Thursday, December 31, 2009

Is It Possible To Once Again Make 700% Returns In 2010?

2009 for me and my fund was a time when we booked profits. To be honest and fair – there was a lot of easy money made as we had picked up stocks in the crash of 2008 and simply sold stocks sometimes at prices that were 700% higher from the lows. Whenever I tell people something like that, they seem shocked and surprised, but all those who have been investing in the markets for long know that every now and then there are companies that change your financial situation almost instantly. The stock I am speaking about is Jindal Steel and Power. Compared to that, others which gave us 350%-400% returns appear to be underperformers. But you need to remember this money was actually made when we purchased at the lows of 2008. Large amounts of money are made – when we buy and not when we sell. This is a well known fact that very few people really talk about or pay attention to. All those who missed out on such opportunities better be ready with cash in 2010.

There were a few companies which we missed, for instance I was told by a close friend and investor how he picked up Kwality Dairy at Rs. 6 and sold it at Rs. 130. That means a return of over 2000% in about a year. I’m not sure of the business model or fundamentals and might look into it whenever I get time.

2010 is going to be a year to buy undervalued assets. It will present the same type of opportunities that were presented to us at the end of 2008 during the peak of the crash. As the world economy crashes, India will present excellent opportunities for anyone who believes in the long term growth of this wonderful nation.

There are already several companies that have immense growth potential and I wouldn’t be surprised if they too go on to give returns in triple digits. For instance there is a company with a land bank of over Rs. 10,000 crores, but the market cap is only Rs. 800 crore. If the stock price of such a company falls 50% in 2010 to make the market cap only Rs. 400 crore, imagine how much juicer the investment will become?

At the same time there will continue to be companies that will make sure investors lose a large part of their wealth. Overvalued and overhyped companies will list in 2010 and unfortunately I can see a lot more people entering the markets with starry eyed dreams only to be cheated of their hard earned money. People will continue to be cheated by a few junk Mutual Fund NFOs and Insurance companies(offering ULIPs) who are almost certainly going to cause you to lose wealth in the long run. If you want to make money in 2010 or 2020, you need to know what you are buying. The basic rules of investing will continue to be the same.

I will continue suggesting investors across the world to look at gold. This had been suggested way back when gold was at USD 700. I rarely advice people to invest in anything on a blanket basis – but have been doing it with gold. The reasons behind a rally in Gold will be discovered by the world soon. Physical hard pure Gold is one of the few things that can’t be printed. More than returns – it is going to be used to preserve your wealth which maybe in the forms of dollars or pounds right now. At present prices also, it isn’t overvalued. I will also continue to be bearish on the real estate prices both in commercial as well as residential pockets of the country. Only farm land, far away from major towns and cities will be a good investment – the only challenge for most will be managing the farm land.

I will always remember the well known fact that, markets have the power to remain irrational for longer than most people can stay solvent. Luckily for me I am not a trader. If I was a trader who had gone short on the market, I would surely be bankrupt by now – as in the last few days stock markets rallied upwards. Similarly if I had gone long when the markets were at 9,000 – they would have fallen more to 8,000 levels. Life is much harder for traders and their life spans are much shorter.

Coming back to my question, is it possible to once again make 700% returns in 2010? As I mentioned earlier, wealth is created when we buy, and going by that logic I am most certainly sure that 2010 will offer several such opportunities for the long term. Keep hunting and you will surely find whatever you are looking for.

Let us all thank God for blessing us in 2009 and pray to him for a beautiful future. Wish you a very Happy New Year and I hope that it is filled with smiles, love, happiness, health and wealth!

Yogesh Chabria


23 comments:

karan said...

Wish you Chabriaji and all happionaires here happy 2010.

I was able to make over 100% by investing in Indian Hotels and also picked up good money in Tata Steel thanks to your advice at the peak of crash. My logic was simple that steel demand will always rise.

Happy happionaires!

Raj said...

Wish everyone Happy New Year and this year too am sure the predictions and analysis will come true.

Suresh said...

Hi Yogeshji,

Wishing you very happy & Prosperous new year 2010.

Thanks & Regards,
Suresh.

suhail said...

Wish you avery Happy New Year Yogesh and also to all others here. Hope you continue sharing your wonderful work and knowedlge with many more people.

Best of luck.

Dr. Gupta said...

