holdyourthoughts

Warren Buffet once famously said, " Only when the tide goes out do you discover who's been swimming naked ". This market correction showed up a lot of people who were swimming naked. i.e, people who were long on stocks or futures with very little knowledge or conviction about the companies they are invested in. For long term investors, a large market correction provides a good time to invest into the market. The market again showed that you can get washed out if you are leveraged. A friend, who started active trading a few months back, was very happily making money before the carnage happened and was telling me about his stock market conquests. I asked him to be careful and he responded saying that he always puts stop losses in place. I still told him to be careful as stop losses does not always do what its meant for. I met him again today and he had lost ALL his capital and is in debt to his broker. So, he now needs to borrow money to pay his broker!!! I asked him what h...

Since, the markets are choppy and most of the stocks in the mid-cap universe are correcting, the question at the top of the mind is, what can be done to protect our capital? Well, there are three approaches that can work and I am listing them here. 1. Sell - This is the simplest of the propositions, but one of the toughest things to do from a behavioral perspective. If you have stocks that are fundamentally weak and you had bought them to take short terms profits in it, then it is better to sell them, even if it means that you need to take a small(or large) loss. However, if you are convinced about the business and future prospects of the company, then corrections are good opportunities to buy into the stock. 2. Short Sell - Active traders can think of this approach. Sell the stocks you have in your DP and buy it back at a lower price. That way your net position on the stock is not changed but you make some money on the way down. 3. Buy Puts - Again, this is for high risk traders. They...

Another stock idea - ICSA. Its present in the products and solutions of Power transmission and distribution. ICSA's main products are Distribution Transformer Monitoring Systems, Theft Detection Devices, Intelligent Automatic Meter Reading, Remote Street Light Control Systems in the Power Transmission and Distribution space. Its Intelligent Cathodic Protection Solutions is a star in the Oil and Gas pipeline space. ICSA’s clients in the power sector include almost all SEBs and leading private players like Reliance Energy. In the Oil and Energy space, it has huge orders from Oil India and is expected to finalize contracts with several others. I will put the financial data in the next blog entry.

Since, its the New Year and it is sort of nice to have some resolutions, here are my ones. Lose Weight - This has been at the top of my list for the last few years and as usual I have not lost a single kilo. So, this year I am renewing my resolve to lose weight. But, what I will also do is to have a plan for losing weight systematically. Spend More Time with the family - Work has seemingly taken over my life and time spent with the family has been on the decline. Utilization at work is a highly monitored metric. Resolving to have high "utilization" at home & with family as well. Make money - 2008 probably would be a year where it would be difficult for all market players to make money. My target is to preserve my capital and make atleast 15-20% returns by end of the year.