Friday, June 8, 2012

Current directions on where to invest

After a one month break, I am back. Not that I was not watching the markets or the economic news –our smart phones ensure that we are always connected.  But I was not actively investing as I was busy elsewhere.

Warren Buffet had famously said – “Be fearful when others are greedy. Be greedy when others are fearful.”

This is the time when everyone is fearful –there is more than normal amount of bad news –my prediction in December for 2012 was a tad optimistic – I did not predict that the Indian GDP growth would fall so much so soon – I also did not predict that the EU problems will go beyond Greece and Italy – now it is at Spain’s doorstep. There is more bad news than what I predicted.

And that is good news

I believe this is the time to look at investment opportunities.

Let me quote Warren Buffet again:

“Buy a business, don’t rent stocks.”

“Buy companies with strong histories of profitability and with a dominant business franchise”

“If a business does well, the stock eventually follows”

Some may say that these sayings of Warren Buffet are more suitable for the US markets where the market is very broad and deep (there are very large number of stocks and many investors). Our stock markets are very shallow - the FII mood dictates whether our markets will go up or down.

Well Yes –there is some truth in this argument – But, when you look at long term of 3-5 years, I believe that  the basic principles given by Warren Buffet will apply for Indian stock markets as well.

So I am happy I bought the stocks in second half of 2011 (when the markets were down).  The companies that I have invested (and most of them are listed in my blogs) have high profitability and good profit growth and have been bought at a fair value. I will invest again in these companies in the next few months as opportunities arise.

Some of the companies that are in the buying range right now are:

Agrotech Foods (invest at around 450), Bharti Airtel (invest at current levels of 300), BHEL (invest at current levels  till Rs. 270), Gruh Finance (invest at around 660), LMW (invest at around 1650), Shriram Transport Finance (invest at current levels till Rs 540). 
In case you are looking fore investing in these companies, I would recommend that you wait for another 3-4 weeks - the markets may go down further and that will give you still better entry price.

Some of the companies that I am watching and am close to investing are - 3M India (will invest at Rs. 3250), Bosch ( will invest at around 7000), Exide (will invest at around 100), Hawkins (will invest at around 1130), Nestle (will invest at around 4200). I hope to get these prices sometime in the next two months and I will invest in these companies if that happens.

I am confident that over a long term of 3-5 years, these stocks will return a 20% ROI for me. The current atmosphere of fear and pessimism will open up opportunities. And I am waiting patiently.