Financial Daily from THE HINDU group of publications
Sunday, Sep 08, 2002
Markets - Stock Markets
Columns - Small Investor
Nursing his portfolio through tough times
Dr R. K. Goel
FOR a medical doctor, he has been rather skilful in looking after the health of his equity portfolio. But then it has taken a lot of interest, hard work and anxious moments as well as the equity market did many a spin. But 15 years after an active presence in the stock market, the New Delhi-based Dr R. K. Goel can look back and say with satisfaction that over the last three years he was able to put to good use some of his profits gained through equity.
Dr Goel started practising medicine in 1985 and after four years, thought of investing his and his brother's savings. Initially, he bought only blue chips; Reliance Industries (bought at at Rs 235 in 1989) and Tata Steel were his priced possessions in a portfolio which was around Rs 3 lakh.
"I used to be fascinated by the stock market even as a boy of 14. I would wonder how and where people bought shares and how did they decide what would go up and what would come down," says the physician. The first serious investment he made on his own was to buy Reliance Industries in the late 1880s and gradually build up a portfolio of mid-cap stocks, such as Rank Aqua and Pacific Granite. "Around that time there was a wave of IPOs and I started applying, investing jointly with my brother and my own money. Initially, the allotments were few. But I became aggressive and started buying from the market."
Gradually, the quality of the issues deteriorated, but unfortunately he could not rein in his ambition. He started getting large allotments of poor quality companies "with the result that my earlier gains turned into losses. By the time Harshad Mehta scam was over, I was sitting on a huge loss, having frittered away all the gains made from my initial investments."
While the physician was racking his brains on how to regain his lost money, there came a public issue from Infotech Enterprises, priced at Rs 20. He subscribed to the issue and was allotted 400 shares, which he later sold at Rs 80 a share.
His maiden success in a technology share boosted his confidence and he entered this sector in a big way. He started buying DSQ Software from the Rs 55 levels, and even managed to buy some shares at Rs 32. With a lot of relief, h e recalls that he started selling his holding in DSQ Software from Rs 150 onward, and even sold some at Rs 550. "As the craze for software shares started, most of my losses turned into profits. Aptech and Sonata also gave me very good returns", he adds.
On why he zeroed in on technology in those early days, Dr Goel says simply, "Mr Samir Arora (of Alliance Mutual Fund) used to buy software and media stocks in those days. I bought most IT shares, except Silverline and Himachal Futuristic and sold them with small profits."
But he retained shares of Satyam Computers, Zee Tele and some of Infosys. "At one stage I had 450 shares of Satyam with face value of Rs 10 (these were later split into five shares for one), and I had bought them between Rs 150 to Rs 500 a share. Satyam even went up to Rs 7,000 a share, but I sold my shares around Rs 5,600."
He zeroed in on Infosys in the early days when it was quoting at Rs 600. "Even then it was quite costly and we did not have that much money in those days. So, I had a discussion with my elder brother and we decided to buy it even though at that time everybody thought it was a very costly share." But somehow he found the money to buy 10 shares at Rs 600, by shuffling his portfolio. It turned out to be a sound decision as he exited from Infosys at Rs 4,500 a share, making it a multi-bagger, indeed!
Another success story was Fortune Informatics "for which we got an allotment of 1,200 shares at Rs 10. These were listed only in Hyderabad and we sold them between Rs 50-600. These turned out to be only notional gains, because in many other stocks and mutual funds we lost a lot of money. But at the end of the day I have the satisfaction that I managed to preserve our capital, got better returns than we would have through bank deposits and that we are left with three cars which all of us use."
He recalls with a lot of satisfaction the profits he made in Balaji Telefilms. "Normally, I apply for IPOs, but I missed applying for the Balaji Tele IPO in October 2000. After losing a lot of money in MRO Tech and Zen technologies, I had virtually no confidence left to apply for a new economy scrip. But though the Balaji Tele IPO would have fetched him the shares at Rs 130, after missing it, he mustered the courage to pick up the shares from the secondary market at around Rs 200-250. "At one stage, I had about 1,200 shares and I sold these shares at an average price of about Rs 400 a share," he says.
At present, Dr Goel is holding on to such scrips as Punjab Tractors, Punjab Communications, Shipping Corporation (bought at Rs 50, sold at Rs 75, and re-purchased at lower levels) and I-Flex acquired through the recent IPO.
He continues to invest in the equity market and trades on the Net with Kotak Securities. Though he has made neat profits in technology, he is not bullish on the sector. "I do not think the same story will be repeated again," is his prophecy.
As for the outlook of the market, this physician is not sure. "On the one hand, you have Marc Faber of GloomBoomDoom.com saying that the markets will fall further. But on the other hand, some Mumbai brokers say one should be fully invested. So, it is, indeed, confusing. But one thing I have learned in the stock market is the importance of patience and the need to do your own reading. With stocks being splashed continuously on all kinds of media, it needs a hell of a lot of effort to stay invested long term in the market."
His analysis is that you cannot have a runaway success in the stock market. "You should be prepared to make limited profits... because if we sell when the stock is up 20-30 per cent, we lose the chance to make big money with huge profits. But then if you wait for your stocks to keep on rising, bull market conditions never allow you to sell. On the contrary, you are tempted to buy. So, a good strategy is to be prepared to make profits which are limited, but well above the bank interest rates," is his sound conclusion.
(Response can be sent to firstname.lastname@example.org)
Send this article to Friends by E-Mail
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |
Copyright © 2002, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line