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Stocks at the times of downturns

June 13, 2008

“You must be crazy to talk about investing in stocks at the time of downturn, isn’t it?” said the girl dressed in green salwar.

This is going to be interesting, I thought. What a better way to spend a boring train journey, than talking to an ‘intelligent’ girl with acceptable portions of good looks. Age circa, 24.

“No, of course not! I mean not crazy“, I said, with a typical boyish smile and a flirting tone.

And…?”

“Well… you see, these type of downturns are fairly common in business cycles.. so it sometimes becomes necessary to keep certain non-jazzy stocks too in the portfolio.”

It turned out, she was having more brains than I guessed her to have. At this moment, she blurted out, about that D-word. Diversification. Period.
It turns out the girl has an MBA or something like that, and was reading her daily dose of Economic Times. But Gods must have been one hell of pleased with me. Never ever did I find a girl in the same compartment I have ever traveled [cmon I also scan reservation charts before I board! Not for my name though πŸ˜‰ ], but this time it was different.

Seeing a perfect opportunity to do some ‘sarging’, I said “So Ranbaxy sold out huh?”

“Yeah!Pretty big time.Wonder what Singh will do in his free time, play golf or tennis?”

“Neither.These days,they either turn into VCs or into PEs.”

And so did the conversation take off. And took off into portfolio management. At the times of economic downtime.

“In fact, look I can’t keep my money in bank. Bank gives me an interest of 8%, inflation eats it away at the rate of 8.75.. and I am poorer than .75% this year. So banks are out…” bringing some logic into the conversation

“Talk about ETFs Jump! Nobody keeps their money in bank these days”

“Yeah ETFs are actually good.. but then again the real good fund managers and few and far in between. Plus in what to actually invest.”

“Hey,Jump! ETFs are good places to put your money.”, she chipped in at this moment

“Touche… 100% returns in some.. Not bad, huh… “- I told with my best wise face. She was getting interested and thankfully actually talking sense.

“… but investing in some core stocks too does one a lot of good”. By this time I was putting in my best of the wise expressions on my face and its effects were visible. Her eyes widened, and was looking for some hard core ideas.
Good Soham… good keep the spiel going!, I thought

“Like everybody knows that FMCG is good at times like these, but few know that retailers are good ones too… or FMCG companies in lower rung is better than those in higher rung. Like say, Unilever better than ITC.”

“Just a thought though, I am yet to check them out”, I added hastily.
Can’t really take any risks with these kinda girls. They are quick to spot cracks.
“And listen close, I am gonna tell you something real good… portfolios in downtimes often perform better if they have companies which CAN advertise. “

“What?”, that was a stunner.
I smiled and looked at the tinted glass pane and the fields receding past.
McGraw Hill actually did a research in 70’s if I am right, and found that although during a downturn normal FMCG companies had lower sales, but Krafts which advertised a lot, saw its sales shooting up by 75%. Same thing with other companies too… So? you get my point”
“But doesn’t advertisements and promotions mean more expenses?”
“Well yes, but they actually serve a purpose. Helping us to recognise who has enough money to be luxurious enough to actually advertise. And convincing people who really are not buying much, to buy their products”
“Hmm… I see”

It was good talking to an intelligent chic πŸ˜‰ , beginning of phase two, active flirtation.


[The author takes a passionate interest in business,technology and strategy. An avid Elliott Wave Theorist,and an analysis blogger. When he is not blogging on markets, technology and their business issues, he spends his time conceiving and executing projects for a hi-tech electronics startup based out of South India. Mail him at sohamdas at gmail dot com. He is listening]

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7 Comments leave one →
  1. June 13, 2008 3:58 pm

    Good writing. Keep up the good work. I just added your RSS feed my Google News Reader..

    Matt Hanson

  2. Paulraj Madasamy permalink
    June 13, 2008 8:29 pm

    super funny.. =)..
    nice goin’ man !!.. hehe.. so did you get her number finally??? πŸ˜›

  3. Soham Das permalink*
    June 13, 2008 8:45 pm

    πŸ˜‰ hehe…

    Wait for sequels and prequels and part twos and part threes… πŸ˜‰

    Well phone number? I really dont share them πŸ˜€

  4. Paulraj Madasamy permalink
    June 13, 2008 8:54 pm

    hehe.. lets just hope you get lucky again.. and again.. and again……………………. πŸ˜‰

  5. Soham Das permalink*
    June 13, 2008 10:33 pm

    Thats the best bit of prayer bro! πŸ˜‰

  6. Soham Das permalink*
    June 15, 2008 12:56 am

    Hey Matt… thanks bro… πŸ˜‰

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