knowing markets will agree with you someday but you don’t know when.
Its hurting more some times in waiting. You know you did analysis based on some events like catylist coming. But its not happening due to external factors.. Example. Waiting for more than 2 years with 30 % correction. Even though its 4 % of PF, still I am thinking opportunity missing cost in others.. How do we check/wait or rebalance in that scenario...
if you have waited 3 years its only worth it if its going to be 3-5x in a year from now (on 4th year).
for example I have waited for almost 2.5-3 years for IEX trade to work out, then sold it for 2.5x but i was able to hold because i knew the triggers (wrote about in wordpress blog post) and i knew something was happening during those 3 years like gate closure time reduction, it took 2 year for it to get implemented.
I waited for 1.5 years in bandhan bank but moved out as soon as it became evident that their strategy has changed (they still may do good).
Overall i think if you have sold reason to stay then you should stay and your probability for making money should go up as time passes by. if its same then you have made mistake of taking trade too early.
& luck (external factor) does play the role but we have to figure that external factor has changed the thesis then we should take the call.
Excellent post, Dhruva, thanks for writing. One set of questions I ask myself is: Will I be willing to buy more if the stock is down 30%? What are some things that could change then and discourage me from buying more?
that's the hardest part but generally i am comfortable if it goes down by -20% but if more i start worry about what i am missing, i regress more about the thesis. Read more of conference calls , ask right questions about what i am missing then try to find the answer.
Suppose stock is down by another -30% , -50% then i did a bad job about buying it irrespective of if i am right in the future bcoz it has to double to recover from -50%.
some folks use technicals but i use my sentiment analysis and price vol action to make the contrarian trade, U have to know the catalyst before entering the trade and probability of that catalyst playing out in future and rough idea about when that catalyst will play out.
Thanks dhuruva for good write up..
knowing markets will agree with you someday but you don’t know when.
Its hurting more some times in waiting. You know you did analysis based on some events like catylist coming. But its not happening due to external factors.. Example. Waiting for more than 2 years with 30 % correction. Even though its 4 % of PF, still I am thinking opportunity missing cost in others.. How do we check/wait or rebalance in that scenario...
if you have waited 3 years its only worth it if its going to be 3-5x in a year from now (on 4th year).
for example I have waited for almost 2.5-3 years for IEX trade to work out, then sold it for 2.5x but i was able to hold because i knew the triggers (wrote about in wordpress blog post) and i knew something was happening during those 3 years like gate closure time reduction, it took 2 year for it to get implemented.
I waited for 1.5 years in bandhan bank but moved out as soon as it became evident that their strategy has changed (they still may do good).
Overall i think if you have sold reason to stay then you should stay and your probability for making money should go up as time passes by. if its same then you have made mistake of taking trade too early.
& luck (external factor) does play the role but we have to figure that external factor has changed the thesis then we should take the call.
Excellent post, Dhruva, thanks for writing. One set of questions I ask myself is: Will I be willing to buy more if the stock is down 30%? What are some things that could change then and discourage me from buying more?
that's the hardest part but generally i am comfortable if it goes down by -20% but if more i start worry about what i am missing, i regress more about the thesis. Read more of conference calls , ask right questions about what i am missing then try to find the answer.
Suppose stock is down by another -30% , -50% then i did a bad job about buying it irrespective of if i am right in the future bcoz it has to double to recover from -50%.
some folks use technicals but i use my sentiment analysis and price vol action to make the contrarian trade, U have to know the catalyst before entering the trade and probability of that catalyst playing out in future and rough idea about when that catalyst will play out.
super