[mukeshgoel]

Originally Posted by roamer012

What is to be done for Majesco Stock? Should new investors get in? Also what should be the exit strategy?

Originally Posted by 7000plusrpm

Yes, I would love to hear expert opinions on this one!

The company is winding up. You will get Rs.974 dividend. You may or may not get anything else other than this dividend. So, this 974 is added to your income and if you are in upper tax bracket, you will end up paying Rs.325 per share as tax approximately. Not worth it.

If you have family members who have nil/less income, you can consider buying some shares in their account.

Experts, please comment if I am missing something.

[7000plusrpm]

Originally Posted by mukeshgoel

The company is winding up. You will get Rs.974 dividend. You may or may not get anything else other than this dividend. So, this 974 is added to your income and if you are in upper tax bracket, you will end up paying Rs.325 per share as tax approximately. Not worth it.

If you have family members who have nil/less income, you can consider buying some shares in their account.

Experts, please comment if I am missing something.

Yes, this bold part is the most important. If this was available at about Rs. 500, then probably would have been OK. Not at this price.
Thanks!

[whitewing]

Originally Posted by roamer012

What is to be done for Majesco Stock? Should new investors get in? Also what should be the exit strategy?

Originally Posted by 7000plusrpm

Yes, I would love to hear expert opinions on this one!

Not an expert, but a long time investor in the scrip.

After the sell off of the US subsidiary along with the core business, the company now holds the sale proceeds, and a building.
If one falls in the higher tax brackets, surrendering the shares via the buyback/selling in open market would be better than to get taxed at 30%+ on the dividend.

The day it goes ex dividend, the stock will probably trade at very very low numbers, since having distributed the sale proceeds, they would not have a tangible business and would be holding the real estate as assets.

So, if one gets into the stock, say on Monday, they can book the losses IF the company does not windup by in the next 3 months (there is some law to discourage tax harvesting on the dividends).

At this price (~equal to dividend payout rate), it makes no sense to get in apart from a play to offset on capital gains (why one would need to do that amount of arithmetic beats me though - I haven't worked out the numbers- I am only speculating that there "may" be something to it) or the hope that the real estate holding will yield a real fancy number.

Personally, I invested because this was a company with an interesting product with a good growth opportunity, now with that gone. It no longer made sense to stay invested. I sold it recently when the numbers approached the dividend numbers.

[SmartCat]

Profound statement by Nithin Kamath, Founder of Zerodha:

Trading stock markets is almost always equated with gambling, at least in India. My take on this is that, yes, you can gamble when trading the markets, just like you can gamble with everything else in your life – education (not studying), relationships (not caring), career (not performing), etc.

The only difference is that with everything else, the results are usually delayed. For example, if you didn’t study well, you may get to know the impact many years after school/college. But in trading, results are almost always instant, and there is no grey in terms of measuring the outcome. The P&L makes it all black and white.

[mankuthimma]

Sorry if this is a repetitive question. But would like to hear some suggestions given the current market situation and my own predicaments.

Thanks to all the gyan I gained in this forum from past few weeks, I am trying to restructure my investments and go towards 60:40 debt to equity ratio.
As part of this restructuring exercise, I accumulated a lumpsum amount that I can invest. Debt portfolio has outgrown, hence want to invest in equity to achieve the 60:40 ratio. For equity, I have a small portfolio of largecap stocks ( presumably secular growth companies that I can keep investing) and a comparatively bigger portfolio of mutual funds. Within equity, thinking of achieving 50:50 investment in stocks and mutual funds going forward. Right now, stocks need more investments to bring the right balance. I need some help in the steps that can be followed -

- I have a SBI maxgain OD account. Can I park the lumpsum here so that the interest outgo reduces and draw the amount at regular intervals? In addition to the lumpsum, I will have monthly savings too. Any other better ways of parking the lumpsum + monthly savings as I rebalance the portfolio ?

- I am not looking to add more stocks right now, just accumulate existing ones. Since the market is at a high nowadays, should I wait for 10% correction from recent peak price of existing stocks and then accumulate them ?

- or should I keep investing fixed amount every month in the stocks ?

Basically, what is the preferred way - wait and invest or invest regularly in stocks or stick to mutual funds given the current market situation?

- Typically, what is the timeframe that I can set to achieve the initial right balance of the portfolio ? 3-6 months or 6-12 months? This will determine how much to invest monthly. Thereafter I want to maintain 60:40 whichever goes lower as explained brilliantly by @SmartCat in many places in this forum.

[SmartCat]

Originally Posted by mankuthimma

Any other better ways of parking the lumpsum + monthly savings as I rebalance the portfolio ?

My ammo is stored in overnight/liquid/gilt funds. Any asset that has somewhat predictable interest payout works.

I am not looking to add more stocks right now, just accumulate existing ones. Since the market is at a high nowadays, should I wait for 10% correction from recent peak price of existing stocks and then accumulate them ?

When buying stocks, you should have a few valuation parameters filters (Eg: PE Ratio below 20, PBV Ratio < 2, Minimum dividend yield of 2%). Buy new stocks or existing stocks only when they meet your valuation filters. Ideally, you should have stricter filters for small/midcap stocks. You can relax the filters for largecap stocks or high RoE IT/Consumer stocks.

My screener.in filters based on valuation is available here:
https://www.team-bhp.com/forum/shift...ml#post4789176 (Do you play the stock market)

Whenever stocks are falling, my screener is flooded with stocks to buy. Whenever stocks are rising, these stocks vanish from my filter (since its valuation goes up). So, by using valuation filters, you always buy stocks at low valuations and do nothing when stocks are zooming.

or should I keep investing fixed amount every month in the stocks? Basically, what is the preferred way - wait and invest or invest regularly in stocks or stick to mutual funds given the current market situation?

Your current asset allocation % value will tell you what to do. Blindly investing in stocks or equity mutual funds every month will give you sub-par returns.

Typically, what is the timeframe that I can set to achieve the initial right balance of the portfolio ? 3-6 months or 6-12 months? This will determine how much to invest monthly. Thereafter I want to maintain 60:40 whichever goes lower

Hmm, no clear answer. Up to you to decide. If you are "eager" to get to 60/40 ratio, do a one-time rebalancing and get on with the process after that. Else, achieve the desired ratio with your surplus savings slowly - invest monthly in asset that is lower than the desired %.

[mankuthimma]

Originally Posted by SmartCat

My ammo is stored in overnight/liquid/gilt funds. Any asset that has somewhat predictable interest payout works.

Ok. I will split between OD account and these mutual funds to get best of both the worlds.

Originally Posted by SmartCat

Buy new stocks or existing stocks only when they meet your valuation filters.

Great piece of advice! Stick to basics even while buying more of an existing stock. This clears the air for me. Thanks!

Originally Posted by SmartCat

Ideally, you should have stricter filters for small/midcap stocks. You can relax the filters for largecap stocks or high RoE IT/Consumer stocks.

Right! Still in learning mode, would prefer to maintain largecap stocks in IT & consumption space for now. For small/midcap stocks, I would like to leave it to the experts and stick to mutual funds.

Originally Posted by SmartCat

Blindly investing in stocks or equity mutual funds every month will give you sub-par returns.

I agree!! Had stopped SIPs and will try to follow this new method of buying the asset that is lower in value at a given point of time.

Originally Posted by SmartCat

achieve the desired ratio with your surplus savings slowly - invest monthly in asset that is lower than the desired %.

This seems like a better approach for me rather than one time rebalancing. Thanks again for all the wisdom !

[fhdowntheline]

Originally Posted by SmartCat

My ammo is stored in overnight/liquid/gilt funds. Any asset that has somewhat predictable interest payout works.

.

I am in a somewhat similar situation as @mankuthimma. Any specific funds that you could suggest in these categories to park lumpsum over the next 1-2 years ? I somehow dont seem to get any clear answer from so-called market experts. I dont want to push too much into equity MFs right now.

[SmartCat]

Originally Posted by fhdowntheline

I am in a somewhat similar situation as @mankuthimma. Any specific funds that you could suggest in these categories to park lumpsum over the next 1-2 years ? I somehow dont seem to get any clear answer from so-called market experts. I dont want to push too much into equity MFs right now.

Just pick a few 4 or 5 star rated funds in Overnight funds, liquid & Gilt funds category
https://www.valueresearchonline.com/...s&tab=snapshot
https://www.valueresearchonline.com/...s&tab=snapshot
https://www.valueresearchonline.com/...s&tab=snapshot

No point in spending brain-power to find the "best" fund of the lot. Even if you somehow figure that out, the extra returns will only be 0.5% or so when compared to 4/5 star rated funds.

