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Showing posts with label Always Buy for the Long Term. Show all posts
Showing posts with label Always Buy for the Long Term. Show all posts

Tuesday, December 20, 2011

Why Long Term Investing Pays you Back !!!

This morning has been unusually busy……for TV anchors of Blue & Red business channels. There’s a news report from a leading international institutional brokerage known for its bearish views on India which predicts that BSE SENSEX could hit 11,000. And TV anchors are doing their best to whip up panic based on it. Just ignore all this ‘noise’…….
Stock market will rise and fall – This is a given fact. But what matters to you as an Long Term Investor is where the stock markets will be in say next 3 years or 10 years for that matter. And when it comes to that, things does not look better at least this is what the picture drawn (0r made seen) by the reports from FII’s saying that index could touch 11,000 or so….
Most of us would be out of markets and would be asking questions that why should one invest? – I will argue to that report and will Strongly advocate LONG TERM INVESTING. Just look down at the history and you will find that markets have always given returns in long term, the only thing  one needs is to have patience and selection of stocks. If you buy a strong fundamental stock with good Return on Equity (ROE) and with good management which you hold it over years, will surely give you the best returns over the period of time. The present stock market crisis has thrown up exciting money making opportunities and in particular select the Stocks which commands good fundamentals & which are available at their best valuations –
But, First read the tables below -
NIFTY
1 Yr Return
3 Yr Return
5 Yr Return
10 Yr Return
No. of Occurrences
15
13
11
6
(-)ve return observed
5
2
1
0
Probability of Loss
33.33 %
15.38 %
9.09 %
0.00 %

SENSEX
1 Yr Return
3 Yr Return
5 Yr Return
10 Yr Return
20 Yr Return
No. of Occurrences 32 30 28 23 13
(-)ve return observed11 6 3 1 0
Probability of Loss 34.38 % 20.00 % 10.71 % 4.35 % 0.00 %

The above tables clearly show that the probability of losing capital is highest if the holding period is around 1 year and lowest or nil if the holding period is increased to 10 or more years.
It means your capital is safest if invested for long term. It also depends on what  kind of stock you hold on, if you hold stocks with good fundamentals, the probability of losing capital nearly vanishes...
Here, down below, I have tried to give a list of stocks which commands RETURN ON EQUITY of 15 % or more which may have potential of money making opportunity - 
*ROE as on 31st March 2011


Stock Name
EPS (Rs.)
Book Value (Rs.)
*ROE (%) 
PAT Margin (% )
AXIS BANK
91.51
505.87
19.34
2.78
BAJAJ AUTO
121.10
219.34
85.21
19.72
BERGER PAIN
4.57
23.26
22.03
6.48
BHARTI AIR
16.92
122.63
19.20
20.30
CRISIL
25.60
70.24
50.53
37.02
COAL INDIA
7.43
39.67
25.73
30.33
CONT.CORP
68.26
418.07
18.86
22.95
CIPLA
12.57
89.25
15.36
15.53
GAIL
30.19
168.17
19.76
10.82
HERO MOTOR
104.77
206.20
60.05
9.33
HDFC BANK
19.18
118.26
16.75
4.05
HDFC
26.12
129.86
21.74
27.50
HUL
11.67
18.26
82.66
10.60
IDFC
10.32
75.55
15.03
28.09
INFOSYS
119.24
487.23
27.69
25.38
INDRAP.GAS
20.97
82.94
28.40
13.21
ITC
7.09
24.11
33.35
16.30
ILFS TRANSP
13.32
98.20
17.14
17.83
JINDAL STEEL
21.58
102.20
26.80
16.98
JSW STEEL
86.07
764.35
15.65
8.00
L & T
66.54
375.93
19.71
8.78
M & M
43.71
189.32
29.46
10.40
MARUTI SUZU
69.73
507.32
17.81
5.64
MOIL
35.00
139.18
30.90
51.34
MUNDRAPORT
5.45
24.05
25.36
52.31
NMDC
18.62
57.92
38.85
57.13
ONGC
26.43
127.92
20.67
28.61
PETRO.LNG
11.92
42.63
25.21
4.70
POWER FIN
17.96
148.55
18.42
25.47
REC
26.83
142.52
21.53
31.12
RUPA & COMP
4.68
23.12
21.09
5.01
SESA GOA
31.24
140.95
36.52
41.38
SUN PHARMA
15.22
72.82
22.32
43.83
TALWALKARS
7.33
55.76
18.34
17.60
TATA STEEL
72.31
526.27
16.4
21.52
TCS
48.29
126.35
43.89
25.86
TITAN IND
5.78
15.33
49.20
6.55
TECH MAHIN
51.54
286.81
22.32
14.03
ULTRATECHCEM
73.26
424.11
18.39
9.45
WIPRO
19.66
95.88
24.96
18.35
*The list is just for explanation and should not be taken as stock recommendation
This, by now, would have cleared your doubts, fears and worries of investing in the stock market.
Happy Investing!!! 

Visit the Presentation to learn more on CLICK - RETURN ON CAPITAL EMPLOYED
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