Let me be frank, I don't like it when markets rise and when they are at higher levels in general. That too if you are not fully invested and the market rises it becomes increasingly hard to deploy capital. Though the gains in the holdings may excite most investors, i love falling markets as they give me a chance to buy good companies cheap. This doesn't mean i am a pessimist, i strongly believe that India has a bright future and so do the Markets and am long the market over the long term. However at the current market levels where the Sensex & Nifty are trading at P/Ex multiples of 20.7 & 22.3 respectively it becomes really hard to find undervalued stocks forget about bargains all together.It is in times like these that you look back and regret having not picked up stocks you liked only to see them double or treble. However one has to remember that the market always gives us opportunities to buy stocks cheap,only one has to have the patience to wait for the right time & pounce on it when it arrives. Warren Buffett often says that most of his time is spent doing nothing but waiting and reading behaving as though the market doesn't exist at all. As Ben Graham put it - The market is there to serve you & not to instruct you. His concept of Mr Market introduced in The Intelligent Investor sums it up beautifully.
Graham’s explanation goes something like this. Think of yourself as owning a share in a business with one of your partners, say Mr Market, who is somewhat of a neurotic who on any given day will offer to buy your share or sell you his at a specific price. His moods can fluctuate anywhere between incredible optimism and overwhelming depression. One day he will nominate a higher price to buy or sell, the next day he might increase it, lower it, or even appear uninterested in whether he buys or sells.The point that Graham makes is that Mr Market’s judgment is formed more by mood swings than by rational thought and that this gives the wise investor buying and selling opportunities. If Mr Market’s price is unreasonably high, then wise investors have the opportunity to sell. On the other hand, if it is unreasonably low, then they have the opportunity to buy.The important thing is that a successful and careful investor makes her or his own decision, based on their own ideas of the worth of the investment.
So i am waiting patiently and trying to study good businesses so that i am ready to cash in when the prices are attractive. I am also continuously trying to find stocks offering value & available relatively cheaply. I am running various screens like Magic Formula,Cigar-butts(more on these later) to get on to some good stock. I shall analyze more stocks soon.
Graham’s explanation goes something like this. Think of yourself as owning a share in a business with one of your partners, say Mr Market, who is somewhat of a neurotic who on any given day will offer to buy your share or sell you his at a specific price. His moods can fluctuate anywhere between incredible optimism and overwhelming depression. One day he will nominate a higher price to buy or sell, the next day he might increase it, lower it, or even appear uninterested in whether he buys or sells.The point that Graham makes is that Mr Market’s judgment is formed more by mood swings than by rational thought and that this gives the wise investor buying and selling opportunities. If Mr Market’s price is unreasonably high, then wise investors have the opportunity to sell. On the other hand, if it is unreasonably low, then they have the opportunity to buy.The important thing is that a successful and careful investor makes her or his own decision, based on their own ideas of the worth of the investment.
So i am waiting patiently and trying to study good businesses so that i am ready to cash in when the prices are attractive. I am also continuously trying to find stocks offering value & available relatively cheaply. I am running various screens like Magic Formula,Cigar-butts(more on these later) to get on to some good stock. I shall analyze more stocks soon.
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