Saturday, January 9, 2016

STOCK SELLING STRATEGIES ....

 Courtesy :oldschoolvalue.com


Buying stocks is easy, but do you have stock selling strategies? Do you consider your exit strategy prior to buying a company? The exit strategy is just as important as the entry strategy. The entry strategy is something everyone considers, but when do you sell? 

 Here are some  reasons for stock selling :
  • You made a mistake in judging the company
  • The company fundamentals have changed
  • A better value or opportunity comes along
  • The need for emergency cash
  • Too far above intrinsic value
Acknowledging a Mistake

I believe this to be one of the key psychological barriers that an investor has to break in order to be successful. You have to be honest with yourself and remember your mistakes. Nobody wants to admit they are wrong, but as human beings, we are wrong quite often.Too often, investors know they’ve made a bad decision but choose to hang onto the losers until they can at least break even or come out with a tiny gain. This usually leads to a larger loss. If that stock is able to break even and we sell at that point, our mind does not recognize this as a shock. This bad decision eventually gets swept away only to be re-enacted at a later time.

If we know that a mistake has been made, sell.

Change in Business Fundamentals

This is pretty self explanatory. If a fashion company decides to start expanding or change its business to the agriculture industry, then we have a problem.Even if the prospects in the  same industry turn bleak and no chance for a revival on foreseeable future -Sell

Better Value Investment Ideas

An investment is defined as
The investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value. – dictionary
If the reason we are investing is to obtain profitable returns, doesn’t it make sense to sell a current investment in order to invest in a better, more profitable opportunity?. This is not just limited to stocks. You could find better value in real estate, bonds, coins, cars, antiques etc.

Better value knocking on your door? Sell.

Sell Stocks for Emergency Use

Life brings all sorts of situations. If you are in need of emergency cash, there is no real reason to visit a loan shark or bank to borrow money that you may already have.
This is a hard situation to call, but if this emergency is extremely urgent, sell.

Over priced and Valued

Intelligent investors monitor their companies, not the stock symbol. We understand that all companies have an intrinsic value. If you bought a great company at a discounted price and the price has now reached the intrinsic value, you could sell or hang onto it because you can fairly expect to receive a certain rate of return from your intrinsic value analysis and discount rate.But due to Mr Market’s craziness, say the price of the company shoots beyond the intrinsic value. Selling in this type of scenario is also psychological. Your greed is nudging you, grinning and nodding, telling you “you know it’s going up further”. If this ever comes around, halt, and reread or rethink your analysis and get back to basics. Price follows value, and if the price is pushed up due to speculation and hype, price will eventually meet value.

121 comments :

  1. Good morning & A very Fruitful Lesson u teaches us today.. Thanks as always u Deserve...

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  2. Dear Sir, Are You tracking Maximaa Systems ltd

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  3. Very nice article. I will share with all of my friends.

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  4. One of the highly relevant post for today's market

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  5. Can you send a link of mutual funds that you might have discussed previously?

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  6. Thanks for such a Important lesson

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  7. Thanks for your sincere effort, could you tell your opinion on Lovable Lingerie Ltd.for long term....Ravi Gupta, Hyderabad

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  8. Good morning Sir. You have touched many valid barriers which we face while dealing in shares. A big thank you Sir.

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  9. Thank you once again !
    Rightly timed article so that investors do not unnecessarily panic in volatile times.

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  10. Thank you for sharing such a nice article with us.kindly let me know your views on kpit bharat forge and ujaas for long term point of view.

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    Replies
    1. Sorry, not tracking any of these companies.

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  11. Nice article we need to be serious in investing,periodic monitoring is also inevitable.Thanks for the article VP SIR

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  12. Thanks VP Sir,

    Much needed Info on when to sell a stock.

    Thanks and Regards,
    Kishan

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  13. Sir, when internationally the conditions are not promising; FIIs are net sellers in the Indian markets, which stocks are to be picked - the ones with much investments from FIIs, DIIs and MFs or the ones which may not have investments from IIs. Please guide.

    ReplyDelete
    Replies
    1. I would prefer to take investment decisions not based on whether FII's ,DII's or MF's invested in a stock or not but on the basis of the business prospects of company and valuation of stock is reasonable or not.

