it very clearly in my earlier mail.
AND THAT'S WHAT YOU HAD MENTIONED IN THE FIRST PLACE THAT YOU WILL BE HAPPY TO PARE WITH YOUR STOCK IF PRICE GOES UP. ------------- Fund Management is Most Important |
Posted By: rakeshmehta48
Date Posted: 23/Dec/2007 at 2:36am
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EXIT STRATEGY
Consider selling a stock if the price is going up but OI is coming down.
Most probably you will get reentry at lower price. ------------- Fund Management is Most Important |
Posted By: Vivek Sukhani
Date Posted: 23/Dec/2007 at 9:11am
| Actually Mr. Rakesh, I have a very maverick style of working. I try to keep off from market hours as much as i can......so F&O is totally ruled out. Moreover I got pissed off with some of my technical analyst friends who kept on irritating me with why tata chemicals was having a negative cost of carry. Since then I have avoided looking at any F&O related information. I am strictly adhering to my dad's principle of buying only when I have the adequate money for that and selling when I have the adequate quantity. |
Posted By: vinoodpk
Date Posted: 25/Dec/2007 at 11:12pm
| And why is that Vivek? Looks like your dad and grand dad do have some strong principles which they have learnt during their time in the market. Can you share with us that thought process (At first glance it looks more or less like risk containment should something go wrong drastically) |
Posted By: kannanravi1
Date Posted: 05/Jan/2008 at 5:50am
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All,
Here is my exit strategy:
Disclaimer: I have only been investing for a couple of years and as such consider myself a newbie in this field. My theories have not been time tested and I am not very confident of them yet, especially the exit side theories.
My exit strategy is intimately linked to my entry strategy. My entry strategy is to identify good companies which generate strong free cash flow and provide above average dividends (and should also meet a few other stringent criteria) and buy them at 50% discount to my fair value estimate (my fair values are typically very conservative and involve more negative thinking than positive). My exit strategy is to sell out when the valuation reaches 125% of my fair value estimate.
I typically sell or flip not to lock in profits but more to increase the 'risk-free yield' . I coined this term myself. For example, if I buy a company worth Rs. 1 for 50 paise, my risk-free yield is 50%. I consider this to be risk-free because it gives me sufficient cushion for error in case of future cash flow negative surprises or broad based recessions etc. Lets say after a year, it becomes worth 90ps. Now my risk-free yield has been reduced to 10% (if fair value hasn't changed over the year). If now I see a company that offers my a risk-free yield of 50% I typically maybe tempted to flip. In this way, my error cushion increases. Another case could be that I don't see a company to flip, and the valuation goes up to 125ps. In this case, I know the company is overvalued and this reduces my risk-free yield to effectively negative. This makes me uncomfortable and so I typically cash out and hold cash. I typically only sell/flip after 1 year holding because I hate paying taxes:)
Sometimes, if the fundamentals have changed, I might not be confident of my fair value estimate. In such cases I may cash out a percentage and hold the rest and then 'wait-and-watch'. This is happening to me especially in the case of Reliance Ind. I bought it when it was just an oil company. Now it is a whole lot more..but not time tested in any other field other than oil. So I am unsure as to how to get to a fair value for RIL. Hence I cashed out some and am holding the rest. ------------- kannan |
Posted By: kannanravi1
Date Posted: 05/Jan/2008 at 7:41am
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I would also like to add that I am a dividend monger, and sometimes do exit for better yields too. This may look contradictory to my risk-free approach, but it really isn't. I have found that higher dividend yields, more often than not, is a symptom of undervaluation. Thus flipping for greater yields often takes one along the same road as risk-free yield approach. Also, because of this approach, I would rather have my stocks not appreciate, since this will enable me to keep on buying my favourite stocks. I hope to get my returns not from price appreciation, but through dividends and share buybacks (case in point is Tata Investment. It rewarded its shareholders by hefty dividends and now a massive share buyback). ------------- kannan |
Posted By: Vivek Sukhani
Date Posted: 05/Jan/2008 at 8:15am
This sounds very similar to the margin of safety principle. Although we have a very similar style, yet I generally keep on buying till I achieve a decent quantity for myself and so instead for 50 p.c. risk-free yield ( term coined by you), I go on bargaining till 25 p.c. yield. My concept is that your profit in absolute terms go on increasing till marginal revenue exceeds marginal cost. So, I go for profit maximisation alongwith yield maximisation.After my dad got ONGC shares in its IPO, my first secondary market purchase was when it was less than 1000 rupees( cum-bonus) and my latest purchase was when it was 1243( ex-bonus). The same is true for Great eastern shipping. With GE Shipping my fancy has been such that all my friend knows that the moment it goes off 20-25 p.c. off its highs I will start buying. You are much more disciplined than me and i play the game entirely on my whims and I really love my stocks and dont book out with 2.5 times generally. ( this is the return you make when you sell a stock at 1.25 times its fair value having purchased it at half its fair value). However in spirit, we have a very very similar style.
