My Investment Portfolio

I have started my Investment company in April'2010. These investments are made from 1st April'2010 when Sensex was at 17500 and currently it's trading at 20000.The Sensex has gained 14% in 7 month period.

Here is the performance of my investments.

Best 5 performing Investments

Titan +93%

Canara Bank +65%

LIC Housing Finance 60%

Jay Shree tea +55%

Cummins 55%

Worst 5 Performing Investments

BEL -22%

Dolphin Offshore Enterprisis -14%

Patni Computers -12%
Hyderabad Industries -11%

HDFC -8%

The above specified information is true as per my knowledge and the invested amount is same in all the above specified holdings.

My Investment company do Short Term Trading, Investing, Swing Trading and Arbitrage Trading.

I am willing to help anybody to discuss my strategies and explain how investing small savings can give remarkable returns in Long Term.

Disclaimer:The above specified information are my views and I am not responsible for any profit or Loss incurred using this info.

Investing in Stock Market for Amateur

Systematic Investment Plan

A systematic Investment Plan(S.I.P) is a way to invest regularly in stock market. For Instance you invest Rs 2000 every month for next 2 years irrespective of the stock market movements. If Stock Market moves up then S.I.P plan will keep investing at regular intervals which will help in getting the benefits of it's up move and in the adverse case if Stock Market goes down then S.I.P plan will help you to invest at lower levels providing the benefits in the long term.More importantly you don't need to time the market to make money in the long term.Also you can specify your bank to deduct Rs 2000 every month for next 2-3 years so you don't need to make the transactions manually every month.

The returns of S.I.P for last 20 years is approximately 15% annualized for Indian Stock Market.

For e.g. If you have invested Rs1000 every month for last 20 years then your current account balance is Rs13,00,027 compounded annually which is achieved by investing 1000 * 12 * 20 = Rs240,000.

Advantages of investing through S.I.P is

1.You don't need to time the market.

2. You get the returns comparable to benchmark indices.

3. There is no active participation required in stock market and even then you get all the benefits of it's up move.

Link for S.I.P Calculator.You can click the link below to calculate your wealth using S.I.P calculator.

http://www.ecst.csuchico.edu/~chetan/cgi-bin/sip.html

For ICICI account holders, here is the link below to setup the automated S.I.P .

http://www.onemint.com/2010/03/24/systematic-investment-plan/

The above link also specify the benefits of S.I.P

Qualcomm Chart

(Click to enlarge)

Useful Term used below -Stop Loss: The point at which I will cut my position is called Stop Loss.

Qualcomm stock is in a range of around 30 to 55 from 5 years.So there is no clear uptrend or downtrend in this stock.

What do I do now?

If I don't hold the stock then:

Stock is in a range of 30 to 56.So I buy the stock at around 30 and sell it around 50.One day it will breakout above 56 or breakdown below 30 which nobody knows and till that that time its best to trade assuming that it will be in range which it is doing for last 5 years.

Note: The day it crosses 56 and stay above that for few days then this stock will be a compelling buy and vice versa.

If I hold the stock:

I would keep a trailing stop loss at the recent support of 42.50 from here on to protect my profits and let the stock move up ward and we follow that.

Note: The Stop losses needs to be updated regularly.

(Disclosure: These are my personal views which can be right or wrong.I am not responsible for any profit or loss incurred using this info.)

Interesting Facts

1. You need to be good in POKER, SUDOKU & CHESS to make money in Stock Market (Quote from a Book I think "Trading For a living")

2. Indian Stock Market is at 20000 close to All time high but only 13%(290 out of 2230) of listed NSE stocks are above or close to All time high.Rest all are trading much below their previous highs as on Sept 25'2010.

3. Sectoral Leaders of Last Bull Run Capital Goods, Real Estate, Infrastructure are the laggards of this Bull Run.

4. Stock Markets are rallying on the consumption story of India. Few of the best performing stocks are Jubilant Foods(Pizza), Talwalkars(GYM), Shoppers(Retail), Titan(Watch & Jewelery).

5. 2 symptoms at the Bubble stage of US housing 1. Everybody says Real Estate prices can never go down. 2. The people who can't afford buy the Real Estate .We have reached stage 1 in India and I believe 70% of the game is over in India.Now just think about stock market in India for a sec,where are we? Not anywhere near stage 1.(That's my view only)

Disclosure:The above expressed views are my views only & I am not responsible for any profit or loss incurred using this info.

Why it could be a good time to send money to India?

Dollar Rupee Chart(Fig 1)

The above shown diagram is a dollar rupee chart which is currently at 45.88 .I have inverted this chart to make some comparisons.

Elliott Wave Principle ( Fig 2. It has 3 figures inside labeled as fig 2.1 ,2.2 ,2.3 drawn from top to bottom)

If you compare Fig 1 of inverted dollar rupee chart and Fig 2.1 ,we can see that its exactly the same and I have labelled too for more understanding.

Now we have completed Fig 2.1 and we are currently at point 3 labeled in Fig 2.2 because Fig 2.2 is extension of Fig 2.1.

