PLEASE READ EACH LINE OF THIS POSTING............. IT IS A MUST READ FOR ALL INVESTORS........
The universal truth question of stock market:
What is the real worth of your stock?
Perfect Answer:
Whatever someone else is willing to pay for it at a particular moment of time in market!
The bigger fool theory or greater fool theory (also called survivor investing), is the belief held by one who makes a questionable investment, with the assumption that they will be able to sell it later to "a bigger fool.” In other words, buying something not because you believe that it is worth the price, but rather because you believe that you will be able to sell it to some one else for an even higher price.
Actually, this theory states that all peoples investing in stock market are fools. Every fool that is purchasing stocks always thinks that there is still a bigger fool present in the market who will pay more amount on his already over valued stocks. These assumptions of fools drive the market and make the cycles, cycles continue and market attains new heights. Always, a greater fool keeps purchasing in the high market and in booming era. When a big and bigger fool enters in market continuously then market usually comes to saturation. That saturation point is a point beyond which no fool in market is present. Precisely there are no investors left to purchase stocks.
No need to be a market pundit to predict the saturation of market, just keep your eyes and ears open and you will identify. Just observer market fully with your ears opens all the time, when you listen from anybody (who was not at all interested in stock market earlier) their intentions in entering markets, BEWARE…………….
In my views this theory is not at all wrong, just correlate with the market mayhem happened in the BSE and NSA in last 6 months.
I can give Many Classical Examples :
Example First:
Rise of RPL
When RPL was at Rs300, peoples were still entering in that stock. RPL rose without any fundamental, still there is no production there. According to this theory those peoples were biggest fools of the market who purchased RPL at 300.
The Fall of GMR Infra
The so called great pundits were giving the calls to purchase GMR at 260. Biggest fools got into market by purchasing it at 265/-
These are two of many stocks that bought the biggest fools in the market at its saturation point.
My Dear Friends, my idea is not demoralize you all … I wanna just say that you must understand when to enter the market and not to trade short…. Be a long term investor always… don’t be the biggest fool…………………
Thanks much for reading this…
Comments are welcome……
Dear Deepak,
ReplyDeleteI really like your views... you always try to provide the basic true facts... really amazing...
thanks for all this valuable information...
Hey,
ReplyDeleteI think you are doing a good job, but i would like to see some more articles about understanding Stock Fundamentals which will aide the Investor in making the right decision.
Happy Investing !!
Hi Anonymous,
ReplyDeleteThanks for your lovely comments.. yeah i will provide all my articles one by one..
i will provide some very basic articles on my blog that will ehlp everybody to understand the basics of stocks
Keep Reading,
Regards
Deepak
Hi deepak ;
ReplyDeleteNice collection of ideas on stock market..
Rgds
anil
Dear deepak,
ReplyDeleteI was thrilled to read your Buy report on Bhag gas. I have been bullish on the Industrial Gas sector for the last two years and specifically on bhagawati gas for several reasons.
Will try and give you a few additional data apart from what you have stated which may be of use to you.
1) Bhagawati Gas had only one working plant ( 50 Tons per day ) for the last two years as their 120Tons per day plant is getting shifted to cater to the demands of Sunflag Iron and Steel. However it
cudnt be done without setting up a new plant for Hindustan copper as demanded by them . Hence they set up a New 25 Tons per day plant which has been commissioned n Feb 2008. Thus very shortly even their 120 TPD plant wil get shifted.
2) Also Linde group ( prmoters of BOC ) announced on CNBC that they are investing 6000 crores in the Indian market in the next three years to shore up their business. Also they bought back their shares at Rs 200 ( raised from Rs 160). Just shows the bullishnes theyhave on the Industrial gas in india.
3) Information recived from Reliance Money Advisory Service
Hi, Thanks for choosing Reliance Money Advisory Services. Bhagwati Gases: The company holds
sound fundamentals. Its net profit went up by 28% YOY and net sales went up by 24% YOY for Q3FY08. Bhagawati gas will have three operating plants within the next two years compared to only one right now. Also with their tremendous knowledge in the Gas sector they will also expand further and also get into newer areas of gas exploration as they did by signing a MOU with the russian co. We recommend you to hold the stock.
EVEN RELIANCE MONEY IS VERY BULLISH ON THE CO.
4) Article in Economic Times bangalore on 9th June 2008
"WANNABE STARS"
Thers a lot happening, away from the glamorous & glitzy world of high visibility sector. RAMKRISHNA KASHELKAR digs deep & unearths some uncut Diamonds.
They say more than a tonne of dirt needs to be shifted to find every single carat of diamond. The
same applies to the vast universe of small companies. Its a daunting proposition to sift through an
endless list of obscure industries in the hope of hitting on some gems.. No wonder most of the
analysts stick to companies in the more glamorous sectors such a IT, Pharmaceuticals,FMCG and Capital goods among others.
ETIG undertook this task long ago. this week we thought of researching a few more small and
obscure industries just to check on the action taking place there.We find that away from the
limelight,quite a few companies in these sectors are thriving and waiting for their time to come.
a) DYES & PIGMENTS
b) PESTICIDES
c) INDUSTRIAL GASES
A variety of Industrial Gases such as oxygen, carbon dioxide, argon and nitrogen are required in a
host of industries such as stell, fertilisers, glass , automobiles and healthcare. The Industrial Gases industry is slated for a strong growth over the next few years. thanks to a number of expansion projects in user industries. New capacities are planned in industries such as petrochemicals, steel , glass and food procesing, which augurs well for the industrial gas industry. Additionally Gas application in the Electronic sector has opened up new growth possibilities.
BOC India is the largest industrial gas manufacturer in India, which is curretly investing in building storage and transport infrastructure fot liquid and compressed gases. Gujrat Fluorochemicals is indias largest manufacturer of refrigerent gases. However a major chunk of the company's revenue come from sale of carbon credits. BHAGAWATI GASES which was so far totally dependent
on Hindustan Copper for selling Oxygen, has now relocated one of its plants to supply oxygen to a steel manufacturer in Maharashtra.
To wrap up things, there are interesting companies operating in highly niche ares, which are not too well-known in the market. Some of these industries have the tendency to fall out of fashion for long periods. However a keen researcher may stil hit upon a multi-bagger, if he acts in time."
5) One thing I can tell you is that when the share price reach Rs 100 or 150 a leading FII will
acquire stake. Keep the reading with you and return me when this happens. This is for your personal
confidence. This was stated to me by Chamatcar.com who had given a buy report Bhagawati Gas in the year 2005.
I have also spoken with the company secretary of bhagawati gas on several occassions and have received positive information from them. They have also stated that the management is very positive on their future prospects.
2007 - 2008 EPS was 1.41 and cash EPS was 3.03. Even a simple Maths calulation gives an EPS of 5.6 and cash EPS of 12 once all their three plants start functioning (50TPD + 120TPD + 25TPD). Plus the benefits of contract won from ONGC and possibilities of further such contracts and also the possibilities of hike in gas prices with growth in capacities of steel industries.
Well Hope the information is useful to you as it is the hardwork of two years. Also i need to state is that i currently hold 43500 shares and hope to increase it to 50,000 shortly.
Thanks and regards,
Meetesh Kuhad Jain
Hey, thanks for the information. your posts are informative and useful.
ReplyDeleteHIND SYNTEX LTD