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Posted By: Vivek Sukhani
Date Posted: 05/Jan/2008 at 8:19am
This road will take you to many MNCs.
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Posted By: smartcat
Date Posted: 05/Jan/2008 at 10:56am
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But how do you arrive at a 'fair value' of a stock? Based on P/E? Then who's to say a company has to trade at a particular price to earnings ratio?
And when you say 'fair value', do you mean fair value in FY09 (based on some cash flow assumptions) or fair value of the stock right now?
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Posted By: sushil
Date Posted: 06/Jan/2008 at 9:20pm
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I get out when momentum players get into buying the stock. Momentum players can take the stock to any height but we should be happy with whatever gain we made. One example was Aegis Logistic as it went to above 300 in few months some two years back from less than 70 odd level. We could see the volume rising unnecessary during that time. But when the momentum players got out of the stock, it went to bear phase with very low volume and made solid bottom at 120/140 level (time to buy again). Nobody seems to be interested at this level. I believe a time always come when value emerge and a good business is available for cheap. The stock is again trading above 350 and everyone seems to be interested in it again. As a disclosure I trade(buy/sell) Aegis logistics. ------------- Please note that Investing in stock market can result in financial loss. Make your own judgement before investing on any company. |
Posted By: kannanravi1
Date Posted: 06/Jan/2008 at 10:12pm
I definitely would like to get a few but not finding enough time to research lately since I am bogged down with office work. Any that you have found interesting lately (other than Foseco which you called out in this thread), if you don't mind me asking? ------------- kannan |
Posted By: xbox
Date Posted: 06/Jan/2008 at 4:36am
When posts in subject thread increases unexpectedly  ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: valueman
Date Posted: 14/Feb/2008 at 9:04am
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When Mungerilal's start talking about it in offices , marriage parties , railway stations , bus stops etc ------------- To achieve satisfactory investment results is easier than most people realize ; to achieve superior results is harder than it looks . Benjamin Graham. |
Posted By: India_Bull
Date Posted: 15/Feb/2008 at 12:29pm
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The best answer to this question is sell it when it meets your expectation.. it depends on whether you are a day trader/short term/long term trader/investor.. just only dont exit in panic and when everyone around is exiting. ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: Mohan
Date Posted: 18/Feb/2008 at 11:53am
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A hypothetical example is when does one leave a party. A really exciting, full of life and happening party.
Are you one who stays till the very end ? When even the host has left ?
or are you one who leaves when the party is at its most exciting, noisy, time when everyone is having a great time ?
With the party Throbbing with energy, at its fullest ?
The market is like a party too. ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: basant
Date Posted: 18/Feb/2008 at 11:57am
Excellent anecdote but it has added to the confusion.No one leaves a party when it is " at its most exciting, noisy, time when everyone is having a great time?With the party Throbbing with energy, at its fullest?".
 ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Mohan
Date Posted: 19/Feb/2008 at 12:05pm
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In the market, it pays to think independently and not be with the crowd.
examples. there is only one Warren Buffet, one Sameer Arora and
one and only one Basant Maheshwari.
( I have a completely new perspective based on my recent experiences in the markets )
No Confusion. Just follow what Mr Market wants you to do. ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: stockaddict
Date Posted: 16/Oct/2008 at 12:40pm
"In the long run.........We are all dead"
I remember reading ACC touched 5 digit levels in Harshad Mehta days, Infosys barely scaled its IT boom peaks after 7-8 years.........so take you profits when you see them and run when valuations become too much to handle. One can always buy back when sanity returns and if stock goes still higher, remember "nobody ever went broke booking profits"
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Posted By: valueman
Date Posted: 16/Oct/2008 at 1:09pm
It depends upon where you keep those profits .If the booked profits were kept locked in a FD or a Postal Savings Scheme it is fine or it is plainly kept as Cash also fine . A cousin of mine booked his profits when sensex was at 21000 and rentered at 16,000 thinking it is a value buy and every dip he was just averaging and now his portfolio is back to red .After 6 months his portfolio many be back to green and no one knows . What I mean to say is booking profits is great but more important is how best you preserve those booked profits . ------------- To achieve satisfactory investment results is easier than most people realize ; to achieve superior results is harder than it looks . Benjamin Graham. |
Posted By: stockaddict
Date Posted: 16/Oct/2008 at 1:38pm
| totally agree! booking profit in one and losing in another defeats the purpose. |
Posted By: subu76
Date Posted: 16/Oct/2008 at 4:51pm
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Well thinking about booking profits (as opposed to cutting losses) would be a welcome change for me. :) |
Posted By: hallmark
Date Posted: 16/Oct/2008 at 5:05pm
As Buffett would say "Nobody got rich by selling either".
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Posted By: nitin_jagtap
Date Posted: 16/Oct/2008 at 5:25pm
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All these statements are said in some particular context and we need to get the context right before making generic assumptions and apply all these principles. ------------- Warm REgards Nitin Jagtap |
Posted By: Mohan
Date Posted: 16/Oct/2008 at 4:53am
I hope the confusion has cleared. ITs time to prepare for another party. ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: tigershark
Date Posted: 16/Oct/2008 at 5:54am
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hopefully it will be in a different country ------------- 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: hallmark
Date Posted: 16/Oct/2008 at 11:41am
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When to sell a stock? When the fundamentals of the company have gone for a toss one sells one's stock. As for good companies in one's portfolio it never pays to sell even if they are trading at high PE's. Sure an enterprising investor would sell a fundamentally good scrip at 21,000 and reenters at 15,000 thinking it to be the bottom, when in fact markets have reached 10,000 levels, he would still be sitting in a loss. Better toss away the bad scrip, retain the good one.
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Posted By: subu76
Date Posted: 17/Oct/2008 at 12:12pm
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I haven't sold any stock with any reasonable profit. Applying hindsight wisdom to call out some possible triggers:
1. When some very improbable things happen.
e.g. When Azim Premji's wealth was comparabled to that of Bill Gates.
I remember something like this happened during the last boom.
2. When the RBI states they are going to work hard to suck out liquidity from the system.
3. When US markets collapse. Because redemtions on FIIs in US will also force them to sell in India.
BTW, when i revisit some of the old links i see quite a few TEDites called out the market exuberance when the Reliance IPO was happening. RJ called this out in Sep. Perhaps these could be triggers to atleast not put in New money in the market.
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Posted By: rapidriser
Date Posted: 17/Oct/2008 at 12:22pm
Very true. But what counts is whether they acted on their call and sold a significant part of their shareholding into cash before the Reliance Power IPO.
For example, I had been bearish on the market since Nov-07 when the sensex started rising by 1,000 points almost every fortnight. But, during that time whenever I sold any of my holdings, I regretted it within the next few days as I saw it rise by another 5%. The end result was that when the Jan-08 crash came, I had hardly converted any of my holdings into cash.
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Posted By: subu76
Date Posted: 17/Oct/2008 at 2:00pm
Yup, i really doubt i'll be able to sell esp when big money is involved and you see a 10% spurt regularly.  Sad but true.
That's why I am thinking it best to buy high conviction stocks only.
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Posted By: equity analyst
Date Posted: 17/Oct/2008 at 2:16pm
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trend have become very very bad for our mkts, now its scary to hold out the stocks, i think we r headed much lower from current levels. i might be wrong also but i have lost my conviction in the mkts. i ------------- "Markets are the places where two types of people meet up in the morning: those with experience and those with money. Towards the end of the day, they exchange their assets and go home." |
Posted By: Hitesh Shah
Date Posted: 17/Oct/2008 at 2:52pm
aapne aap ka sentence poora nahi kiya? ------------- |
Posted By: equity analyst
Date Posted: 17/Oct/2008 at 3:17pm
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@hitesh bhai Sijee bhool se I reh gaya.............. ------------- "Markets are the places where two types of people meet up in the morning: those with experience and those with money. Towards the end of the day, they exchange their assets and go home." |
Posted By: equity analyst
Date Posted: 17/Oct/2008 at 3:19pm
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Sold LT and reliance, nifty futures ..............
------------- "Markets are the places where two types of people meet up in the morning: those with experience and those with money. Towards the end of the day, they exchange their assets and go home." |
Posted By: subu76
Date Posted: 17/Oct/2008 at 3:36pm
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Now i know why the beast is in a free fall |
Posted By: basant
Date Posted: 17/Oct/2008 at 3:37pm
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Just take it cool. No one knows what can be right but in about 3 years hence we will all look back and reflect as to what we should and should not have done.
This does not mean that falling prices do not worry me but the only solace is the PE of Fy10 that I can see with the stocks which I hold.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Hitesh Shah
Date Posted: 17/Oct/2008 at 3:42pm
Main socha ke woh conviction bhi nikal gaya  ------------- |
Posted By: smart_prof
Date Posted: 17/Oct/2008 at 9:01pm
Basantji, latest what buffet says (he says buy) http://www.cnbc.com/id/27230391?__source=RSS*blog*&par=RSS |
Posted By: 9StockPortfolio
Date Posted: 19/Oct/2008 at 11:31am
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One has to keep cool until stock price reaches or crosses it's intrinsic value. should not worry if bought at right lavels with right margin of safety. regards 9StockPortfolio ------------- Pursuit of Value |
Posted By: equity analyst
Date Posted: 20/Oct/2008 at 1:29pm
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Sir, if we can get the same stocks below 20% from its current value i think there is no harm in being short. No body knows when a stock reaches its bottom but i m keeping at least 14-17% target from the current levels. regards ------------- "Markets are the places where two types of people meet up in the morning: those with experience and those with money. Towards the end of the day, they exchange their assets and go home." |
Posted By: equity analyst
Date Posted: 20/Oct/2008 at 1:56pm
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REPO RATE CUT!!!!!!!!!!!!!!
------------- "Markets are the places where two types of people meet up in the morning: those with experience and those with money. Towards the end of the day, they exchange their assets and go home." |
Posted By: equity analyst
Date Posted: 20/Oct/2008 at 1:57pm
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REPO RATE CUT!!!!!!!!!!!!!! sold some more at 3200............. ------------- "Markets are the places where two types of people meet up in the morning: those with experience and those with money. Towards the end of the day, they exchange their assets and go home." |
Posted By: manish_okhade
Date Posted: 20/Oct/2008 at 7:45pm
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Dear Basant,
I am a new member to TED and thoroughly enjoyed this forum and looking forward to participate in the forum with my analysis.
Just a one small feedback - Though you are providing a complete viewpoint on a given scrip but it helps if we also share the exit info for a perticular scrip discussed and shared in TED alongwith author's rational for the same. This is something which is equally important as buying time , i never come across it in any of the topic for right time to sell.
Rgds
Manish
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Posted By: basant
Date Posted: 20/Oct/2008 at 8:33pm
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Exiting is something which we messed up but as Buffett says "Have the purchase price be so attractive that even a mediocre sale gives you good results".
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: nav_1996
Date Posted: 20/Oct/2008 at 9:13pm
| Yes. I think it is a great idea to discuss exits also. Few may agree and few may disgree but it will definitely help few. |
Posted By: Mohan
Date Posted: 20/Oct/2008 at 12:12pm
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Read a book long time ago called "Its when you sell that counts" Exits is just as important as entries. If not more. Its important to figure out what is the motivation/ purpose behind making money in stocks. Is it a means to an end or an end by itself. ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: manish_okhade
Date Posted: 21/Oct/2008 at 1:16pm
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Taking this thread forward, Can any of the following discussed stock deserve the exit or still we should hold for future:
Pantaloon
TV 18
BlueStar
HDFC Bank
Voltas
etc..
and so on...Just thinking growth of few stocks like Pantaloon,Bluestar etc is closely linked to growth of Real Estate sector (new malls,multiplexes etc) which is under fire and will remain under fire for next few years so it makes sense to hold/accumulate indirectly realty based stocks?
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Posted By: equity analyst
Date Posted: 22/Oct/2008 at 10:06am
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will cover some of my shorts at 2900 nifty, was short on LT , reliance and nifty futures. But still having doubts about upside................. ------------- "Markets are the places where two types of people meet up in the morning: those with experience and those with money. Towards the end of the day, they exchange their assets and go home." |
Posted By: stockaddict
Date Posted: 23/Oct/2008 at 3:09pm
Dear Manish,
This is one thing which probably none of us have figured out ! Most of us have learnt it the hard way that selling out when the price gets way ahead of fundamentals is very important too.
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Posted By: equity analyst
Date Posted: 23/Oct/2008 at 10:50am
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i have acted early to cover my shorts............ this mkt is goin down down down..............  ------------- "Markets are the places where two types of people meet up in the morning: those with experience and those with money. Towards the end of the day, they exchange their assets and go home." |
Posted By: equity analyst
Date Posted: 23/Oct/2008 at 10:59am
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this is a crazy mkt u dont even get a bounce back to short, bears r so confident that what ever they sell at what ever price they will get 10% lower the very next day......... the same procedure was seen at dec ,jan 08 but of course totally opposite. ------------- "Markets are the places where two types of people meet up in the morning: those with experience and those with money. Towards the end of the day, they exchange their assets and go home." |
Posted By: basant
Date Posted: 23/Oct/2008 at 11:17am
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Nothing crazy that is how markets operate and for investors they should be able to survive as they say every bull/bear has his day!
Unfortunately in times like these either investors intend to chase returns by buying the fallen stocks or withdraw from the markets.
The formula remains simple - look at companies that can grow at 30%+ CAGR with some degree of comfort and leave the rest to time. Easier said then done though...
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: subu76
Date Posted: 18/Nov/2008 at 4:09pm
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John Neff: "When you feel like bragging, it's probabily time to sell"
Neff is a reknowed low P/E investor and beat S&P for 22 of his 31 years career. He made a very concentrated bey on Ford in 1984 when buying auto was completly out of fashion and it's P/E was 2.5 and made a 4 bagger.
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Posted By: valuepicks
Date Posted: 10/Jun/2009 at 7:50pm
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Has come across this thread that was initated long ago.
By theory, we have three kinds of picks - Value, Growth and Dividend yielding. So, exit should be synchronous. i.e., Exit a value stock, what was probably bought when CMP was trading below book value, when it reaches the book value. If other means, like low P/E was used to enter, than exit at higher P/E.
Similarly, growth scrips that might tend to grow their revenues or EPS at about 30+% should be exited when growth plateaus.
Dividend stocks, when the yields decrease or probably when one realizes that the company stopped giving dividends for a while.
But all said and done, implementing and benefiting from an exit is an experience in itself. I am yet to experience such happiness in getting an exit right
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Posted By: Hitesh Shah
Date Posted: 30/Aug/2009 at 1:25pm
http://www.moneycontrol.com/india/news/mf-interview/see-new-high-for-mkt1-2-years-buydips-reliance-mf/413329/1 - Source ------------- |
Posted By: rajivsubra
Date Posted: 08/Sep/2009 at 2:15pm
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Here's a question on selling strategy for long term investors:
Lets say we have identified the intrinsic value of Tata Motors stock to be around 580 - and the current price is around 560. The stock has been held for 3 years, has limited upside from this point on. How do others exit their positions? A. Do you wait till your EXACT intrinsic value is hit? Keep in mind it may never be actually hit B. How do you execute the sale? Put a limit price sell order for your intrinsic value estimate? or just a market sell order on the day the intrinsic price is hit? Anyone who has figured out how to execute the sale of their large long-term holdings please help! |