Home > Trading Ideas > Index flat but stocks flying high!

Index flat but stocks flying high!

Friday, September 7, 2007 Leave a comment Go to comments

The index is trading flat but individual scrips are running hard. I see many stocks on my scan list that are up 8-10%!Sometimes, it becomes difficult to find “entry” into such stocks. Chasing a “hot” stock can result in burnt fingers. Trade something like an Aptech,Bartronics or NIIT only if you have a clear strategy in place. Otherwise let them cool down and then buy.Do not buy with the feeling of “having missed out” on a great opportunity.Safety first-returns later!

Categories: Trading Ideas
  1. sagecapital
    Sunday, September 9, 2007 at 5:53 pm

    Anupam- How would you know in advance that India’s growth story is going to end at a “particular time” so that you are away?What are your check points to know that the story has ended?Even the US federal reserve(with all the tools and knowledge) couldn’t estimate the credit/housing problem in US in advance. How can you as an ordinary investor know in advance that the growth story is going to end?

    Sunday, September 9, 2007 at 3:48 pm

    I was observing your comments on buying high and selling higher. I buy lower and sell higher as many might be doing. I keep my profits invested and take out my capital only to re-invest lower. Only problem with this strtegy might be if India GROWTH STORY gets ended. But then, at that time we shouldnt be in the stock markets! Am I wrong?

  3. sagecapital
    Friday, September 7, 2007 at 5:41 pm

    If you are good at b) and c), you are on firm footing. Good luck with your trading and job hunt!

  4. Shyam
    Friday, September 7, 2007 at 5:36 pm

    I have started trading ONLINE since 28th Oct 2004, may be I have less experience than “SAGE” and I may not have seen bigger crashes. but since Oct 2004 I have always entered during a fall in a staggered manner, and my short time experiene tells me that there can be a maximum of 30 to 35% Fall in any fundamentally strong stock and fundamentally strong economy. I mix FUNDAMENTALLS and Technicalls. I always have short term, medium term, and long term positions in my Portfolio.
    I have learned certain positive points from SAGE CAPITAL
    a) buy on high and sell higher.
    b) cut losses ( I normally look at fundamental weakness )
    c) Ride the winners with TRAILING STOPLOSS.
    d) I play sector wise.
    But during such falls I follow my principle of staggered buying in fundamentally strong scrips.
    I do not intend to argue on anything, I am an unemployed person, I try to learn from
    each and every person, take his positive points and forget it.
    If I get a job I might leave all this and invest through mutual funds.

  5. sagecapital
    Friday, September 7, 2007 at 5:10 pm

    Shyam- I would be more interested in knowing what you’d have done if the NIFTY had gone from 4000 to 3000 and just stayed there.
    Or what were you doing during May 2004 crash?

  6. Shyam
    Friday, September 7, 2007 at 5:04 pm

    I agree with “Hart” and his views, you should only take care of “FEAR” and “GREED” and trade accordingly. Even I invested in a staggered manner during “FEAR” and booked profit without much “GREED” and faced the ” V ” shaped wave successfully.
    I think hence forth due to GLOBAL FACTORS and INDIAN POLITICAL SCENARIO there is going to be VOLATILITY in the INDIAN MARKET. That does not mean we should stop trading and investing. Plan your stratergy ” Jo dar gaya samjho margaya”.

  7. sagecapital
    Friday, September 7, 2007 at 4:18 pm

    Hart- Your observation is correct. Things are not as simple as they appear to be 🙂
    It is more game of ‘nerves’ rather than anything else. Those who feel “confused” or “overconfident” end up losing while those who keep their head clear and stay calm win.
    And it is difficult to keep “calm” because you are dealing with fear of losing money!

  8. hart
    Friday, September 7, 2007 at 4:08 pm

    I got stucked at your second line itself. “Volatility” appears to be the most magic word to me in stock market :), let’s analyze following scenarios:

    i) Market went down from 15,700 to 13,800 levels in few weeks & people didn’t invest since they got scared by ” high volatility”.

    ii) Market rose from 13,800 levels to almost all time high at 15,500 levels in few weeks & people didn’t at this juncture fearing “high volatility”.

    iii) Third imaginary condition in line with above two would be – Market remained at “X” level for few weeks and people didn’t enter since market was stagnant.

    Forget exit point you talking about, it appears finding entry point itself is an enormous tasks. Isn’t it a funny business for a newbie in this world :D?

  9. sagecapital
    Friday, September 7, 2007 at 3:43 pm

    Mr. Ravi- the choice of being a gambler/trader is yours.Stock market is a good place for gamblers to lose their shirt!

  10. Ravikumar
    Friday, September 7, 2007 at 3:40 pm

    what is happening in the market?Is this market merely act as gambling area?it is totally belongs to vested intersted persons i think.

  11. sagecapital
    Friday, September 7, 2007 at 3:37 pm

    I buy high and sell higher.
    I fear “volatility” as higher volatility increases risk.
    Even I added stocks in August where I felt risk and return was in my favour.(though not from short term trading perspective)
    I am not saying do not enter these stocks.All I am saying enter only if you know your “exits”.Otherwise, a small investor gets caught on the wrong side of the move by “chasing” stocks that are moving 10% a day.
    Many of my clients are trading NIIT and Aptech only after knowing their “exits”.
    Do you know the exits of your stocks before you enter?
    What is your definition of “long term”? Do you hold your stocks for 5 years even after they fall 70-80% from their highs?
    It is not necessary that a “long term player” will make money in the markets.
    I can show you many stocks which went up 20 times in 2 years during 1998-2000 and then came to 1/20th their value in 2-3 months!
    The same thing will happen with most of the people at the end of this bull market.Many of us shall see our “paper profits’ evaporate in no time. And some people like you might end up adding “50% more cash” in “one” of those reversals. In investing the sad part is that you are not judged by the “quality of your decisions” but by the “outcomes” of those decisions.If today the NIFTY were trading at 3000, the same “skepticism” of mine might have won great applauds 🙂
    You need to experience “one bear market” to understand these things.

  12. hart
    Friday, September 7, 2007 at 3:22 pm

    When markets were falling in August, you were not bullish over the discount market was offering. Now that it’s rising you feel hot stock can leave you with burn fingers. So this leaves me wondering what is a right entry point for you?

    I am a long term player, but I follow market just like a trader. I pumped extra 25% of my existing portfolio amount in August’07 and, not that I am boasting over it, I made decent 9% return just on my August investment alone. I simply pumped cash over 500 point fall.

    I understand each has an approach of it’s own, but few things are still are beyond me. couple of weeks back fear of “another 30% fall” stopped you from entering market, now that market is looking well set for 20k in next 18 months or so, you want to enter once the stock cool down.

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