So the conclusion is we are following this theory from last 1.5 years so we assume that it can follow this again till we find any aberrations.So If the rupee appreciates from here on the first target for dollar rupee is 40 in next one year and then 35 within 2 years.

(Disclosure: These views are my personal views which can be right or wrong and I am not responsible for any profit or loss made using this info.)

Reference for Elliott wave Principle

http://en.wikipedia.org/wiki/Elliott_wave_principle

Reliance Industries

Click to enlarge the image.

In the above picture it shows Reliance Industries is following a parallel channel from last one year .Currently its at lower end of the channel. If it breaks the lower end of the channel and stay there for some time then the minimum target for Reliance is 700 and if it breaks upper end of the channel at 1130 then target is 1430.

The pattern shown above is a classical symmetrical triangle pattern as the shape of reliance looks like symmetrical triangle and the target is also derived from triangle formula .

Why most of the people lose money in Stock Market?

Common Questions and Answers that might have come to your mind?

1. Market is at 8000 after falling from 21000.Should I invest now ?

Market has risen to 18000 So is it the right time to buy ?

1.What most people will say and do - If it has fallen to 8000 it can fall to 6000 too and I can lose a lot of money .So why should I invest now.

Oh it has risen to 18000 ,I should have bought at 10000. Now if it falls to 12-13000 I will buy.

Now suppose if Market rises to 23000-what they will say " I think this is the last opportunity otherwise I would be considered fool, so buy now".

Probabilistic - I am not saying that anyone who will buy at 23000 will be fool. The Point I am making is its better to buy an economy when we are getting at cheap levels as risk reward is also in your favor at that time if you believe in the growth of that economy .

2. I invested in stock "A" at Rs 100 now its Rs 120 and also I invested in Stock "B" at Rs 100 now its Rs 80. Which stock should I sell and which one should I hold.

2. What most people will do -Sell the stock A at 120 to book profit (It is Psychological satisfying) and keep holding stock B expecting that it will rise.

Probabilistic - You should cut your losses and let your winners run.

Conclusion: The point I wanna make is that people don't make mistakes by chance or by bad luck but our Psychology is programmed to behave in that manner in those situations. So stock Markets behave against human Psychology as it always leaves us on the other side of the fence.

One more point I want to make is Stock Market is the only place where 1+1 is not always 2 so you need to follow the probability to succeed.

Predictions 2010

Firstly I would like to review my 2009 predictions

Predictions 2009

1. Prediction: Rupee to make high of around 52 in next six months when it was at 46 .

Actual: Dollar made high of 52.13 .

2.Prediction: Gold to double in 3 years predicted at 900 $

Actual: Gold currently at 1193$ .

3. US markets to Fall in a big way very soon predicted at 9400.

Actual: They never fall but they remain range bound for sometime and then moved up to touch 11200.

4. Prediction : There is very high probability that Dollar has made a top at 52.13 when rupee was at 50.

Actual: Dollar reverted back after that and touched 44 and is currently trading at 47.

Predictions 2010:

1. Indian Stock Markets are currently at around 18100 and if it moves up and sustain above 18500 for atleast 15 days then I believe it can touch 27000 in next 1.5 years. So this target holds true only if we move above 18500 and stay there for some time.

I believe one can make a living out of this upmove if one is smart enough to play this correctly.

2. Dollar to hit 35 within 2 years.

Note: I have the every right to go wrong as these predictions are only based on technical patterns which have a good probability of success but not always.

(Many people might have heard about Fibonacci numbers ,I believe the big secrets of stock markets lies in that . I will post some of the amazing facts that these magic numbers have done in my later posts)

A 5 minute Simple Rule to make Long Term Gains In Stock Market

Sensex 2003-Till Date(Click to enlarge)

This theory is called Higher Highs and Higher Lows method of Investment.

The theory says that when we make an investment we only keep track of recent low to sell our investment.

I explain with the above figure.We invested at point 2 and the market moves up and moved to point 3 before resuming its up trend.

So the recent Low is point 3 and we will sell our investment if Point 3 is broken.

Again the market moves up and made a low at point 4 and we update recent Low point to point 4.

Like this we continue and we update recent low Point to 8 .Then the market starts collapsing and our recent Low point is broken by Point 11 and we sell our Investment.

So this process is repeated again and we buy at Point 15 and currently the recent Low value is point 18 which is 16187 on Sensex .

(The point of making an investment ie Point 2 and 15 is decided when we break recent high in a downtrend)

QUOTE : "There is a risk involved in doing something only if you don't know what you are doing" Warren Buffet.

Basics of how to make money in Stock Market.

There are 3 requirements for making money in Stock Market.

1. Technical Analysis –It is the study of patterns and identifying the same in stocks to predict the future. The weightage for Technical Analysis in making money is 20%.

2. Money Management- Money management is basically how you manage your trade. The weightage for Money Management is 40%. I explain it with an example.

