Uncategorized | Portfolio Yoga

Dummies Guide to becoming a Stock Expert on Twitter

Way back in time, when Yahoo had those Chat rooms, in the finance room, one could see a huge number of stock experts advising others of the virtues of buying / selling a company stock due to reasons that could not be listed on one’s fingers (use of toe fingers was very much recommended).

In India, I have seen a similar trend on certain websites / forums where experts outnumber the number of investors in India giving advise all through the day (and even night as and when one suffers from periods of insomnia. I haven’t been a active participant in Facebook (nor was on Orkut during those times) and hence am not sure though based on hearsay, I would say that there are plenty of experts out there as well.

But the game changer for the experts has been the arrival of Twitter. Your omnipresence is no longer confined to the small set of persons who like you on Facebook or have stumbled onto your blog / forum. Here, not only can you recommend on your own time line but also tag others (who may or may not even want to know) to ensure that your calls aren’t wasted for the minute problem of not enough followers.

So, here is the dummies guide to becoming a Stock Expert on Twitter.

1. First have a plan – When I say a plan, its not about a plan on what stocks you want to see or what method you want to use. What I suggest is that you first define your end goal. Do you want to boost your ego with XXXX followers or do you really want to become rich by selling SMS plans / Newsletters, etc. If you aren’t sure, not to worry, you can make one up as we go.

2. Create a Twitter Account with a Quirky handle (remember, its always easy to remember small number of characters – We humans have a limit on that).

3. Decide as to how many calls you want to make per day. This is important since we want to track the winners and a very small sample size is not ideally suited to it.

4. Do not make enemies. And if you want to make, make sure that they are big enough to make them ignore you (you do not want people questioning your claims, do you?)

5. Keep a track of all recommendations you give – doesn’t matter if it was given a week or month or even a year back. After all, even a broken clock is right twice

6. Suckers are out there in plenty, unfortunately you need to attract them since there are just too many of your kind out there. One way would be to spend time answering their queries on what should I do. Don’t worry too much, just toss a coin and give a appropriate answer based on your current mood

7. While you are climbing up the ladder of destiny, there will be few who will be hell bent on pulling you down using what they call as quantifiable tests. Arguing with them leads to peril, hence keep a list of quotes which can be helpful in such situations. Do not engage with them unless your fame is being targeted

8. Always and this is important, Always use a photo that looks appealing. Peoples belief in you is greater when there is a photo compared to a egg and best of all, it doesn’t even have to be your photo to start with (who really knows you, right?)

9. Track (in terms of ability to obtain charts / news) on as many markets as possible. Diversification is the key. Who knows which market follower suddenly find you the most knowledgeable analyst tracking their markets

10. Finally, activity is the key. Since success is not guaranteed, you need to throw as many dices / darts as possible and hope some of them will stick (and random luck dictates they will). Also a large tweet line will ensure that tracking your calls is as tough as finding the needle in the hay-stick.

So, there you go. I hope these 10 commandments will help you in becoming a twitter expert in due course of time and help you find enough suckers who you can sell whatever you want to sell.

Is the Pressure Cooker loosing steam

In 2010 / 2011, one sector outperformed every other sector in the Indian markets. While Pressure Cookers aren’t seen as a sector, all stocks in that sector saw a tremendous rally, a rally that is better displayed in the relative comparison chart below.

As can be seen from the above chart, while Nifty has returned a minuscule return of 16.57% since 2010, TTK Prestige which was the first to take off has given a return of 628%, Hawkins (BSE Code: 508486) returned 423.50% and Butterfly Gandhimathi Appliances (BSE Code: 517421) a return of 185%.

But when one looks at the Year by Year returns, the momentum seems to be slipping. Here is a table of returns lodged by the stocks since 2009,

For the first time in 6 years though, all three stocks are into negative territory. Lets look at the Individual charts to see whether we can find any opportunities at the current stage.

Butterfly Gandhimathi Appliances

Of the three stocks, this has given the least amount of returns . Due to the long period of range based trading, the daily chart of the stock shows not much of a signal. The stock is trading just below the 200 day EMA and MA but based on the number of times we have crisscrossed those levels, it makes little sense to read too much into it.

The weekly chart (chart below) though provides us with a much better reference points. 240 seems to be the long term support while 400 sees to the resistance level to be crossed.

TTK Prestige

On the weekly charts, TTK Prestige shows a clear ascending triangle pattern. Right now though, we seem to be approaching the lower trend line (violation of which would make the entire pattern invalid). Major support below that level would suggest a move to the support levels indicated on the chart below.

Hawkins Cookers Ltd

Compared to the previous two stocks, Hawkins has shown way greater volatility on both the rise and the fall. While I have drawn a channel on the weekly charts, the weight we can give to the pattern is low due to the number of touching points being just two in number.

