Every investment must begin with an analysis of risk.
Macro Risks --- The Sensex is currently at 18,600 odd. I have no clue whether the market will go up or go down in the next 6 to 12 months. In the next 10 years, there will be a few up years and a few down years. I do not know the order in which they will occur. There is huge uncertainties associated with the global market today. US, EU and India has their own macro problems and I have no insight to provide one way or another. I will try and provide some bearish cases that exist out of the net, so that the readers can form their own opinion.
Stock Movement Risks -- The stock, Piramal enterprises, might or might not be volatile in the short term. I have the stomach to see the stock go down 50% and do nothing about it or even decide to buy more (unless my basic thesis has been invalidated)
Is there a chance that my analysis is wrong? Yes. When I go out and buy the stock (my buy price ranges from Rs. 380 odd to Rs. 488 odd), I am being arrogant that I know more than the person selling on the other side (who might be an expert) On other other hand, I am also humble enough to recognize that I may be wrong and will list out the things that might possibly go wrong with this position in the subsequent posts.
What is the investment Horizon I have in Mind? Long. Possibly greater than 3 to 5 years. This is the primary reason why I am not very interested in the short term movements.
What happens if the stock underperforms even after 3 to 5 years? --- If the business does not see fundamentals improving even after 3 to 5 years and the Sensex over performs the stock considerably, we will wind down the position with the knowledge that we made a mistake and were better off holding the Sensex ETF. However, it must also be noted that we might sell / reduce the position if the basic thesis changes because of fundamental changes in the business.
And finally, do your own research. This is only a start not a recommendation to buy or sell.
Macro Risks --- The Sensex is currently at 18,600 odd. I have no clue whether the market will go up or go down in the next 6 to 12 months. In the next 10 years, there will be a few up years and a few down years. I do not know the order in which they will occur. There is huge uncertainties associated with the global market today. US, EU and India has their own macro problems and I have no insight to provide one way or another. I will try and provide some bearish cases that exist out of the net, so that the readers can form their own opinion.
Stock Movement Risks -- The stock, Piramal enterprises, might or might not be volatile in the short term. I have the stomach to see the stock go down 50% and do nothing about it or even decide to buy more (unless my basic thesis has been invalidated)
Is there a chance that my analysis is wrong? Yes. When I go out and buy the stock (my buy price ranges from Rs. 380 odd to Rs. 488 odd), I am being arrogant that I know more than the person selling on the other side (who might be an expert) On other other hand, I am also humble enough to recognize that I may be wrong and will list out the things that might possibly go wrong with this position in the subsequent posts.
What is the investment Horizon I have in Mind? Long. Possibly greater than 3 to 5 years. This is the primary reason why I am not very interested in the short term movements.
What happens if the stock underperforms even after 3 to 5 years? --- If the business does not see fundamentals improving even after 3 to 5 years and the Sensex over performs the stock considerably, we will wind down the position with the knowledge that we made a mistake and were better off holding the Sensex ETF. However, it must also be noted that we might sell / reduce the position if the basic thesis changes because of fundamental changes in the business.
And finally, do your own research. This is only a start not a recommendation to buy or sell.