Before taking a trade analyze the risk reward ratio in the trade and one should normally look for 1:3 risk reward ratio opportunity in the trade .Now Suppose I take 10 trades and there are 3 winners and 7 losers. So I will be making 3 units each in the winning trade as risk reward is 1:3 and losing 1 unit in a losing trade. The money I lost in 7 trades is 7 units and I made 3*3=9 units in 3 trades. So in all I will be making (9-7)=2 units .So if you see we can still make money even if we are correct 30% of the time if we have good risk reward ratio.

3. Psychology - I try to explain that with an example. Suppose we have found a pattern to trade and we are executing the trades and we get 4 losing trades in a row. Its Psychologically very difficult to take the next trade after losing money in 4 trades consecutively because there might be a case that 3 winners are the 8th,9th and 10th trade if we are expecting only 3 winning trades as explained above.

Other Psychology hurdles are taking profits too early or keep holding the losing positions.

I believe that ability to execute this comes with experience. The weightage for Psychology is 40%.

It might be surprising to see that most of the Traders talk about Technical Analysis which accounts for only 20% in making money whereas Money Management and Psychology accounts for 80%.

(You are welcome to post any suggestions)

(References: "How to make money Trading Derivatives" by Ashwani Gujral.

Sensex

Sensex July'2010(Click to enlarge)

Future Price action of Infosys & Indian IT Industry

INFOSYS Chart (1995-Till Date)(Click the image to Enlarge)

IT sector is in its last phase of growth of 15 years as explained below:

1. As explained in the chart we are currently at 5th wave of Infosys which will end in 2-3 years. After this Infosys Stock Price will undergo 10-15 years of A,B,C sideways movement as explained in Basics of Elliot Wave theory.

2.The biggest threat I can foresee for IT Industry is Dollar-Rupee value.With the current pace of India's growth I think Rupee can go to 35 in 3 years from 46 currently.If that happens then margins of IT industry will shrink by 25% from current levels due to currency appreciation so that will put brakes on IT growth.(I predicted the Dollar-Rupee movement from 39-52 and back to 46 and I have a target of 35 in long term)

(Please spend 5 mins to read the "Basics of Elliot Wave Theory" Posted on 23'Jan for better understanding of this article.)

Disclosure: My 2% of equity is in Infosys.

Disclaimer: The information in above article are my views only which may be right or wrong.I am not responsible for any trading decision made based on above info.

Future of Indian Stock Market

Sensex (2007 -Till Date)(Click to enlarge)

Scenario 1-A decline from here on for 5-6 months and then the biggest bull run of India with targets of 40000-50000 and possibly even more.

Scenario 2-We move in the range of 12000-18000 for another 2 years and then the biggest bull run of India starts for targets of 40000-50000.

Why 40000-50000? I explained in my Elliot wave theory that stock Markets move in 5 waves and India is currently in its 2 wave so when 2nd wave completes 3rd wave will start which is the strongest of all according to Elliot wave theory which enforces me to say the best is yet to come.

The best time is yet to come for India.-Why? I believe the Law of Nature is you can only make big money in any field if very few people believe in that and most of the people are criticizing it.

Take an eg of IT Industry 15 years back ,India story 10 years back and currently Indian Stock Markets .

Note:All the above analysis is based on Elliot Wave Theory which I explained in my previous article.I will revisit my analysis if we move above 18000 in next 2 months.

How Dollar move from 39 to 52 Could be Predicted?

Basics of Elliot Wave Theory

The chart-1 explains how the Stock Prices,Gold Prices,Currency Rates move in waves in a long term.The first of the three figure in chart-1 explains that we will have 5 waves 1,2,3,4,5 and then 3 waves A,B,C in any price movement in Long Term.The 5 waves are divided into 3 waves up ie 1,3,5 and2 down corrective waves 2,4 .3 waves A,B,C are subdivided into 2 waves down A,C and one wave up B.

Other 2 figures in chart-1 explains the future price action after C wave .

Chart-1(Elliot Waves) Click to Enlarge the image

The second Chart is the dollar Rupee Price movement from April'2008-till date when dollar made low around 39 and then moved to 52 and then back to 46.The price movement is exactly similar to the above explained theory as shown on the chart. with 5 waves and 3 waves A,B,C that is correcting the 5 wave upmove.

Chart-2(Dollar-Rupee) Click to Enlarge the image

This is how I predicted dollar move from 39 to 52 and move back to 46,which I believe anybody can learn to do.What's next?

References:

For more information on Elliot Wave Theory ,Refer below

http://en.wikipedia.org/wiki/Elliott_wave_principle

Gold and US Stock Market Facts

Gold 1975-Present

US Stock Market (S&P500 )1980-Present

US Stock Market is falling or moving sideways

from 2001-2010 as shown in the chart

but Gold Rallied from 250$ to 1200$

during the same period.Its reverse happened in

1981-2000 period as Gold moved down or

sideways for 20 years and US market rallied in

1981-2000.This derives to the conclusion that

if Gold rallies then StockMarkets and Economy

goes down ie Gold is inversely proportional to

US Stock Market for last 30 years.

Reference:Gold Price chart taken from http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx