This note was written to our subscribers about two weeks ago. The underline message continues to be valid and may benefit others. So we decided to post it on the blog.
There has been a big panic since last few days in the market. This had seen a correction in several stocks.
We have been cautious in giving recommendations, and hope subscribers understand the reasons now. We had been facing macro headwinds and to top that valuations in many stocks were not attractive. We now believe risk-reward ratio is returning in favor and there is an enhanced margin of safety.
In our views, such times of panic are friends of long-term investors and provide great opportunities.
Also, remember that when a big earthquake comes it is followed by tremors. We will continue to witness volatility, it is going to be here. On the economy front, there are macro issues. But on the micro front, our economy is doing well and the ground reports suggest picking up in economic activities all across. While the economy does well, we will have to keep a close watch on macros too. If they deteriorate any further we will keep you posted for next actions.
Specifically regarding NBFCs. The valuations are critical and we have been harping on this from the beginning. NBFC valuations were very high and it needed a trigger to correct, howsoever small it may be. Always understand, the sectors once they go out of favor, do take time to come back in flavor. So, one must be very careful in catching falling knives. Unless you understand the knife well.
If you have any questions, feel free to post it in Investor Forum available for paid subscribers. These are not responded by any assistant or Account Manager. All the emails and questions in the Investor Forum are personally replied by the founder. If we find a merit in the question, e.g. related to the investment, market, and not repetitive; we surely address the question.
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