Today I’m sharing 17 stock market lessons that I have learned from 17 stocks over 17 years (oh yeah, this is my first ever YouTube video). I have explained each lesson mentioning the name of the stock that I purchased at that point of time. And yeah, it includes all kinds of stocks: blue chips, large caps, mid caps, small caps, micro-caps, and penny stocks.
- Today, I’m gonna talk about 17 lessons that I have learned from my stock market experience.
- 17 lessons are from 17 stocks over a period of 17 years.
- So I will be explaining mentioning the stocks.
- In that period, I made profit and loss in almost all kinds of stocks.
- Blue chips, large caps, mid caps, small caps, microcaps, penny stocks. Everything.
- I haven’t included every single stock that I have purchased.
- Instead, included only a handful of stocks that taught me a thing or two.
1. IDBI Bank
- First investment. Personally.
- My dad recommended it because he liked the native branch of IDBI Bank.
- Recommended at around 80s in 2004.
- And I probably sold at around 60s or 70s.
- It hit 200 in 2010. PSU rally.
- Good thing is now it trades below my purchase price at around 50s.
- That means, even after 14 years my CAGR = ZERO.
- LESSON: Don’t blindly invest in stocks recommended by other people. No matter who they are. You don’t know their convictions about a particular stock.
- Gone for expert stock recommendations and other traders.
- I think I got it from MoneyControl message board or stock tip sites or maybe CNBC. It was there in news frequently at that time.
- Not just IFCI, there was some other junk stocks too.
- LESSON: Don’t fall for hot tips/media hype & don’t buy penny stocks.
3. JP Associates
- You know it was a popular stock in 2005-2008 (because infrastructure was a theme that worked at that time) and was there in almost every portfolio including Mutual Funds.
- Was on news as well all the time.
- I first invested in 2005 and it went upper circuit of 40%.
- So I thought it was an excellent stock.
- Its peak was 500+ and went down to 10 now.
- LESSON: Stay away from debt ridden companies. They are probably not gonna make it.
- Problem is you buy it more when they fall and it falls further like there’s no bottom.
- Best example is, Kingfisher and Unitech (Now @ 550 to 4).
4. Reliance ADAG
- Reliance stocks (especially ADAG) was the darling (especially retail) of the 2003 bull run.
- And you know what happened after that: ADAG stocks crashed.
- I have also invested in R Com, R Cap, R Infra.
- Don’t blindly buy what everyone else is buying (even if they are experts). You could be trapped. You never know when they sell.
- ADAG was superpopular and I also bought RPower for quick gains because of its demand.
- But luckily exited on listing when it didn’t make it for my entry price. 300 to 30. Even after 10 years.
- You can corelate it with today’s DMart. Or Eicher or Bajaj Finance or Page Industries or whatever.
- Know why you want to buy it.
- LESSON: Don’t buy fancy stocks.
5. Bharti Airtel
- Telecom was booming in 2003.
- The best time was when my father invested in it at around Rs. 50 (or Rs. 25 if you adjust stock split).
- It’s been 10 years and yet it didn’t reach its life time high in 2007.
- LESSON: Don’t go for dull (or saturated or matured) industry.
- L&T is top quality stock. Right?
- Yet I made a loss. And the secret is leverage.
- I leveraged via derivaties.
- It bounced back immediately after I exited my position.
- That’s why they say, “Markets can remain irrational a lot longer than you and I can remain solvent.” – John Maynard Keynes
- LESSON: Don’t overleverage.
- Everything infrastructure was going up.
- I entered it in 2013 only. And exited for a loss I guess.
- Now after 10 years, it’s way below 2007 high (390 to 70).
- LESSON: Stick with the best in the industry.
8. Polaris Software Labs
- I entered Polaris because of its valuation and dividend.
- But noticed that, stock was volatile and was moving before bad news and good news.
- So I realized something wrong with the promoter or management.
- Polaris CEO Arun Jain was fined by SEBI for insider trading.
- If the stock moves before results or news its a bad investment. Dont trust the promoter.
