The best share to BUY NOW is...
Why look for newer companies when the winner could already be there in your portfolio, asks P V Subramanyam
Subra, which is the best share to buy now? When will people stop asking me this question please?
I have in my life looked at about 100 odd companies (as an investor), and must be holding about 30 shares.
Some of these shares in my father's portfolio are 60-year-old (yes you read it right) now. There are many shares held for the past 40 odd years, and of course some younger ones that are 20 years old.
There are some newer buys like Bharti Airtel which are now core.
Then there are some experiments which may have gone partially right like Kerala Ayurveda, Deccan Gold, Speciality Restaurants -- which are in the black (profit), but cannot decide whether they can be permanently in my core portfolio.
So when somebody asks me 'which share to buy?' -- I ask them what do you already have... the answer goes like this -- 'I have 200 shares of Kajaria Ceramics which I bought for Rs 20 -- now it is quoting at Rs 74.
So why do you not BUY MORE OF THE SAME share? What if the best share is already there in your portfolio?
If you hear that 'good financial companies will do well' is it necessary to buy L&T Finance? (just giving an example). You may not need to if you have say HDFC, HDFC Bank, Cholamandalam, etc. Why not buy MORE of the same shares?
I have added Essel Propack from Rs 17 to Rs 80 and then sold off everything at Rs 92. This was in the earlier ride; I completely missed the next ride. So I have Tata Global (I had it even when it was called Tata Tea!!), Tata Coffee, Tata Investments -- shares which I have bought so many times and sold so many times that I have NO CLUE about its average cost.
I find it easier to buy and sell a share that I already have (positional trade) -- which allows you to buy at lower prices and sell at higher prices.
Having bought shares like Cholamandalam at much much lower prices, today I am in a position to sell it off, if it spikes.
Why can't people buy MORE of a share that they have in their portfolio beats me. Especially if they have taken the trouble to build a good portfolio.
This creates a habit of selling shares -- just buying does not make you cash, does it?
Even shares like Asian Paints, Nestle, etc. have given me a chance to sell at higher prices and buy back at lower prices. Of course that is a double edged sword -- if I had sold Cholamandalam at 350, 380 and 385, I may not have had the heart to sell more at 400 -- simply because I have not had the chance to buy the shares already sold.
What does one do in such cases?
Wait for the market to come down.
In my case I have say 10,000 shares of a company I sell NOT MORE THAN 500 (5%) in one lot. So I would have sold about 1500 -- which means I still enjoy the rise on 85 per cent of the stock. Not bad, eh? And in most cases, the market does oblige :-)
Photographs: Uttam Ghosh/Rediff.com