I still remember my last portfolio update post in February 2014. The post was titled PSU Banks are Losing Hell Lot of Money, and rightly so. After just three months of starting this portfolio, it was down -12% compared to Nifty’s -1.5% returns.
It seemed that markets were hell bent on proving me wrong. 🙂
It seemed that markets were hell bent on proving me wrong. 🙂
But thanks to Modi-Wave sweeping the country, last month has pushed up PSU banking stocks like a eagerly awaited IPO’s price in first week of its listing. And because of which, the overall 6 months returns of this portfolio has reached a stupendous 27%!!
And if you include dividends, it touches almost 29%. And this is against Nifty’s return of 15.8%. And here we are talking about big, country-wide banks and not small cap stocks.
And if you include dividends, it touches almost 29%. And this is against Nifty’s return of 15.8%. And here we are talking about big, country-wide banks and not small cap stocks.
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| Note – Returns based on prices upto 14th-May-2014 |
But before you put your money in PSU banks, please remember that on the business front, almost nothing has changed for these banks. Its only because of the so-called-hope, that these stocks have charged ahead. But having said that, prices these shares were trading sometime back were ridiculously low compared to historical valuations. And because expectation from this portfolio is to give better returns than index in next 5 years, this current out-performance should be taken as an exception and not as a rule.
But there are two simple yet important observations which I would like to highlight here:
- Sometime in January 2014, concerns about asset quality were getting a lot of media attention & hence stocks of these banks reached almost absurd levels of undervaluation. But when the markets turned euphoric due to elections, it was the group of larger banks (SBI, BOB, PNB, etc) that bounced higher than smaller ones (Syndicate, Allahabad, Andhra, etc). This came as a surprise as I expected smaller ones to be more volatile and prone to movement due to market noises (even though asset quality of these smaller ones pose a bigger question than that of larger ones.)
- Another interesting fact is that this Portfolio of government owned PSU banks is quite a volatile one. And as you can see in table below, quarter-on-quarter portfolio returns have fluctuated from -14% to +47% over the last 6 months. And that is a very high level of volatility. So, those who have difficulty sleeping at night due to stock markets, please avoid this group of stocks 🙂
In last post, I had specifically mentioned (read speculated) that it was possible that these stocks would become volatile in coming quarter. Never thought volatility would be so high. 🙂
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| A screenshot from previous post dated 15-Feb-2014 |
If you are interested in knowing further details of these 10 banks’ share-price performance & dividends in last 6 months, please click on image below to enlarge:
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| Detailed Portfolio Tracker – Last 6 Months – Click to enlarge |
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Hi Vicky
I am myself an engineer (loved science, processes & systems),
who followed it up with a MBA. But my love for stocks started when I was in
class 12th. 🙂
As far as starting your investment journey is concerned, its
good you feel that long term investing is the way to go. To be honest, one should
only invest in individual stocks if one (atleast) broadly understands what
stock markets are and how they operate. As a first step, its good to start
investing in markets via SIP in mutual funds. Once comfortable with markets and
its associated volatilities, should one think about buying direct equities.
And I am trying my best to keep reports of Ultra Long Term
Stocks as simple as possible. I am pretty sure that anyone who is interested in
stock markets and wealth associated with it, will be able to grasp what is
there in reports.
Thanks
Thanks Subhodeep 🙂
Hi,
Thanks for your reply. I will take your advice and start an SIP in mutual funds.
Wishing you all the best in you new venture 🙂
Thanks 🙂
Hi , i was out on vacation for few weeks and have seen this page just now. Is it possible to make registrations now. Please let me know. I do not want to miss out opportunity on investing…
Hi Pratik
As of now, the Pre-Registrations have closed (Pre-Reg was required to avail special offer on launch day). You can still buy the product on or after 15th June 2014 (Launch Day).
Even though I will miss the special offer, its great to hear i will not miss out entirely. Thanks for that . And yes eagerly waiting for 15th June….