      Delete
  14. Dear sir,
    Are you tracking Majesco.Kindly share your view for the same
    tks

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  15. Nay view on vishnu chemical, entered at high price. whether exit or hold

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  16. Thank you guru Ji, I want to ask you about PSU banks as they have intrinsic value but their performance is muted. Is there is any possibility of these scrips coming back to glory in near future.

    ReplyDelete
    Replies
    1. Not expecting any miracle in 'NEAR FUTURE'

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    2. Thank you Guru Ji

      Delete
  17. Sir, can you please share your views on Enkei Wheels ?

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  18. Hi Sir, good evening. Please share your view on surana Ventures

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    Replies
    1. Not tracking any companies of this group

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  19. Dear plese your view on future consumer, future retail

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  20. Hi VP sir,
    MIC electronics declared Q3 results, can you please share your views on the results. Also can you please throw some light on why every quarter the profit is being overstated by almost 6 crores. How is the stock for long term view

    ReplyDelete
    Replies
    1. Reason for overstatement explained in the notes itself .

      In this quarter , there is an exceptional expenditure of Rs.7 Cr accounted . I would prefer to share my view only after understanding the reason for this expenditure.

      Delete
  21. Hi VP Sir, your views about MIC ELECTRONICS results. Posted decent results. Exceptional item is around 7 crore provided, otherwise results are very good. Your valuable views please

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  22. Dear Sir,

    Your view on Dena Bank considering long-term investment.

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  23. Dear Sir,
    Pls share your view on LLOYD ELECTRIC AND ENGINEERING
    It seems very under valued stock compared to competitors.Market capital is only 1000Cr.High and steady growth for last a few years.Huge potential on Air Conditioner division,good demands for newly launched products like LED TV.Re structuring of service support div.Only one negative is huge debt.
    Pls share your view.

    ReplyDelete
  24. Is it a good share L&T-finance for long term say 2 years.pl share your view

    ReplyDelete
    Replies
    1. Nothing to comment about time bounded investment in stocks.

      Delete
  25. Sir,
    Holding Granules from last 4 years and would like to continue doing so. But with change is your updates due to SEBI crazy rules, would you give a idea when to do profit booking in companies as and when needed?

    Thanks

    ReplyDelete
    Replies
    1. Adjusted to stock split , Granules already turned as a 20 bagger for my old readers .I prefer partial profit booking to cover cost plus some profit and keep the remaining as cost free.

      Delete
  26. Sir, What are your views on shipping stocks? Especially GE shipping. With the oil prices down and countries reserving oil, ships should be in great demand thus the profits.

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    Replies
    1. Expecting range bound movement is Shipping stocks.

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  27. Sir are you expecting a big fall in markets in near future ?

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    Replies
    1. There is euphoria in small and mid caps , so better to be cautious especially in stocks moved very fast in recent times without any fundamentals.

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  28. sir ur call on patels air temp.

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    Replies
    1. Comparatively better placed in that sector.

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  29. Hello Sir,

    Hope this message reaches you as my earlier post did not appear. Sir HDFC Securities have suspended trading in Mindteck due to risk management concerns. How do you see this from a retail investor prospective with average risk appetite.

    ReplyDelete
    Replies
    1. If there is fund in client account what risk brokers are taking by allowing their clients to buy any stock ? .Will they pay for clients if they met loss in other stocks ?

      Try to find a broker allowing purchase of any stock listed in stock exchanges if there is fund in your account.

      Delete
  30. Please share ur views abt cmi fpe.can it swim through these difficult times

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  31. Sir can we ask CS of company for clarification on exceptional item of 7 cr?

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    Replies
    1. It is your right if you are a share holder.

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    2. Sir
      Very Nice Article. Please share your views on Pipava Defence and Ultra Tech Cement

      Delete
  32. Sir you views on Mindteck (India) Ltd one of my friend suggested me to have a look at this company sir do you track this company if yes please give your little bit insight about it would be helpful for me if you are tracking it and when i went through the profile and what they do looked quite interesting especially the cloud computing part.