To conclude, while all stocks seem to have started to weaken on the short term, on the long term, the current fall is nothing more than a pause in the long term rally (if at all this evolves into one). If the lower trend line is not broken, TTK appears to the best bet as of now though Hawkins with its Higher High Higher Low formation also is a pretty good bet as long as it doesn’t break below 1630

Stock of the Day – Selan Exploration Tech

After years of bearishness, this stock suddenly found the legs to do the 100 meters in 5 secs :). The rise in the stock in last 4 weeks has cleared the losses a investor saw in the last 3 years. Talk about speed.

Today though the stock made a Doji. While Doji’s generally indicate indecisiveness and aren’t something to track or crow about, the fact that this has happened at the junction of the previous all time high does bring into question the ability f the stock to continue to move higher.

As a adage goes which says “Rome wasn’t build in a day” and while we shouldn’t overly focus on just this aspect, if you are already long or intending to go long on this stock, today’s high and low (give or take a couple of percentages since markets being dynamic, we cannot be static in our expectations) will provide us with teh next clue as in whether we need to go long the stock or shall we see some amount of profit booking.

But regardless of what happens, this stock is now firmly in the grip of the bulls (for now)

Stock of the Day – Balkrishna Industries

The long term chart of Balkrishna Industries shows a interesting trend. In 2006 when markets were in full bloom, this stock was in the grip of a strong bear trend. While it did some recovery in 2007, it could not break the high of 2006 lest alone make a all time high. 2008 affected the stock in the same way it did for much of the market.

But while rest of the markets after recovery in 2009 / 10 more or less went into a range, this stock was able to break new grounds and was able to break into the new highs in 2012.

The stock after being in yet another range for much of 2012 and 2013 is once again breaking new ground and today tested the all time high with good delivery volumes. Unless the markets tanks, probability of continuation of the current trend remains high

Stock of Day – Jubliant Food

A stock which was once a speculators delight fell into a broad range stiffing many trader ambitions to make enough dough to buy some pizzas :). On the weekly charts, the stock shows a Ascending Triangle pattern with today’s low being on the support trend-line. While the stock trades below the 200 bar average on the daily charts, the fact that this stock has repeatedly whipped the average gives a lower level of confidence about the ability of 200 MA to provide for direction on the short to medium term.

Measuring Performance

We measure, compare and contrast when it comes to a lot of things but one thing that I find amusing in a way is that the same rigor is not applied when it comes to understanding and shifting between good and ordinary trading systems.

Whether we wish to buy a Laptop or a Mobile or even a Car, we try to compare between the options present and select the one best suited for our requirements. But when it comes to strategies, too many are happy with something that works regardless of the fact that one may actually have made more money by just buying and sitting tight.

Too many traders / investors out in the real world care more for the thrill of trading than for actual returns. As one broker said in a interview and I quote ““Every month, your trading ‘fund’ gets replenished by your salary,”. When you aren’t there for the money, it doesn’t matter whether you outperform or under-perform as long as you get the thrill of trading.

But then again, there are many serious traders / investors out there trying to find ways to consistently beat market retursn without having to assume risks higher than what the markets showcase.

The primary belief that is needed to invest in the markets is the belief that the Index (country) shall continue to grow and stocks shall perform leading to returns that are better than what is available elsewhere (Fixed Deposit for instance). This is especially true for Buy & Hope investors since they need a market that is going up over a long duration of time rather than try and replicate the performance of Nikkei 🙂

Buy & Hold is the easiest way to take part in the market. Choosing stocks is not as easy as that though since a lot of parameters have to be looked into before buying today’s blue-chip lest it turn out to be tomorrow’s bust chip. A easier way is to instead buy funds / ETF’s that track the Index.

With most Indices being well managed (read that as including performers and dropping under performers / dud companies), the risk of loosing on the long term is significantly low. The biggest advantage in such a strategy is that you need not track the markets on a daily basis or even weekly and still be able to perform inline with the market (both on the upside and the downside).

While the strategy looks great in rising / bullish markets, when the markets get into extended periods of bearishness / range territory, one would not outperform the savings account interest let alone other benchmarks.

To overcome that deficiency, one needs to have an active trading strategy (active doesn’t have to mean intra-day trading or even end of day trading. Even a weekly / monthly trading strategy can be a active strategy).

There are various statistical ways to verify as to how good or bad the system is, but to me the simplest way to measure how good a system is (especially one that is used for trading the Index) is to see whether it has performed Buy & Hope returns. After all, there has to be something for the amount of time and effort we make and if we cannot even beat B&H, we may well just Buy, sit tight and hope that we shall eventually come out as a winner.

The benchmark idea is widely prevalent in the Mutual Fund industry as every fund is bench-marked against a Index which it hopes to outperform on the medium to long term. Without such a performance, a Do-it-Yourself passive investor will easily make more without having to pay anyone to manage his funds.

So, the next time you find some incredible strategy on the Internet, take a step back and check whether the incredible returns beat market returns or does it fall apart on a deeper investigation.

VA Tech Wabag Limited – Breakout ?

Yesterday we saw a pretty huge quantity of VA Tech Wabag Limited change hands and today it seems set for a breakout from the symmetrical triangle it has been trading in for the last many months.

If the stock closes above 560, the target based on the pattern suggests a move in the coming months to around 850.

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