This post is from Dr Hitesh Patel, my partner in Hitpicks and in my own investing. We have been collaborating for many years and hopefully complement each other and I have learnt a lot from him over the years. He is the most prolific members on ValuePickr and his thread is the most-read thread on the forum, where he shares his thoughts and helps investors.
Link to the ValuePickr thread.
Greetings to all our friends and hope everyone is keeping good health in these trying times.
The market rally which began in 2020 and which took everyone by surprise then has continued to surprise us even now. Especially when we read the headlines in newspapers and watch news on television, we feel a total disconnect between the ground situation and the behaviour of stock markets. Even at a personal level this second wave has created havoc and has directly or indirectly affected one and all.
But as investors the basic premise is not to argue with the tape. The strength and resilience being displayed by the markets is something that has taken most of us by surprise. I think I would not like to go too much into the details of why markets are not falling and in fact going up. Ever since this rally began in 2020, we have seen that a lot of technical patterns that were visible early during the rally have played out and these types of patterns still continue to play out. It indeed has been a stock picker’s market. Some of the sectoral moves have been breathtaking and have created a lot of wealth for those who have been able to ride them.
Ever since we started HITPICKS, both Abhishek and I have been on a quick learning curve. Launching our services has helped both of us in improving ourselves as technofunda investors. From the beginning, our mantra has been to land big winners and keep riding them while getting stopped out at the earliest in our losers. This has helped in riding some of our winners well beyond our targets which we initially provided at the time of the recommendation. As you must have seen, we keep raising our stop losses in order to keep riding our winners as they go higher and at the same time be stopped out if the trend reverses. This has helped us in riding our winners as much as we can with the help of trailing stop losses.
Even though ours is a technofunda advisory, we prefer to pick companies where fundamentals are very sound. So any investor who has missed implementing our stop losses and has been stuck with his/her position in our recommended stocks does not suffer permanent loss of capital.
Another strategy we follow is not to flood our subscribers with too many recommendations in the hope of getting a few right while others may go wrong or may not move much. We understand the limitations our subscribers face in terms of the availability of capital and hence do not want to have too many open positions at the same time.
Coming to the current market scenario and what I feel about it, personally I have always felt that it helps to focus more on companies and sectors rather than worry too much about the markets and where they are headed. This has always helped me in staying away from futile exercises in forecasting market directions. I prefer to look at companies and their fundamentals and chart formations and structures. I don’t prefer writing long-winded letters trying to figure out stuff like reasons for market rallies or falls, details of macros etc. Because in my investing career, I have learnt that Peter Lynch got it absolutely right (as he has got most things he wrote in his books right) when he quoted about focusing on companies rather than market directions. “Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.” The above quote has been the cornerstone of my investment philosophy.
We have tried to focus on selecting good companies with good technical setups and this has worked well till now in a lot of our recommendations. Our effort will continue to be to refine our processes so that we continue to churn out more and more big winners and minimize our losers.
If you have any suggestions to make regarding our HITPICKS advisory, we would welcome them.
Wishing everyone healthier happier times, regards to one and all.
HITPICKS SUMMARY DATA
|
Num of gaining positions |
15 |
|
Num of losing positions |
8 |
|
Max loss |
-15.21% |
|
Max gain |
80.27% |
|
Average loss |
-8.97% |
|
Average gain |
25.40% |
|
Min duration held |
7 |
|
Max duration held |
200 |
|
Average duration held |
71 |
|
XIRR % |
87.30% |
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