It isn’t easy to identify the Crucial Time before a Bull Market is Officially Over. The only thing that saves you from market volatility is your investment horizon and a simple but utmost efficient strategy.
Our leveraged positions and wild trading bets in those otherwise unwanted stocks which we may not keep in our core holdings have to go away. News flow always clamours our mind and makes us believe in unnecessary noise which one has to avoid in order to invest and trade right. One can rely on his sources and follow a strategy to stay afloat, but individuals who want to experience and learn the hard way, they have to dig-deeper on their own.
For the lone wolves out there, Survival in the long run is the key challenge to keep up with as different instruments we exercise come with highly varied capital risk possibilities. We can often find ourselves in tricky situations where it becomes difficult to cut losses and strategise again. It’s all about how well you can protect the damage when a bull market comes to an end without notice.
Well, apart from a lucky few forecasters and their following, most of us should actively manage downside probability. You would agree and maybe no one would deny that the complacent nature of a market is the first sign that the damage could be deeper. Timing large corrections isn’t easy as shocks can hit a trending bull market and a clue-less traders waiting in a range to react to awaited cues. So, the direction of your trading bias will always depend on your forecasting ability and the depth of your risk appetite.
Core Stock Portfolio Ideal for Very Long Term (Indian Retail Investor)
As an enthusiast blogger and a ready to learn sort investor, I have kept real close track of Indian stocks in a pursuit of creating a core equity portfolio with stocks of companies that have the potential to survive through the worst of economic phases and hopefully generate decent opportunity for people who do not feel shaky while committing anywhere between 3-15 years. This is my best so far, I hope to build a corpus through investing in these in a phased manner. Do not expect any short term returns as I have tried to make it as balanced as possible.
These are key companies from major sectors with a long history to prove their sustainability, mostly giant opportunities which may be filled with more positives than negatives for committed investors.
This is my first India focused post on the blog, I Aim to share quite often with regular readers. For now let me leave you with the quick list of core stock portfolio ideal for very long term Investors in Indian Stock Market :
1. Bharti Airtel
2. Idea Cellular
4. ICICI Bank
6. Tata Steel
9. Mahindra &Mahindra
10. Reliance Industries
I would give these stocks 50% cash allocation of my entire stock portfolio. I have not included IT and Pharma stocks to the core portfolio due to stretched valuations.
Starbucks (SBUX) is definitely a stock worth looking at despite the fantastic rally over the past five years. It’s a good growth story to bet on for the long term; however I don’t like their net profit margins that stand around 10% at present. Even their dividend yield of around 1.20% isn't really attractive. The most promising part of their business is that they are still expected to grow above 20% annually for next five years. Even its annual sales are expected to rise to $17 billion by 2015.
But, despite such a rosy outlook, the current valuations look a bit stretched. Its currently trading around 33 times price to earnings, has a price to sales ratio of around 2.90 and it price to book ratio nearing 10 times is simply beyond investors comfort level. So, purely on fundamental basis it’s looking expensive around current price levels. Now, let’s see where it stands technically.
Walt Disney (DIS) has been around since our childhood days, but now it’s a completely different company. Over the decades Disney has diversified their business within the consumer services space and at present they have over 166k employees. Even from an investment point of view you ought to love this company, just like old days!
They have a strong presence across media and entertainment space through their five key business segments.
Five years ago Priceline (PCLN) was a mere $50 stock, and now it’s threatening to break past $1000 level. Even more surprising is that this stock was trading around $1000 mark in 1999 soon after its IPO, and then dipped to as low as $10 in the following years. I usually don’t question markets wisdom, but this sort of price action clearly reflects deep rooted ignorance and stupidity among analysts, market gurus, traders, investors and money managers. It seems that almost every single one of us is short sighted, and the worst part is that the success of a listed company largely depends on us. Well, my rage is justified as we still haven’t developed an efficient marketplace, and this will become the reason for the death of the retail investor. Anyhow, you are not here to listen to my overflowing expressions of mindless thinking ;)
So, let’s look at the chart and see where Priceline could be headed next? I also went through detailed fundamental aspects and made comparisons to its competitors. You can have a slice of all that along with a few mindless notes after I cover the key technical observations in the first half of this analysis. (Click on the chart to enlarge)
Home Depot (HD) has gained the status of being a market and economic bellwether in the recent years. But this time around it is appearing that the stock might lose some ground in the short term. It has been trading above its 50 day WMA consistently since December 2011. However, in the recent trading session it’s the first occurrence when it has come down to test this moving average. It has also broken below its long term trend line, which it had respected on closing basis so far. Now, the first line of support comes around $69. So, what should be your strategy on Home Depot?