How stock recommendations helped me

How stock recommendations helped me 


How many times it has happened to you that you could not decide upon what to buy and relied upon other's advice to buy a particular stock ? I bet many of you will have a similar experience.

Do not believe on stock recommendations, do your own research
How stock recommendations helped me

In my journey of understanding investments, there was a time when I did not understand stock selection and did not have much confidence in my own knowledge of good quality stocks. Searching on the internet, I stumbled upon some videos and blogs which appeared promising in the way they predicted the future of some stocks.

A stock that is available at a low cost is an attractive bargain, if someone tells you that it is going to be a multibagger in the future. I fell prey to such a prediction.

I experimented with many stocks. I was learning about stock selection but did not have confidence. So in addition to selecting my own stocks based on the fundamentals that I had learnt, I also selected some stocks based on recommendations of people on the internet whom I thought were making sense. Needless to say that I still did not consider the stock if they did not fulfil certain basic requirements.

Here are some of the stocks I bought based on predictions and expert opinions of other people on the net. I bought them in April 2019.

Nocil
Himadri Speciality Chemicals limited
IDFC  first bank
KNR constructions
Sakuma exports

Can you guess the fate of these stocks ? Well that's not difficult. Only one of out of these is doing well. All others are wealth destroyers. !


Nocil 

I bought Nocil at Rs 119, and thereafter the stock has been falling continuously. It took a break, came back to 119 and then after the recent result of Dec 19 Quarter, it has started its free fall again. Looking at the numbers in the hindsight, I feel it's not the right stock to invest for long term. Being a small cap, it is hit hard by bad results or negative news.

Himadri Speciality Chemicals limited 

I bought Himadri at Rs 92, inspired by the strong views many people expressed about the upcoming e-vehicle story. Despite a loss visible in the quarterly statements, I invested in it believing in the future of the industry. Since then, it has never seen an uptick and at 65, I am thinking of selling it to buy a better performing stock. I cannot afford to wait endlessly to get results.

IDFC first bank.

Another favourite of the media and self pronounced intelligent people on the internet. TV personalities talk a lot about it saying that this is the next HDFC bank. Well, the balance sheet tells you a different story. Motivated by the media hype about the merger and growth story expected ahead, I bought this stock despite visible loss in the quarterly results. I bought at Rs 51 in April 2019. It is still struggling at Rs 43 and the bank has shown loss of Rs 1632 Crores in Dec quarter. In effect, the stock is likely to go southwards for the next 3 months, at least. I am exiting this stock too !

KNR constructions.

I bought this stock on the recommendation of a famous youtuber who is popular for his technical analysis. This is the only stock which proved beneficial.  Although this is also a small cap stock, I found the balance sheet healthy. I never like to buy a construction company but the recommendation seemed so appealing that I was enticed into buying this one. Fortunately, it turned out to be beneficial. I bought at Rs 240 and today it is at Rs 300. Its financial statements are still healthy and I plan to buy more of it in near future.

Sakuma exports 

Another share bought with the recommendation of the same youtuber. Till Mar 2019, it was showing good results, It did poorly in Jun 19 and even poorly in Sept 19. So the stock went down from Rs 33 to Rs 6, making it a penny stock. I don't know whether it will go up again. I am stuck with it, although I don't have too many of them. I have yet not decided about exiting. As of now I am expecting a good Dec quarter result, that could be a saving grace, else I quit.

This was my limited experience with stock recommendations by others.
About my own research - I have done my own research to select quality stocks and I have been right in 9 out of 10 times. I shall make an endeavour to share the research and results some time soon.

What did I learn ? 

I learnt that one should never believe in anybody's stock recommendations blindfolded. Always conduct your own research into the quality of stocks to ascertain if it stands up to your criteria. I would recommend everyone to learn how to select stocks and do your own research in order to select quality stocks. DO NOT depend on others for stock recommendations, you will always be fooled. Do not take emotional decisions.

Happy investing. 

Comments

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