Review of Performance of 23-Jan-20 Stocks List

Almost 7 months ago in my last post in January, I had posted a list of 5 stocks as a study for short term trading and the market crash started soon after that month. Few weeks after that I was embarrassed to see that they performed poorly.

In the meantime I learned more things about filtering stocks and especially the short term filters and wanted to revisit this list before I could continue posting anything further on this blog. At various times I noticed these stocks and surprisingly noticed them to rebound faster after the market crash in March. What is better than systematically and simply comparing their performance after 3 weeks from filtering and after 7 months now? So here we go about that without wasting much time.

Here I am posting table comparing their LTP on 22-Jan-20 (the day the stocks are filtered), 12-Feb-20 (after 3 weeks), 20-Aug-20 (yesterday after almost 7 months).

	On the day found	After 3 weeks	Yesterday (After 7 months)
Scrip	LTP on 22-Jan-20	LTP on 12-Feb-20	LTD on 20-Aug-20
RPGLIFE	330.95	285.95	375.6
GSS	43.9	36.3	27.05
TANLA	72.25	83.3	198.8
PRICOLLTD	58.6	59.9	39
SUNFLAG	42.6	39.85	48.9

Not getting the table as it is, on blogger, so putting the same as picture below:

Now let us compare the % change.

Scrip	% Change After 3 weeks	% Change Now (After 7 months)
RPGLIFE	-13.6%	13%
GSS	-17.3%	-38%
TANLA	15.3%	175%
PRICOLLTD	2.2%	-33%
SUNFLAG	-6.5%	15%

Same thing as an image:

We can see that RPGLIFE, TANLA and SUNFLAG have fared better giving more than 10% returns with TANLA having done exceptionally well at 175% change. GSS and PRICOLLTD were the bad ones.

I actually had bitter experience with Pricolltd which did poorly and again got bitten by it in April (I do not learn with one bite). I never did anything with GSS but seeing its earlier performance in the last year, I was skeptical of it. I also bought TANLA and held through March only to book losses in April. It consolidated for quite sometime in May-June. I had tested again in June and got out for only 10% to watch it rise multifold from my exit at 77 to 199 now and still rising with Upper circuit close yesterday.

What do we learn from this? Let us check the cumulative gain if someone had invested equally in all stocks at about the same price level as on 22-Jan-20.

Cumulative performance with equal amount in each stock	% Change After 3 weeks	% Change Now (After 7 months)
Net % gain	-4.0%	26.3%

Same thing as an image:

So we can quickly conclude that these were better not for short term trading but for long term investment. 26% return in 7 months time is quite good.

While I was embarrassed for never being able to make good stock filer for short term selection of stocks, in February after 3 weeks from the time posted that I thought I did this post just at the wrong time. This post kept reminding me that I am not good with short term selection of stocks.

Long time ago in 2011 July, I tried similar posting of two stocks, PAPERPROD and PETRONET. Below is the link for it.

http://nextgoodbets.blogspot.com/2011/07/two-stocks-for-2-weeks-paperprod.html

A month after that I did a review of performance of those two stocks.Below is the link for it.

http://nextgoodbets.blogspot.com/2011/08/revisiting-two-stocks-paperprod.html

As we can see, both gained close to 20% after a month. When I posted the expectation was they rise within two weeks. But they actually rose after two weeks.

It is only two months ago that I began to realize that my stock selection is not good for short term but rather very good for long term. I used to notice PAPERPROD in the later years too for its good performance and I was not quite systematic about what I filtered and when it did better in those days. As I remembered this past post, I realized now the same thing happened this year too.

Back in those days I filtered stocks seeing price action on candlestick chart. That is why I posted charts for each. Over time I refined my selection criteria. But even now I realized timing is not certain. However when we make a list of stocks, after two weeks few could rise and few could fall. If the rising ones beat the falling ones, the list is still a winner. From here on I will do such study and post their performance after two weeks.

Now back to long term thing. I was also mentioning about debt and pledge % along with quarterly result date. The first two are fundamental filters for long term selection of stocks. The third is to estimate the time of big move based on the earnings calendar. This is more suited for short term selection than the first two. As I used first two, these eventually turned out to be good.

How could the two bad ones have been avoided? Looking at the charts, all looked good except GSS. So GSS was clearly an outlier and could have been skipped. It was jumping up fast just at the time of posting so I noticed it. PRICOLLTD was the hard one to avoid. 

Later in May-June timeframe I bought and sold SUNFLAG from 31 to 39.95. Missed TANLA and RPGLIFE. Now that it has become clear about long term I keep these three in my long term watch list.

I will post from now on a stock list for 2 week watch, on any given day I can post it up. No fundamental check here. And study the list performance after two weeks. Let us see how this goes.

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Is Investing in Stocks Better than Trading Stocks?

Investing and trading are not really two sides of a coin as many people think. They are not opposite things. The only difference in my view is the risk a trader takes for a given trade that determines whether they are investing or trading in stocks. Many people easily fall into the belief that investing is better than trading. Let me shatter this myth in this article and show why the contrary is actually true.

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Investing is a One Time Shot

Investing appears to an outsider to be similar to gambling. But to the investor it is not really so. Though it shares a lot of similarities with gambling and many so-called investors practically gamble with the markets, there is an aspect that makes these people slightly different from gamblers.

Investing is like a one time bet or one time shot. You will make it or break all in your only one attempt. For this reason investors study the markets and stocks and their background companies, economy in general before making their bets. Though this is time consuming task and also full of domain knowledge, this is what makes the investor’s bets better than gambling. Any trade done without a plan or reason is just gambling and returns from that can be attributed to plain luck.

