Red Portfolio: What to do?

Red Portfolio: What to do?

INTRODUCTION:
Preventive step :
Never invest in small companies especially <1000 Cr market cap. It will be Safer to invest in companies with >10000 Cr market cap
First step : Weed out all bad companies at whatever price.
Criteria of bad company

  1. <1000 Cr market cap
  2. Business losses since last 3 years
  3. Promoter share pledged >30%
  4. Promoters share holding is drastically reduced.
  5. D/E ratio more than 1. If DE ratio is > 2 ,then Exit immediately.
  6. Debt is increasing and Sales are decreasing is ominous sign
    Second step:
    Don’t look at the price, it causes Anchoring bias.
    Look at account statements.
    If profitability is intact.
    Promoter is in sound mind.
    Then don’t worry. Be seated.
    Share price is Wife
    Profit is Husband
    Wife follows husband. …..some or the other day.
  7. IF Quarterly results are not good, then Investigate reasons.
    Few Q results can be up and down but if any company doesn’t recover 2-3 years then it become difficult for company to sustain. Again it depends upon Asset and Reserve of companies.
  8. TradeVesting helps me to protect me from heat of bear market
  9. Averaging works for small and medium cap companies
    Wait for trend reversal and start Averaging on Upper side
  10. Small cap can correct to 65% also
  11. If company is good then:-
    Continue SIP.
    Top up on Dips.
  12. Buy From Paniac and Sell to Maniac
  13. I always wonder why people put cart before horse.
    Stock market learning should start with Fundamental Analysis and End with Technical analysis. For strange reasons Retail investors LOVE technical analysis and learn first. They like Candles. However, HNI and Big players learn Fundamental analysis first. They like Numbers.
    That’s Why, We start with Numbers in TMP and Candles are last.
  14. We should get rid off the stocks not fulfilling MPTDS criteria or showing signs of doom..
  15. No Tax
  16. No dividend
  17. Price below 65% of ATH
  18. Sales down
  19. In falling market don’t see price, see account statement profitability and promoter vision,
    if these are intact, no need to worry
  20. High PE also causes price correction in otherwise fundamentally strong stocks like Maruti. If whole sector is under pressure need not worry about the Red
  21. Companies can be in red due to generalised SELL off sentiment in the market. In this case wait for tend reversal signs and start accumulating when uptrend begins.