Investment_ LICI (Life Insurance Corp)
Namaste!
LICI has been hit hard for the mainly two reasons,
1. Previous performance of other IPO stocks such as Paytm, Zomato, Etc.
2. Current bearish sell-off (in over all global markets).
Investment Objective: If Nifty/Sensex give 10-12% annual average return, my goal is to beat the index. Means we will try to generate >12% annual return. We can include stocks with high risk and high reward (such as Paytm, Zomato and LICI) to make a portfolio, along with other blue-chip stocks so that, we increase our returns with a little increase in our risk. I would not advice investing more than 10% of your investment capital in each. Remaining 70% should be invested in other blue-chip stocks.
The logic: Look, there is always a resistance at the high of red candles. As you can see in the chart, this will be the 3rd attempt for a breakout. Each time the resistance get a hit, it becomes weaker and weaker. The probability of a breakout increases with the number of hits. So, Rs 669.40 is a most logical price for an entry. Always remember, our goal is to beat the index. As long as our basket of stocks performs well, we should be happy.
Disclaimer: Investment carries an element of financial risk. Investment does not guarantee a fixed return due to volatile nature of markets. Please do your due-diligence before investing.
LICI has been hit hard for the mainly two reasons,
1. Previous performance of other IPO stocks such as Paytm, Zomato, Etc.
2. Current bearish sell-off (in over all global markets).
Investment Objective: If Nifty/Sensex give 10-12% annual average return, my goal is to beat the index. Means we will try to generate >12% annual return. We can include stocks with high risk and high reward (such as Paytm, Zomato and LICI) to make a portfolio, along with other blue-chip stocks so that, we increase our returns with a little increase in our risk. I would not advice investing more than 10% of your investment capital in each. Remaining 70% should be invested in other blue-chip stocks.
The logic: Look, there is always a resistance at the high of red candles. As you can see in the chart, this will be the 3rd attempt for a breakout. Each time the resistance get a hit, it becomes weaker and weaker. The probability of a breakout increases with the number of hits. So, Rs 669.40 is a most logical price for an entry. Always remember, our goal is to beat the index. As long as our basket of stocks performs well, we should be happy.
Disclaimer: Investment carries an element of financial risk. Investment does not guarantee a fixed return due to volatile nature of markets. Please do your due-diligence before investing.
Trade active
Comment:
The stock is throwing weak hands away. Correction is basically and exam of patience, more specifically for the weak hands. Selling at the time of correction is a silly mistake. But, it doesn't mean the stock won't fall further. And don't sell at a loss. Let the stock take time (>year).
Comment:
There are other valuable companies, so I decided to sell this stock and invest in others. Selling price is a breakeven price and most probably this stock will give exit at a breakeven, don't sell it at a loss.
Trade closed manually:
Break-even exit opportunity exploited.
Comment:
I expect anyone who is reading my writings to know that there is nothing "certain" in the markets. Neither the %gain on stock nor "out-performance" or "under-performance". There is a risk and opportunity cost involved in both, buying and selling. Selling at any price can often result in "opportunity loss" when the stock moves higher and higher. Human psychology is a culprit here. For e.g. I post any stock which seems undervalued or overvalued to me on tradingview. When anyone makes money on that, they wont appreciate me "a single word". But when they lose or it results in opportunity loss, they are bound to blame me. I don't criticize any person, because I know their psychology has defeated them. At last, there is nothing like "easy money" in the markets. The survival of the fittest holds absolutely true here.
Comment:
I have to accept my one mistake, so that I can try not to commit it next time. I told to buy at Rs 669.40 and sell at Rs 669.40. In India anyone could've earned around 4.5% on savings ac or 9% on fixed deposits at best annually, "without taking the risk". But in LICI's stock case, you took the risk but "jumped out" without taking the reward. Which is a wrong decision financially, because greater risk should be compensated by greater reward. So, the best price to actually sell was 18% above the buy price (double the alternative avenue). The better sell price should be Rs 790. You see, these small mistakes add up overtime and become considerable% of return.