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POSTED BY ON January 18, 2011 10:48 pm COMMENTS (2)
In value investing the most important element is price of entry. if you are follower of buffet/graham the companies which fits into the criteria are high ROE,low debt,good growth,strong brands and moats. but often these companies (e.g nestle) have high PE multiple and the price of entry is almost always high and the opportunity load shares is every slim (may 2008) and for ordinary investors to put large sums of money at that particular time is small
how does one resolve this dilemma?
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1. There is nothing like “Buffet/Graham” style. It will need a huge post to elaborate. Sorry :(. Maybe Manish should start a thread
2. If Buffett followed Graham we would be sitting on cash for many years
3. Value investing does not mean buying only Nestle and Crisil. Textile companies were great value stocks in 2009
http://www.moneylife.in/article/4/2535.html
http://www.moneylife.in/article/8/2989.html
The best value investing in India has been buying mundane businesses like paper, textiles, bearings, etc. at throwaway prices periodically
Hope this helps
Look elsewhere hard enough..There are lots of small/midcaps which will suit you but higher risk-find out yourself. You dont have to put large sums(for a small investor) to risk it. The brokerage rates are <1% and that is a bargain when compare to developed markets. If you like a stock/s, put small amounts over a period of time. You can rupee cost average on blue chips for example. Keep an eye on the earnings, balance sheet and the charts!! Charts are handy tool to have.