Invest talk: Track stocks for buying

The year 2016 has certainly not started off well in so far as financial assets are concerned. Excesses are coming home to roost and fear of the easy money-driven liquidity getting choked is driving money away from emerging markets.
Global economists are saying that we need not worry and things are not looking bad. I think they said the same thing in 2008 before the crisis unravelled. When they could not spot a banking fraud, how can I rely on them to tell me that all is well with the world?

Let me look at the companies I own and also at companies I would like to own. I am keeping a watch on adding to my portfolio and not selling what I have. It is money that is not part of my needs in the next ten years or so.

For me, it is a bullish time when prices of shares drop and no one wants to buy. I still see a lot of folks saying that the worst is over or near over and time to buy. I will respect their judgement. But I do not want to buy. I do not see any value available.  Yes, perhaps some trading opportunities, on large stocks whose prices have crashed and a couple of year’s holding could give a good return.

Instead of looking at stock prices, I like to understand how the companies are doing. Are they going to make less money, more money or lose money? And if there is going to be any significant change, is it of a permanent nature or is it just a passing phase? If I can find answers to this, I can decide whether to buy more or sell what I have. Unless there is a permanent deterioration in the company earnings potential, I do not see strong reasons to sell out.

Our markets are driven more by FIIs than by domestic investors. Given that there must not be more than 20 companies where a FII can buy or sell a block of shares worth a couple of million dollars, the volatility tends to be high whenever they are active. We do not have any retail interest (How many companies do you know of where there are at least 100,000 shareholders?). Yes, I do see that some domestic money has been added through mutual funds or pension funds.

Thus, if a stock on my ‘wish list’ reaches my desired price, I will not rush to buy everything in one go. I will probably divide it in to two or three tranches and buy it over a month or so. Yes, I may miss an opportunity. I am happy to lose an opportunity rather than lose my money. Buying opportunities come once every five to 10 years. It is not that I should blow up all my money in one go.

Yes, I can see the budget coming. It is perhaps the last opportunity for this government to make any impact. They have not made any outside the budget. A lot of changes which they promised are not happening. As a result, there does seem to be a reluctance for the industry to invest.

Announcing a scheme for start-ups is simply deflecting attention and subsidising yet another section of the undeserving. An entrepreneur has to take risks. And today there are enough venture capital financiers out there. Neither our banks nor the government have any expertise in this area and frittering away tax payer money is poor governance.

I am not in a hurry to invest. I think this is not a time to be brave with my money. I would rather wait till I can see earnings grow. I do not want to buy something because the price has come down. Be careful with your money.

(The writer is a veteran independent investment advisor. He can be contacted at
balakrishnanr@gmail.com)