To Buy Or Not To Buy..... That is the Big Q

My first multibagger pick was Hindustan Ciba Geigy, which merged and demerged and I finally got shares of Novartis (India) Ltd. and Ciba Speciality Chemicals Ltd.. I purchased HCG at an average price of Rs.130 (Rs.10 paid up) and made very good money. I continue to hold both Novartis and Ciba Speciality. Yes, my holding period is more then 15 years, I suppose, but the return is also fabulous.

These type of valuations are difficult to find when the Sensex is at 9000 but still there are many stocks which can become five baggers at least. I am not a good timer of markets, i.e., I don't know whether one can buy at these levels or not, because when the sentiments become negative and markets fall then even good stocks suffer a lot. So, I can only search for good stories over a period of five to ten years but can't tell whether it is right to buy at current levels. Though, good stocks need not fall every time the market falls. I have purchased Gateway Distriparks at Rs.190 after which sensex corrected by 1500 points and all the midcaps and smallcaps were bleeding profusely. Gateway did not go below Rs.200 in fact when Nifty was at 2316.05 on 28th Oct 2005, Gateway was at Rs.218.55 (Source NSE). I am not that lucky every time market corrects, I too have fair share of losses but in the long run share prices of good stories always bounce back. I have purchased ICICI Bank at Rs.120 on 25th Oct. 2002 after which it went down to Rs.80, a fall of 33%, but today it is around Rs.570.

Moral of the story - Look for good stories with good management and have patience.

Read First - Invest Later

I am still wondering, after spending 20 years in Stock Market, whether stock picking is an art or science. There are times when nothing seems to work, either Technical Analysis or Fundamental Analysis. I am a very ardent reader and I would like to mention following books which are a must read for every investor. Some are from Marketing and Branding Genre to understand a company better.

Investment Books

1. One Up On Wall Street by Peter Lynch
2. Beating the Street by Peter Lynch
3. The Intelligent Investor: The Definitive Book On Value Investing, Revised Edition by Benjamin Graham, Jason Zweig
4. Reminiscences of a Stock Operator (A Marketplace Book) by Edwin Lefèvre
5. Market Wizards : Interviews with Top Traders by Jack D. Schwager
6. The Warren Buffett Way, : Investment Strategies of the World's Greatest Investor by Robert G. Hagstrom
7. Of Permanent Value - The Story Of Warren Buffet by Andrew Kilpatrick
8. Liar's Poker by Michael Lewis
9. Technical Analysis of the Financial Markets : A Comprehensive Guide to Trading Methods and Applications by John J. Murphy
10. Value Investing : From Graham to Buffett and Beyond (Wiley Finance (Paperback)) by Bruce C. N. Greenwald
11. How To Make Money In Stocks: A Winning System in Good Times or Bad, 3rd Edition by William J. O'Neil
12. You Can Be a Stock Market Genius : Uncover the Secret Hiding Places of Stock Market Profits by Joel Greenblatt
13. Options, Futures and Other Derivatives (6th Edition) (Hardcover) by John C. Hull
14. Bull! : A History of the Boom, 1982-1999: What drove the Breakneck Market--and What Every Investor Needs to Know About Financial Cycles by Maggie Mahar
15. Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger by Charles T. Munger

Marketing & General Books

1. Horse Sense by Al Ries & Jack Trout
2. Marketing Warfare by Al Ries
3. Positioning: The Battle for Your Mind by Al Ries
4. Bottom-up Marketing by Al Ries
5. Focus : The Future of Your Company Depends on It by Al Ries
6. The 22 Immutable Laws of Marketing : Exposed and Explained by the World's Two by Al Ries
7. Differentiate or Die : Survival in Our Era of Killer Competition by Jack Trout
8. The Power Of Simplicity: A Management Guide to Cutting Through the Nonsense and Doing 8. Things Right by Jack Trout
9. Jack Trout on Strategy by Jack Trout
10. The 22 Immutable Laws of Branding by Al Ries
11. The New Positioning: The Latest on the World's #1 Business Strategy by Jack Trout
12. The Fall of Advertising and the Rise of PR by Al Ries
13. In Search Of Excellence by Tom Peters
14. The Pursuit Of Wow by Tom Peters
15. Rich Dad Poor Dad by Robert T Kiyosaki
16. The 7 Habits Of Highly Effective People by Stephen R Covey
17. Brand Sense : Build Powerful Brands through Touch, Taste, Smell, Sight, and Sound by Philip Kotler
18. Good to Great: Why Some Companies Make the Leap... and Others Don't by Jim Collins
19. The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It by Michael E. Gerber

In my following posts I will try to create insight in picking the stocks and will tell how I picked my first Multibagger and how I am trying to find the same in Bull Market when the Sensex is at 9000+