Investing and Trading Both Help Each Other and the Economy

Investing money does not necessarily go into stocks. It can go directly into the business of the companies if not stocks. Even the stock market investments start for a company by investing directly for the growth of the company though initial public offers. Hence investing is more closer to contributing to the economic or industrial activity. It has a direct impact on the companies.

Trading is indirect. It is not a waste thing as many people think, who like to be called as investors. Without traders there cannot be a market as we see everyday. Traders make the bloodline for the market and keep it flowing everyday for the functioning of the markets.

If traders are not there then it will be a hard time for investors. The long term investors from large institutions need enough volume on any day to make a position into stock. Traders help build the momentum or volume for the day so that these investors can buy the stock easily without putting orders lower and lower with every transaction. It is basically the liquidity that traders contribute everyday to the markets.

Liquidity is important for not just stock markets but any business. Even if the economy is not good, enough liquidity can temporarily create rallies and sustain a short term bull market as we see today. Liquidity implies that it will be easy to get in and out of stocks with ease and without moving the price of the stock very much. Highly liquid stocks can be bought in thousands or even millions on single day. This is all due to the presence of traders who generally concentrate popular companies’ stocks.

That is how investors and traders work to create a stock market as we see today. No matter how old or new the technology is there were always traders and investors in the history of stock exchanges. Both contribute not just to create a market but in fact to help the turn-arounds or major growth phases of listed companies in the country.

I saw many people who think that stock market is like a casino and traders and investors are like gamblers without really contributing anything to the society. That is not true. In fact it is a part of our modern culture. It plays a great role in helping the economy and works like a virtual money lender which has more flexibility than banks or finance corporations.

Most of the people who start trading stocks, slowly start their bias towards investors. They think that investing is better than trading because they do not realize that trading is also like any other discipline. It is not just trading even investing does require same kind of study and effort on the part of the market participant as does their other businesses.

Investing is Not Low Risk Option But Trading is!

People tend to move towards investing because they think of the timeframes involved without bothering about how risk changes in the overall equation. There is a general feeling that investing involves low risk where it is exact opposite. Also people flock to investing because it gives them lot of free time to concentrate on their daily business. This is because they do their job only to certain extent as much as their current knowledge tells and get convinced there itself.

In fact investing is far more riskier than trading. It is because you do not have stop loss protections. I saw many traders who call their trades as investments when the trade turns into a loss. Instead of taking the loss they change their mind and plans, to let the stock do whatever it wants. They give more time for it thinking it will recover in a “long period of time”. Hence they name it as long term investment.

It is amazing how people shift their thoughts so easily when it comes to trading stocks. They also shift their identities as a trader to investor without much trouble. But the fact is that all big losses first start with initial small loss. A trader cuts them short and books them. An investor lets it become bigger and bigger until finally selling the stock when it just starts a turn around. How many times can you remember doing this in your own experience? I think many times unless you are learning your lessons.

Such is the risk involved with investing. You may now point out that same will hold true when it comes to making profits. By holding the investment long enough the investor stands to gain bigger. Let me tell that the reality is quite different. The stock can behave like that but not the investor. There are several reasons for this.

First of all many investors book profits soon because they can’t have an idea when to close the trade. That too they do it more often during uptrends much like they let the losses increase during downtrends. If an investor is sitting tight to hold the stock during uptrend it is much like the quality of a trader who does the same thing but with more certainty. Because the trader lets the market gives its signal while the investor looks for things that indirectly affect the market. These indirect things many times go out of phase and make the investor lose sight of the best price to get out of the position.

Investing is Not Necessarily Long Term

But there is another little catch here. Apart from the uncertainty of exiting that investors face, they also face the problem in time dimension. People think that investing is good because it is about long term. In fact the long time means either long term gambling or long term trading.

The stocks in reality make their biggest moves in only a short period of time. You can check all of stock markets histories. You will find that stocks spend a lot of time moving here and there. But only a part of the time they spend moving straight in one direction. It is only long term traders that get to catch this portion and make the best killing if not the maximum possible made by those bought at the bottom. Generally those who buy at the bottom fail to call the top at the right time.

The Reality of Long or Short Term When a Stock Moves…

The stocks move in a short period of time with all intermediate trends concentrated in that same time frame. Investors think that by capturing a stock for all its life time will increase the chances of grabbing its golden period of rising. That is actually gambling in the time dimension. Because you may be studying the stock and its company but leaving the timing for luck. Even the most successful investor Warren Buffet made the right timing for his entries and exits. All the principles will go into the ash if timing is not taken care.

Trading is Superset of Investing!

Don’t judge investing and trading based on false beliefs shaped by your trades that went bad. Learn lessons from them. Just take a step ahead and look at the reality. Trading offers more flexibilities than investing. Trading does not only have to be about day trading. It is like a superset of investing when it comes to the time and effort involved!!

Related Articles

• Does History Repeat? This is About Average Stock Market Returns
• Never Make or Take a Loss: You Should not get Trapped with This Belief
• Buy at the Bottom or Buy When Everyone is Selling: A General Misconception of a Stock Trader
• Buy Low and Sell High: Why You will Not Succeed in the Long Run with This Myth?
• Trade with the Money You can Afford to Lose: Another Myth in Stock Trading
• Someone Loses When Someone Gains: Do You have This Belief about Stock Markets?
• How You Should Use Diversification in Trading Stocks?

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