The Chennai real estate prices did not fall too much. It got corrected to some extent in the range of 10-20% depending upon the location. In my opinion, the Chennai RE has appreciated too much and there is less room to move upward. The higher income (IT and others) job losses make the situations worsens further.

The beaten down stock market shows some improvement. I think it is wise to invest in stocks now. I bought suzlon at 40 Rs. (6000 stocks). In 2 months, the stocks price jumped to 90 Rs. I got my investment doubled and it may increase further. This may not possible with RE unless we are heading for collapse.
I bought Bank of Ireland ADR (IRE) for 1 dollar (1800 stocks). It is now at 9 dollars.
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  • The best time ...

    Originally Posted by contra
    The following stocks have even now very attractive P/Es even less than 10 (You say P/E between 12-15 is good buy)

    Tata Steel, Orbit Corp, Ashok Leyland, Indian Oil- all are good long term bets ,

    (disclaimer: I currently hold the last 2)



    I buy when P/E is in the 1.0 to 4.0 range!!! :D At these levels you simply can't lose!

    You won't believe it but there are many times when I have seen a large number of BSE stocks which were making decent profits as well as giving dividends (as well as having solid reserves) which were going at incredible P/Es.

    Here is an example which I spotted in 2nd half of 2008. Guj.Florochem:

    Rs.720 Cr sales (thats large so its not a fly-by-night co.). Face Value Rs.1. Book Value of Rs.86 (this is outrageously high on a face value of Rs.1), EPS of Rs.28 (which is also outrageously high), dividend of 350% (how many cos distribute like this?). After all this, price had come down to Rs.50 giving a P/E of 1.78 times and a P/BV of 0.58! I could not see any equity dilution due to issues that were going to kick-in in the near future. At Rs.50, the dividend yield alone was 7% which is like an assured FD return :D! And at Rs.3.50 dividend the payout was only 12.50% which meant 87.5% of you cash was ploughed back to generate returns at an incredible RONW (Return on Net Worth) of 32%!!!

    In the recent rally it reached Rs.220 and is now Rs.125 with a P/E even now of 4.0 times. These are gold mines even at this price simply because of the amount of cash they generate in their business.

    There are many other reasons to pick this stock, but I will refrain. In these troubled times there are so many of these gems available for throwaway prices! And their continued good performance even in these times are the strongest indicator of their management's ability to deliver in the worst of times!

    cheers
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  • Originally Posted by wiseman
    I buy when P/E is in the 1.0 to 4.0 range!!! :D At these levels you simply can't lose!

    cheers


    Your patience is outrageous:D. I don't wait so long though, but very actively manage my personal portfolio shuffling it now and then.

    You seem to wait till P/E ratio of a good gem company falls to 1.0 to 4.0 range to buy. You also seem to look at macroeconomics like good times, bad times. If times are bad as per your analysis want to refrain from buying itself.

    This is what i do:
    When the overall market in low like in march 2009 with index at 8000 levels, I buy both good companies & bad companies as all have P/E ratios in single digits. In march 2009 i bought apollo hospitals, opto circuits (good companies) and also bought unitech, tata motors (bad companies). In may-june 2009 all 4 gave superb ROI ranging from 40% to 120% in just 3 months - and i sold them all.

    When the overall market is high like now in july 2009 with index at 14500 levels, i am more choosy. Now i buy only the best (not just good) companies provided they are still undervalued with P/E ratio of less than 10. Good question to ask is why are some of such best companies like indian oil still grossly undervalued even when overall market has rallied from 8000-14500 in just 3 months?? because many market players are worried about buying them influenced by doomsday mindset of oil crises & goverment price control. So while those influenced by bears avoid Indian oil, Contra is buying IOC.

    But being a active, i can come out of IOC even with 10-15% ROI and buy into others if overall market again falls to 8000 again. But IOC which is already undervalued will be a lonely performer giving 10-15% returns even while everything around is falling apart back to 8000 index levels. In case market moves up to 20000 levels then again IOC will be the biggest beneficiary as other maha navarathnas are already overvalued.
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  • Just one word of caution :)

    Originally Posted by contra
    Your patience is outrageous:D. I don't wait so long though, but very actively manage my personal portfolio shuffling it now and then.

    You seem to wait till P/E ratio of a good gem company falls to 1.0 to 4.0 range to buy. You also seem to look at macroeconomics like good times, bad times. If times are bad as per your analysis want to refrain from buying itself.

    This is what i do:
    When the overall market in low like in march 2009 with index at 8000 levels, I buy both good companies & bad companies as all have P/E ratios in single digits. In march 2009 i bought apollo hospitals, opto circuits (good companies) and also bought unitech, tata motors (bad companies). In may-june 2009 all 4 gave superb ROI ranging from 40% to 120% in just 3 months - and i sold them all.

    When the overall market is high like now in july 2009 with index at 14500 levels, i am more choosy. Now i buy only the best (not just good) companies provided they are still undervalued with P/E ratio of less than 10. Good question to ask is why are some of such best companies like indian oil still grossly undervalued even when overall market has rallied from 8000-14500 in just 3 months?? because many market players are worried about buying them influenced by doomsday mindset of oil crises & goverment price control. So while those influenced by bears avoid Indian oil, Contra is buying IOC.

    But being a active, i can come out of IOC even with 10-15% ROI and buy into others if overall market again falls to 8000 again. But IOC which is already undervalued will be a lonely performer giving 10-15% returns even while everything around is falling apart back to 8000 index levels. In case market moves up to 20000 levels then again IOC will be the biggest beneficiary as other maha navarathnas are already overvalued.



    Folks in general,

    We all think we are much smarter than we actually are and believe that our success/failure is almost entirely of our doing. Nothing could be further than the truth!

    If you look back at your own lives, you will realise that most of the lucky breaks you got was just that, lucky! :D

    The problem with actively managing portfolios is that, when we get bargain prices for assets, in most cases, these prices never come back again 0 in nominal terms.

    So, imagine I got Sesa Goa at Rs.30 in 2003. In 2005 it went to Rs.300 and one would think, "Wow! A 10-bagger in only 2 years" and sell out when the market dips. The same person who thought he/she was lucky to sell at such an opportune time will realise to their dismay that, while they got a 900% gain in 2 years would have completely missed the much bigger gain when Sesa Goa went to Rs.4200 in 2007/08. Imagine, grabbing a Rs.270 profit and missing a Rs.3900 profit on top of it!!!! Even now, with their business having fallen by 50%, stock price is still in the Rs.1500 range after adjusting for stock split (it will most probably never come back to Rs.30 of 2003! or even Rs.300)

    So, please restrict "trading" to a small part of the portfolio. When you see good company, buy it and keep buying it in small lots whenever bad circumstances come. Over the years, bonuses and dividends will see you make multiple 1000% gains on these stocks.

    cheers

    Ram
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  • Wisey , Clear me one doubt . For the Face Value of Rs.1 , IF Divident is 7% , this would be 0.07 Paisa per share only . Can't be 3.5 Rs . I may be wrong.
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  • One mistake. read divident as as 0.07 Rs / Share
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