It has been a good year in Shikhar capital. From a universe of thousand stocks we arrived at some very few stocks (Less than 10), and then the stories behind the stocks which we shared with our readers turned out to be philosophically right. The best part in this small journey was not the stock price but the conviction supporting the stories.
We researched many stocks, followed many processes and then arrived at the stocks which fulfilled the criteria lead by our process of finding the intrinsic values, and wherever there was strong margin of safety we initiated a buy for the stocks. All this resulted in good profits and till this first stage all went smoothly like a dream innings. It was simple i.e do your research, find intrinsic value, find story behind the stock, find the growth factor and if there is a margin of safety buy the stock.
After this first stage, we found that lot of stocks were way above their intrinsic values (Mostly after stock prices doubled) so we, rotated our holding and shifted our profits to other undervalued stocks. Now, this has created lots of doubts and confusion in our own process because many stocks which we thought are above their intrinsic value and sold, have turned out to more than double or triple from our selling price. Also, some of the sectors which we thought are just not going to rise like real estate and PSU banks have given stellar returns. All this is very troublesome and have now created an urgent need to look into our own process of stock selection as well as sell decisions.
Now, we are under the process of dissecting all our processes and methodologies, till now we are unable to pinpoint the cause. Either all this is due to tons of liquidity in system and large domestic money getting into stocks, so the rally is liquidity driven and will continue like this, or Indian economy is booming like never before, or we were just lucky chaps in the first stage. We Still don’t know and may be only time will tell.
Personally it’s like a Black swan moment for me.
(Black Swan –
The black swan theory or theory of black swan events is a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight. The term is based on an ancient saying which presumed black swans did not exist, but the saying was rewritten after black swans were discovered in the wild.
The theory was developed by Nassim Nicholas Taleb to explain:
- The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology.
- The non-computability of the probability of the consequential rare events using scientific methods (owing to the very nature of small probabilities).
- The psychological biases that blind people, both individually and collectively, to uncertainty and to a rare event’s massive role in historical affairs.))
We have been wrong on so many fronts especially Real estate, Nifty index, PSU Banks and of course Bit coins that we have missed not the bus but the flight toward profits. Looking at all this I have decided to hold this blog for indefinite period, and get back to research. So, I don’t know how long we will be away from markets and blogging so , till then happy investing .
Thank you for all your support.