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    Replies
    1. Opinion about it already shared in MMB

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  33. Right time, right message from right person. Thank you VP.

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  34. Pls share view on Shree pushkar chemicals and fertilizers

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  35. Good Morning, again asking about ilfs engg.testing investors patiance level.shall we stay invested or can buy more now or book the loss? Little help needed.so plz reply.

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    Replies
    1. My opinion to investors whose patience level is low already shared as a comment below the last posting on IL&FS.

      Delete
  36. Avanti Feeds has sold its shrimp processing business to its subsidary. Is it good or bad ? Whats your view sir ?

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    Replies
    1. Already suggested to book profit,as of now not tracking.

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  37. what are your view on donear industries and kirloskar electric? I have been holding them for a while and in some profit. Do you see a reason to hold onto them further at this price?

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    Replies
    1. No reply to this means not tracking the stock I guess?

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  38. Dear sir,
    Is mic a still hold after debt conversion or should i sell? Pls advice

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    Replies
    1. Depends on the reason of your purchase whether is purely on the basis of debt conversion and its implication or other factors too.

      For me, the major worry was the nature of Rs.7 Cr extra ordinary expense in last quarter .Now it is learned that the same is a one time case and I prefer to Hold it.

      Delete
    2. Thanks Sir for the update. I am holding MIC though there was huge sell going on due to panic created in MMB board

      Delete
  39. Hi Sir ur View on Pantaloon Merger.and Also on DCW.. Thanks in Advance

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  40. Pantaloon's scheme of arrangement is an already known fact to everyone and we have already discussed it ,now the record date fixed.

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  41. Hello VP sir, Happy new year. Not sure why my posts are not showing up.

    Now that your are not suggesting stocks, could you please throw some light on which are the key parameters to invest in a company for long term? For instance how should we analyze the P/E? Some ppl say the P/E should always be less than 15 for a growing company, but some of the companies you have suggested earlier have had greater P/E. So how do we go about it?

    Also how to assess the other parameters like EPS, book value, Cash in flow, Reserve, Debts etc...

    How do we choose a company which is undervalued in the market?

    If you could advise on which parameters to analyze before picking a stock, it will be of great help to some new investors like me who want to do their own analysis.

    ReplyDelete
    Replies
    1. Answer for such general subjects easily available in the web.

      Delete
  42. Sir, your view on Gujarat Alkali and Chemicals?
    Did my part of research and see that debt is negligible, business is showing improvements and can be a gud pick for long term

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  43. Dear Sir,

    Your present view on Pioneer Emb? can I partially book the profit?
    Please advice

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    Replies
    1. Waiting to see the impact of debt settlement with more banks.

      Delete
  44. Sir, Please share ur views on Aviation Stocks.

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  45. Thanks a lot VP sir, such a wonderful article. No other words. Thanks.

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  46. Dear Sir,
    Could you please advice on peninsula land and nila infrastructures for long term?

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  47. Replies
    1. Mentioned around Rs.17 level, nothing more to add now.

      Delete
  48. Dear sir
    your view about Syncom health care
    regards
    biju

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  49. Sir,
    Are you aware of any adverse news in SKM? The stock is falling without any reason.

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    Replies
    1. There may be two reasons for fall in stock price

      1) General fall in stock market

      2) Unexpected rise in egg prices from mid November ( Reasons for that in the following link :

      http://timesofindia.indiatimes.com/city/chennai/Consumers-feel-the-pinch-as-egg-prices-surge/articleshow/50317940.cms

      Due to this rise in egg price , positional traders and short term investors who always active in stocks near result season may expecting bit soft result in December quarter and it may be the reason for fall in stock price. But currently stock is trading even below the price at the time of last quarter result and hence I believe even if the result may be bit soft than expected earlier ,it already discounted in stock price as far as a long term investor is concerned.

      This is my personal opinion and make own due-diligence before taking any final call.

      Discl: Personally Holding shares of SKM

      Delete
    2. I slightly differ with you (first time) here.

      Even medium size restaurants have a supply contract(yearly) for poultry\sea food\ etc. So in most probability, SKM (with heir 10+ years exp), would also have a similar contract with its egg suppliers for the year. If at-al the suppliers would increase price that would be in the next year, in which case they would have the option to consider absorbing some impact in its final product price. Hope this makes sense :)

      So my expectation of a very good result continues.

      Delete
  50. I read your views on Himalya International expressed in 2014, do you still hold them? I'm skeptical about their entry into real estate projects though they plan to invest in core business. What are your thoughts on this?

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    Replies
    1. Untimely and unnecessary diversification into a non related business- removed from tracking list.

      Delete
  51. Sir ur views on Maximaa systems and diana tea. Thanks

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  52. Dear sir please your view bhafna pharma, welspun enterprise, alok industries

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  53. Dear sir plz your view kwality ltd & dynacon tech

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  54. search option for IDBI not working. Failed to know your view on IDBI from time to time.

    ReplyDelete
    Replies
    1. Not tracking above mentioned stocks.

      Delete
  55. Hi VP,
    Do you track aban offshore and selan explore? If yes, Then can u share your views.
    Aban has a life high of 4900 and now at 200. similiarly selan got plummeted in recent oil mayhem.To me selan balance sheet looks healthier than aban. But potential of aban looks very high. Do you even, feel aban is highly indervalued at such a low PE in this negative sentiment scenario.
    Regards,
    Vinay

    ReplyDelete
    Replies
    1. There is nothing wrong in contra investing it you have enough patience and will power .But one should be very careful and good understanding about the strength of balance sheet . Debt ridden companies may fail to weather the storm if the negative business environment last long .So keep this point in mind while selecting companies for contra investing.

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  56. Sir, your views on Fluidomat. The company manufactures couplings and the technology is dominated by only 4 players world wide.

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    Replies
    1. Fluidomat already suggested @ Rs.27 , neutral at CMP Rs.200

      Delete
  57. Dear VP ji pls share your views on krbl , sahyadri , premcoglobal. Thank you.

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  58. whats your view on axis bank at current level?

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  59. Dear VP,

    What is your views on Moser Baer india ltd.
    Thank You.

    ReplyDelete
  60. do you have any view on RattanIndia Infrastructure & TINPLATE

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  61. Sir your valuable views on current price of ceat and Avanti feeds?

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    Replies
    1. Not tracking Ceat

      Avanti Feeds suggested before face value split around Rs.70 and it reached a high of Rs.3450 thereafter .Stock already suggested to exit and no recommendation as of now.

      Delete
  62. Good news for Multibase India
    http://www.ibnlive.com/news/auto/government-of-india-planning-to-make-airbags-mandatory-in-cars-1189553.html

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  63. Do you track care sir? If yes, ur valuable views on current price sir?

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  64. Sir , could you share your views about ion exchange & Anil ltd.

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    Replies
    1. View about both stocks already shared

      Delete
  65. Sir, Steel sector has seen very much downfall. Which company looks interesting and you are tracking as a counter-bet on this particular industry?

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    Replies
    1. Tracking Tata Steel and Sarda Energy & Minerals from this sector.

      Delete
  66. Hi Sir, Wanted your View on Recent hit of Mid cap stocks like NCL industries , As Large Cap stocks are available in Discount and Mid cap have profrmed exceedingly well do u think sir this year mid cap in general will have tough time and also ur view for long term on NCL industries

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    Replies
    1. Under performance of large caps is mainly due to lack of business growth and over ownership by FII's who sold heavily in recent times. I don't like to take market cap as a bench mark for investment but prefer to take decisions based on company specific business opportunities and availability of such stocks at attractive valuation.

      Delete
  67. Respected Sirjee,
    I am holding 500 shares of Mindteck @Rs.155/,after this week's volatile session,your advice would be very much supportive.

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    Replies
    1. I don't think there is any change in business prospects .

      Delete
  68. sir, your view on skipper scrip and rallis india scrip at current level.

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  69. Sir, please share your views on Shreyas Shipping. Is it advisable to enter now ?

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  70. Not tracking above mentioned stocks

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  71. Sir, your view on Cupid. not on share price but on its fundamental value. Please

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