Right Stock - Wrong Time

Many analysts say time doesn't matter and a High Growth story always deserves Higher PE ratio. I disagree, Right Stock bought at the Wrong Time is no less than disaster. I have purchased Gillete on 24.02.2000 at Rs. 2100.00 (then known as Indian Shaving Products). The story was good and there was a huge growth potential for the company but the stock seems to be discounting the earnings of further 8 to 10 years at that time, and that was too much. Even after 5 years the stock is quoting at Rs. 800.00 after seeing a low of Rs. 200.00 (approx.) and mind it, there has been no Stock Split or Bonus or Right Issues. God knows what went wrong, I doubt people are shaving less these days, otherwise the company has good management, innovative R & D department and is now a part of Procter & Gamble. I am still hoping for some spectacular performance.

Another stock I bought the same day was Hindustan Lever at Rs. 300.00. Because all the analysts, those days, were giving example of HLL and showing that if you have bought HLL gradually over a period of time, you would have made money anyway. But, since 2000 HLL is grossly underperforming the market. That doesn't mean HLL & Gillete are bad stocks, only the timing was wrong.

It also proves, that I am not a good timer of stocks. I generally buy a good story and keep it until I am convinced that the story is over. Sometimes it is also beneficial to switch the stock when it has reached a Saturation Point and further growth is very difficult. On the contrary, if the stock is not performing but the company is doing good business then hold it tight. Two or Three bad years doesn't matter, analyse the Financial Statements closely. An increase in R & D expenditure or Capital expenditure augurs well. I made money in several such stocks, for example : PSL Ltd., Suven Life Sciences, Shashun Chemicals, Simplex Concrete Piles, Zodiac Clothing, Honeywell Automation, Pantaloon Retail, ICICI Bank to name a few. The list is endless.

Try to spot the stock early and avoid it when it has become very popular and everybody is recommending it. One way is to look around you, use your common sense and see what people are buying nowadays the most, which Brand has established itself as a quality product and is rightly priced. You will see a lot of stock tips scattered around you, they are hidden in the products and services you mostly use.