Everyone has witnessed huge market decline in the month of March when our PM Narendra Modi suddenly announced lockdown to tackle covid pandemic. Sensex stock market index reached all time high of 42273.87 in January of 2020 and from there it fallen down to below 26000 pts, nearly 40 % down.
And from there it started healing.
|My Investments and COVID-19|
Before this great fall my all investments were in undervalued stocks with very low P/E multiple, attractive earnings and exciting track record. Thanks to this quality stocks my own portfolio fall nearly 22 %. Although my 22% of capital vanished, I feel very delighted my portfolio beaten the market index(Sensex down nearly 40%) with significant points.
In the last year of your college generally you are not backed with huge capital support, and your capital is very limited. So securing capital is my first priority.
Back on the track, I sold all the stocks with 22 % capital loss and secured rest of the principle capital, and added more capital from my personal account which was more than three times of secured principle capital. Actually I couldn't stop myself taking advantage of this great fall of market. And with this enhanced capital lets begin from very scratch.
One thing I want to mention you that full turnover of portfolio never be considered good for investor, as soon as you book profits or realised your stock you come under tax regulation. But I have an edge, my capital which was not large enough not fall under any tax regulation. So it never be cause of worry for me. One more thing I have to mention that I eagerly want to pay taxes. I can't restrict my growth with fear of taxes.
My strategy is very simple:- look for stocks with low PE multiple, constant earning at least 5-7 years if 10 then better, with good track record of management with no fraud and any type of capital manipulation, and leading and promising industry in its sector. Market Cap of the company not bother me. I happily invest in small, micro, nano or nano of nano company if they promise attractive return and if it trade below its intrinsic value.
My portfolio is very focused, in other terms i have no choice. With very limited capital how much company you can own? Too much diversification is diworsification.
I invested in only four companies, lowest investment contain 10% of whole capital and maximum allotment was nearly 27% and retain only small fraction of amount as cash.
As I am writing this article and in between this I completely existed from two stocks one given 2.5X return and other 1.3X return. Other two stocks appreciated the invested capital more than 50% but unrealised and subject to market volatility. With this my whole portfolio capital doubled in less than five months. I added two more stocks without any quality compromise.
All the stocks which I sold with capital loss of 22% recovered to great extent. Some doubled (from price at which I sell them).
One thing I have to accept that result achieved through my investment were by luck. Personally I not expected this type of massive return in very short run. In future I am not sure to achieve this. Only one thing I have under my control that is chose companies backed by attractive statics and fundamentals and leave them at the mercy of market. Market is supreme. No one have accurately predicted it and no one can predict it.
MY VIEWS AT THIS STAGE:-
I am very cautious and full of hopes at the same time. If you look only Index ( Sensex and Nifty 50) you find it recovered very fast opposite to economic condition. If you look individual stocks then you find instant recovery is nothing when you compare it with 2017-2018 price chart and you find there still long way to recover . Let me mention that this view is totally price based. This fill me with hope.
While looking into fundamentals- lockdown has beaten some industries very badly and badly affected earnings of these industries. But stock price of these industries surge to significant amount with the support of Index recovery. And quoted them with high PE multiple and this is my cause of worry.