Slow Compounding

Paint companies Asian Paints and Berger Paints start slashing prices | Company News - Business Standard https://www.business-standard.com/companies/news/paint-companies-asian-paints-and-berger-paints-start-slashing-prices-124051701296_1.html

The moment at the end of 38 min, it just touched me!

RBI cracks down on Kotak Mahindra Bank; bars onboarding new customers through online, mobile banking and issuing new credit cards https://www.moneycontrol.com/news/business/rbi-bars-kotak-mahindra-bank-from-onboarding-new-customers-through-online-mobile-banking-issue-new-credit-cards-12707215.html

Those who will be cursing this PMS, appreciate that performance also moves with the cycle. More underperforming will trigger investors to withdraw more. When the underperformance will hit the rock bottom, value will again emerge. Nothing in this galaxy escapes this cyclic nature.

Price War

Book - Atomic Habits by James Clear. I cannot recommend this book enough if you have not picked this one yet. "True long-term thinking is goal-less thinking". It is applicable in every sphere of life.

Sold Asian Paints! Today, I sold Asian Paints. Reasons: 1. Asset creation in this industry intensified. This rate is faster than industry growth. Hence, the profitability of the sector will go down. 2. I still believe that Asian Paints will remain the strongest players for at least a decade. However, ROCE of Asian Paints will gradually absorb the shock. And when it happens, PE will continue to de-rate. If the profitability keeps up the pace, this de-rating will keep the stock price in consolidation. This is the bull case. 3. Bear case will include scenarios like, a price war in paint outbreaks rapidly and the margin takes a sharp hit. In this case, profit growth will slow down while PE de-rates even faster. Stock price corrects and swings in a price band for a longer time. 4. Though I love this business, I know that the business does not love me. I see the risk-reward ratio not favouring me. I remained uncertain and took a rational approach to take a sidestep and watch the show. Hence, exited.

HDFC Bank - Page 20, third Paragraph, must read

Mutual Fund Updates In 2023, my mutual fund portfolio zoomed by ~40%. This growth was majorly driven by the small cap funds. As you probably know, I have a sizable portion of money invested in Parag Parikh Flexi cap fund. This fund also garnered ~37% return last year. So, in short, small cap funds rallied and parag Parikh flexi cap fund gave a stellar return. Altogether, mutual fund portfolio did very well well. Action on Last Year: Last year, I invested a good amount of lumpsum in a small cap fund during May-June. It increased my allocation towards the small cap that time. And in the last six months, rally in a small cap further skewed my weightage on the small cap fund more. Now: While ending the year 2023, the allocation increased to 41% in the small cap. I have started trimming my position at small cap fund, and probably bring close to 25%. I am putting this money on Bank Nifty. Trimming will continue for some time and my position at Bank nifty will be built at the same pace. Why Bank Nifty? If you see the PB ratio of Bank Nifty over five years, you will get the answer. P.S. This action fits my risk-reward appetite, may not be suitable for you. Because each one of us on a different journey. So, no buy or sell recommendation, as usual.

Asian Paints Revenue up by 7% Expenses up by 4% Profit up by 20% (Q-o-Q) Y-o-Y (this Q vs. Last Y Same Q.) Revenue up by 5% Expenses up by 1% Profit up by 35% Profit is driven by the low price of Raw Materials. Operating Profit Margin (OPM) This Q: 22.3% Last Q: 20% Last Year Same Q: 22.3%

No Place to Hide! When the setup of the battlefield is against you, there is no point of showing courage. Rather, you need to find shelter and places to hide. The objective is PROTECT YOURSELF...to flight another day! The market has run up significantly in last year. The valuation has heated up and is now causing worry to deploy incremental money. Because, one cannot risk not to participate in the market. In short, you have to stay in the market. Where to go? Nifty 50: 23.5 Nifty Midcap: 27.3 Nifty Smallcap: 28.4 It is said that the son of Ravaana, Indrajeet, has special abilities to hide behind the cloud and fight against the enemy. I am in search of the cloud now! P.S. I am currently making some changes in my mutual fund portfolio. More updates will follow!

HDFC Bank Q3 profit grew by 2% Net Interest Margin 4% remains intact. Tax rate in this quarter was lower which reflects in Q-o-Q profit jump. First time, in decade, EPS declined. Negative Sentiment may reach its peak now. Average Price to Book ratio of HDFC Bank in last ten years: 4.3. Now, it is trading at a PB ratio of nearly 3. It may stay at this level or may go below this. Or go up as the company delivers good results. One must assess the probability of each and accordingly take a call. My position at HDFC remains untouched.

Same as Ever By Morgan Housel, the book, "Same as Ever" is a masterpiece. I loved the description of risk. What nobody is predicting, will turn out to be a gamechanger. And this is a risk. To mitigate that, the author suggested to have sufficient cash. How much is sufficient? The author says that there is no Excel sheet to estimate that. One should have a feeling that this amount of cash is too much. This message is more relevant when the market is zooming. If you have been investing regularly for a while, your portfolio is shaping up well. If you are a recent investor, you will get fair chances as well. Do not get carried out by Greed. The toughest challenge will be to stay rational and lower our expectations.