Wish you a very Happy New Year and it was wonderful to start the new year with such a wonderful post.

krishan kumar pankaj said...

you must be talking about ansal properties and infrastructure

Omprakash said...

Dear Yogesh Chabria ji all other Happionaire's,

Wish you all a HAPPY NEW YEAR 2010.

Yes Kwality Dairy was one such stock which gave immense gains to the investor. I had been watching it since 11th Dec 2008 with price of Rs. 142.60 ps which rose upto Rs. 1320.00 ps before splitting 1:10 on 10th December 2009.

I think most of us are trying to identify this kind of stocks in this year!!!

Are we not?

Sunil said...

Hello All,

Wishing all Fellow Indians A Very Happy and A Prospereous New Year ... May god bless you and your family ... Yogeshji as I have always said it and will repeat it one more time, Please keep guiding us on this Journey for becoming Happionaire.

Anonymous said...

Dear Mr. Yogesh and fellow investors,

Wishing you all a Happy, Healthy, Wealthy and most profitable 2010

- Rao.

sudhir said...

Happy New Year Greetings To Guruji and all other Happionaires Here.

Yes, we are all looking for the ultimate multi-bagger but also destiny and the blessings from above are main thing. My pick this year was Tata Motors and I was happy with the superb returns. Let us look forward to new year with crash and then go buy.

Anonymous said...

Hi Yogeshji
I hold your hotel recommendation at 24 avg price and "buying shovels at high growth" at 42 avg price.Should i take partial profits now or wait for more time?
Vignesh

Anonymous said...

I heard that Binny Ltd has land bank of 25,000 Crore and currently trades at 200 Crore mktcap with zero debt. More over prise has rose from 1 Rs. to 138 Rs. & currently some where 100.

Ramesh said...

I had 100 Shares of Kwality Dairy since 1995 or 96 @ time of IPO. it never went up but there is big SATTA now a days in it and I exited at 1400 Rs.

It was pure luck, no funda nothing
just passion of holding 13 years.

sumit jain said...

Hello Chabriyaji,
Wish you happy new year and happy investing & making money. I am continuously reading your post, and i am happy that your studies are fantastic. But after reading your last post on 'Indian market Crashing" i am wondering, how it is going to be possible that the country who survive at the time of world turmoil, will have its on bubble. well i believe on your study more rather any statics so i will just "wait and watch"
One thing i would like to ask you that we are small investor having little knowledge of the market, can you please helps us to know how to find out undervalued or overvalued stock?

Thanks and Regards,
Sumit jain

Anonymous said...

Your blog keeps getting better and better! Your older articles are not as good as newer ones you have a lot more creativity and originality now keep it up!

AMIT said...

I cannot guess which company yogesh is mentioning my guess are HCC or Godrej but both are valued at 5000-6000 crore at current MP, Is any body known name of this company please reply with full detail

s. parikh said...

To anonymous - Chabriaji's words have always soothed me since long. Even when the crash was intense I would get lots of peace reading his writings which said so much, wile being so simply, humble and nice. Probably his writings have become with practice, but I continue to believe that what comes from the heart will always remain beautiful.

The company could be Arvind Mills. It has around Rs. 800 cr market cap at today's value and does have a huge land bank. No?

kapil said...

To All Happionaires,

Wishing you all a Healthy, Wealthy and prosperous 2010 !!!
May you have lots of luck, success and Grace of Almighty !!!

kapil said...

To All Happionaires,

Shouldn't we be sharing value stock ideas, do individual analysis and share findings for feedback / critical advise from Yogesh & fellow happionaires ?

Its just a thought, because I haven't seen this happen on this forum.

Happy Investing in 2010 !!

Anonymous said...

hi mr.kapil , you must take the initiative 1st,rest we will follow you

paresh said...

Dear Yogesh,

Thank you for sharing your thoughts. I just finished reading both of your books 'Invest in happiniore way' and 'cash the crash'. I know kinda late to be reading the 'cash the crash'.

Appreciate your sharing the knowledge with us.

Thanks,
Paresh.

prashant said...

It was great to read about your company's new Rs.100 cr. private fund. This is I think the second launch after the success of the first one. I have sent an e-mail to your company regarding this, hope I am able to be a part of it. I have immensely benefited not just in terms of investing, but also other areas of life. Happy New Year and wish to learn much more from everybody here.

C.C.Gemini said...

Mr Kapil...Yes this site should be something of the sort you suggested.I doubt it will be published...Lets give it a try..