- Compare it with Infosys, because most of the times it reacted after results.
- I still remember upper circuits and lower circuits for a company like Infosys.
- LESSON: Good corporate governance is crucial.
9. HDFC Bank
- I stayed away from HDFC due to its price.
- So I was buying other bank stocks.
- LESSON: Priced to perfection stocks can still make you money. As long as the company is growing.
- Compare it with PNB < 100. Thats why HDFC Bank, Eicher Motors, Maruti, etc. are still and making new life time highs year after year.
- I invested in ONGC when it was falling and exited on rally.
- Now it’s trading 30% below my exit price.
- LESSON: Don’t invest in PSUs. Instead, trade it.
11. Tata Steel
- It was the most hated stock in my portfolio in 2015 bear market but eventually it became the best performer and I exited with descent gains.
- Exited at around 380 and then it doubled from there.
- We can’t predict the cycles of commodity stocks. Only mantra is buy low (when it touches 5-10 year lows because that’s when it bottoms out) and sell high.
- LESSON: Don’t invest in commodity stocks. Instead, buy low. Sell high.
12. South Indian Bank
- As I mentioned, I stayed away from HDFCs and Kotaks of the world due to its high valuation.
- Entered South Indian Bank as it was cheap.
- And then realized it was boring. So volatile and moves in ranges.
- LESSON: Don’t buy boring companies with volatile earnings.
- You dont want to buy stocks that are moving in a range right? Buy that’s growing up. Reporting better results than last year. And not something volatile.
- If you really want to buy it… buy it and forget about it and dont even enter that in your portfolio. and dont track it.
13. Idea Cellular
- Idea was perhaps the only telecom stock that was giving returns post 2008.
- Went up from 50 to 200 and now back to 50.
- I missed it when it was below 100s.
- And now it’s just 50.
- LESSON: Monitor what’s happening to the sector.
14. Kotak Mahindra Bank & Hindustan Unilever
- As you can see, both are top quality stocks in their sector.
- I entered Kotak and HUL when it was falling.
- And I was averaging. When it bounced back handsomely I exited.
- I exited after booking Rs. 1 lakhs+ on each stock.
- But now the tragic part is, both stocks almost doubled after my exit.
- If I held both stocks, then today’s notional profits could be Rs. 5 lakhs+.
- It means, most of the gains happened after I exited.
- LESSON: Don’t sell the best in your portfolio.
- Means, stocks that you are willing to buy more when they fall. Valuation can go to any level. Just like junks goes down to any limit, good stocks can go up to any level.
15. Tech Mahindra
“When buying shares, ask yourself, would you buy the whole company?” — Rene Rivkin
- I entered it because it was the cheapest (largest) IT stock.
- But eventually became the worst performer in my portfolio. And the most hated stock as well.
- LESSON: Don’t buy stocks that you are not comfortable in averaging.
- If it was Infosys or TCS then I would have averaged it.
16. Inox Wind
- When I see new IPOs, I just Google to know more about it.
- Usually I do not invest in IPOs. But when I read about Inox Wind, I thought it was good as it’s into green energy.
- In fact, it was the fastest growing wind energy company.
- I was buying more when it was going down and when it bounced back I saw profits too. But didn’t sell it as I was betting on its future.
- And then things turned around, as they reported bad numbers quarter after quarter.
- LESSON: Think twice before investing in IPOs.
- Best stocks could be what’s already there in your portfolio. So it’s best to research your own stocks or what’s already listed.
- Pharma was widely known as the defensive sector.
- Means, it usually outperforms the index.
- I don’t remember how I ended up buying Lupin. Must be after reading some article about their management or company’s growth.
- I bought and exited Lupin several times and made profit. Because it was moving up and up like HDFC Bank.
- In fact, I compared its chart with HDFC Bank chart.
- LESSON: No stock goes up forever.
- All sector corrects and goes through a cycle.
Video / Malayalam
I hope you have learned a thing or two from my stock market journey. If so, do share my blog post with your friends and family on your social media channels!
Happy Investing/Trading! 🙂