A big chunk of your future returns will come from the investment strategy (rule based system of buying equities at low prices) itself. So we don't bother much about picking the "best fund" or "hot stock". Just stick to the basics (reputed fund house, direct investment, long history, large AUM, 4/5 star rating etc) and you will be fine.

[PatienceWins]

Originally Posted by mankuthimma

Great piece of advice! Stick to basics even while buying more of an existing stock. This clears the air for me. Thanks!

I usually look at buying opportunities only when the market is falling down (for e.g. March this year). or when a specific sector that I understand is out of favour in the short term. My investment horizon is long term, so even if I am interested in a company I wait. Basically - Good business I can understand run by credible management available at attractive price.

The stock should match your investment philosophy (P/E, Low or No Debt, Sales/ Profit growth, RoE, free cash flow etc). When the market is expensive, the P/E check itself fails for me as I usually invests in quality large caps.

I also look at Nifty P/E, as you can see current market P/E is very expensive - 38. A P/E around 20 is attractive - https://www1.nseindia.com/products/content/equities/indices/historical_pepb.htm

[C300]

Originally Posted by SmartCat

My ammo is stored in overnight/liquid/gilt funds. Any asset that has somewhat predictable interest payout works.

Thanks SmartCat. What about Banking and PSU debt funds? Any red flags there?

[SmartCat]

Originally Posted by C300

Thanks SmartCat. What about Banking and PSU debt funds? Any red flags there?

Banking & PSU funds are OK. Bonds from PSUs are considered as quasi-sovereign debt. Bonds from banks are as safe as FD in a bank. If you have a horizon of 3 years, you can invest in this category of MFs.

Originally Posted by PatienceWins

I also look at Nifty P/E, as you can see current market P/E is very expensive - 38. A P/E around 20 is attractive

Look at Nifty's P/BV and Nifty's dividend yield too, and compare it with its historical average. Current PE ratio of Nifty is misleading because it includes results of the lockdown quarter. Book value (or networth) of a company changes slowly, and PBV ratio is not susceptible to shocks like lockdown. Bookmark this site to check Nifty's current PE/PBV/Div Yield and how it compares with the past.
https://nifty-pe-ratio.com/

Last 20 year history of Nifty PBV Ratio (click on image to zoom):



Current Nifty PBV Ratio is 4.04, which is above average but still below the levels it reached in year 2000 and 2008.

[jomson13]

I have been a silent reader on this thread and I must say that it is packed with some brilliant advice.

I shifted from 'investing' to 'trading' during the lockdown and it has been going quite well up until now. I was able to eke out close to 20% between april and december.
Since the past couple of months, I am finding it more and more difficult to identify new trades. Hence a lot of my portfolio now consists of ETF's.
Junior bees has been the best performer followed by bank bees and nifty bees.
Also have a little bit of gold bees.

Any suggestions / comments on this approach?

[whitewing]

Originally Posted by SmartCat

.... Current PE ratio of Nifty is misleading because it includes results of the lockdown quarter...

Sometime back there was an announcement of reduction in corporate tax, do these numbers include the bump up in earnings after IT due to the reduced tax outgo? Or we would see a further increase post March '21?

[BaCkSeAtDrIVeR]

Originally Posted by jomson13

I shifted from 'investing' to 'trading' during the lockdown and it has been going quite well up until now. I was able to eke out close to 20% between april and december.
Since the past couple of months, I am finding it more and more difficult to identify new trades.

Best strategy when there is no opportunity is to take a break. Not getting in is also a valid decision.

I personally am not keen on funds which buy other funds or are traded on the market. I feel that they are like those groups of kids clamouring to get the butter/cash prize from the pot tied high up (janmashtami game). If one kid loses the balance, whole group tumbles.

Investment is always a long term game. During the lowest points of 2020,if I had put in ₹ 100 on my existing portfolio, it would have been 220 - 250 today. But then, it was around 10% down. But I dont regret putting in more back because staying away from new companies was a conscious decision. (I did sell off Vedanta, it was more out of disgust with the promoters' attitude. I might not touch a group entity again).

YMMV though. There are no rights or wrongs here. You take your decision, implement it, and accept the outcome, whatever it is.