It’s all warm, sunny and bubbly

By Rohit Chauhan
In General thoughts
October 5, 2010
2 Min read
26 comments
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Happy days are here again ! The index is at 20400 and will soon touch 22000 and then maybe 25000 or even 30000. The sky is the limit with India growing at 9%, and with a young population and all the other great factors working in its favor.

2008 was actually just a small bump on the way and the smart folks who bought during the downturn have made several times their investment. So the smart thing to do now is to load up on the small caps and midcaps as they have returned 100%+ returns in the last 2 years.

All the news channels are buzzing with hot new stocks and the smart thing to do is to watch these programs for tips and buy these stocks the next morning. The other day all those stock gurus and pundits were saying that now is the best time to buy as India has such a bright future ahead of it.

One should hold these stocks for a couple of days and sell it for a quick 10% profit. One only needs to do this a few times a year to make more than 100% on his or her investment. Actually, if you are really bullish, you should take on debt and dabble in options. Then the upside is unlimited and one should be able to retire in the next few months.

The problem with the news channel is that they don’t give the hottest tips. To get the hottest tips, one should join a penny stock service and use those tips to ‘play’ market. There is no time to waste on analyzing companies as most of these opportunities are available only for a short time and anyway who is planning to hold for more than a couple days ? So why bother !

It really does not matter that the IT stocks did badly after the 2000 bubble or the real estate stocks crashed in 2008. It is different this time!!!

Now is the time to get all excited and one should be fully invested, so that you don’t miss the opportunity of a lifetime. Heck, all my friends are making money and now my milkman and dhobi is in the market too!!

Note: If you are new to the blog, I hope you have realized that this is a sarcastic post and the exact opposite of my views.

26 comments

  • Hi Rohit, I have been a long time reader but never posted..ayway LOL reading your post:-). I realized the sarcasm after reading the 1st sentence. My thoughts exactly.I moved to 70 % cash a few weeks back and may have to wait on the sidelines for a few more years to get good valuations (although still haven't given up hope of finding undervalued business). Hope I have the patience for it though. As Graham said (I paraphrase), in the stock market the investor is his/her own enemy.Btw, I hope we could buy some short only index ETFs to short the market right now.

  • Hi Rohit,I have emailed you asking for feedback on my analysis of GEECEE ventures. I have posted it to my blog as well: http://wp.me/pTJ7I-2uThis comment is in case you did not receive the email.Please post your feedback, counter arguments and criticisms.

  • hi ranajitgood to know you got a chuckle out of the post.i am not into cash much and my decision are stock specific. as the stocks i own get fully valued i will exit ..however i trying not to based it on the index levelsrgdsrohit

  • Hi ngmsorry i could not get your name.unfortunately i did not get your email ..need to check my spam folderi saw the post and think your logic is sound. i actually invested in gwalior chemicals as an arbitrage opportunity ..gwalir chem was renamed as GEECEE ventures. however i exited it – with a small loss – when the cash was not returned and a buyback was announced.the reason is that the markets typically discount cash a lot and hence you are seeing this kind of valuation. the market is not willing to give 100% to the cash as it does not know how the promoters will use it. so if you buy the stock you are betting on the competence of the promoters ..they may be good ..i dont know and hence i sold and exited

  • Hi Rohit,Thanks for the reply. Btw my name is Narasimha.Yes the market is discounting the fact that management took away 48 Cr last time around they did the buyback. Precisely the reason stock is selling at a discount to cash equivalents.I am willing to take a bet on this and check.- Narasimha

  • Ha ha ha!It was a very funny read :-)Unfortunately most stocks that I held became too overvalued for my personal comfort. As a result I am almost 95% dis-invested and waiting with a war chest ready to deploy.But for some reason the future is way too bright and sunny and the stocks keep gallopping ahead.Have a really stupid question -> If funny money priting is increased, lets say by factor of 2 times (implying that ideally exchange value of every hard resource should double). Does it really mean that companies can increase pricing by twice and assume wages (and thus available spending) to increase by twice?

  • Hi Rohit I have sent you an email seeking your advise on something on 28 Sept. Not sure whethere you have picked that mail. The title of the email is – value investor blogpost. Would appreciate if you could reply soon. Thanks

  • Sir, i would like to thank you for the post.I would also like to request you to write down one such post whenever everybody seems to be getting caught in frenzy and emotions can corrupt the fundamentalists too.

  • LoL..The first two paragraphs got me to check the address-bar if I was on the right blog! Then I thought maybe Rohit's got drunk!!

  • hi rohit,firstly the blog is xcellent.Regardign teh latest post, midway through reading it i thought that you had joined one of the fancy business channels, thankfully you havent. This post most accurately summaries the current situation and how some of the so called experts are gearing up the poor tv watching economically illeterate poepulation of india to enter the stock market at these levels. not that these levels dont offer the right oppurtunities, there are some sticks which are still available at a good discount but there are bubble pockets emerging in several areas now.Regards,saurabh.

  • Dear Mr Rohit,I have a suggestion. Company called macmillan publishing solutions is in bad patch at present. The net current per share is slightly lesser than quoted market price. As per golden rules of Mr.Graham, any company quoting equivalent to its current assest or lesser is bargain buy. Because, you are virtually getting the fixed assets free of cost.I will suggest you to please look in to the same for a detail analysis so that we can have further deliberations.Thanks in advance.m.sivakumar

  • After being inspired by Rohit's post. Couldn't stop myself – so penned this.The Sensex is shining. Stop whiningLook at your milkmanHe's a genius.He bought stocksFutures and options.Life's good, he sold his cowAnd now gives investing advice.Turn or your TVWatch investor TV from 9 to 6.Learn about technicals, and stock astrologyPredict how the prices will move.Be a hero among your friends and relatives.Make the move. Get going. Go get a trading account.Just get advice and trade.India is shining.You will be a crorepati.

  • Hi narashimai think the reason it is selling at a discount is because the company is mainly a cash holding entity and the market will not give it higher valuation till the management invests the cash and builds valuethat may take some time and one has to bet the management will be smart in doing it.i personally have done such investments in the past and they give average returns over timergdsrohit

  • Hi mkdi think in the long run companies can increase prices ..but overall inflation does not change the economics or long run profitability of a company. a commodity company with poor pricing power will benefit for a short period and then revert back to its pre-inflation profitabilityrgdsrohit

  • Hi Rohit I have REsent you the email seeking your advise on something. The title of the email is – value investor blogpost. Would appreciate if you could reply soon. Thankssunil

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By Rohit Chauhan October 5, 2010
26 comments

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