For sake of disclosure, let me say that I have started exiting my position in MRO-TEK. The stock is almost at 95 and has shown an 80% rise in the last one month. It is now above my calculation of intrinsic value for the stock.

I can see the thrill of momentum investing – instant gratification. In spite of the thrill, I am not planning on changing my approach which I understand well, and have become comfortable with, over the years. In general I have seen my picks rise and approach intrinsic value in 1-2 years. That allows me to analyse the company in detail and build a decent position. Sometime I have been able to even average down on the stock as the price went lower and I developed a better understanding of the company.

A case like MRO-TEK is not really suited to my style of investing. Too soon, too fast. If the stock moves up very fast, I lose interest if it crosses my buy levels as I cannot complete the analysis and would hate to create a big position without understanding the company in depth. This approach is ofcourse contrary to most investors. However I do not have such an approach for the sake of being contrary or just because it is a smarter approach. It is just that with my time constraints and risk aversion, I prefer to analyse a company in detail before I invest in it.

Will the stock go higher …? I have no clue and am not planning to play the stock on that.

As always, please read my disclaimer

5 Comments

  1. Anonymous says:

    Warren Buffet once said “We enjoy the process far more than the proceeds”. It is commendable that you continue to stick to the process !

  2. Rohit Chauhan says:

    hi anonymous
    i prefer to stick to a process which i am able to understand. i sometimes get lucky like in the above case , but as nicholas taleb says in his book – fooled by randomness, try not mistake luck for skill.
    however unlike buffett, i definitely enjoy and need the proceeds too 🙂

    regards
    rohit

  3. Vishal Mittal says:

    Hi,

    I am also facing similar situation…the stocks i analyze are running too fast, and am not able to complete my analysis…signs of bull run…

    cheers

    vishal

  4. Rohit Chauhan says:

    vishal
    it looks like panic buying. looks like it started around november. now some or other midcap / small cap stock manages to hit circuit breaker every other day.so for value investors the environment keeps getting tougher
    i guess if you own the stock, enjoy the ride.

  5. Shankar says:

    MROTek … the 2nd stock I bought at rupees 14 .. brings back some good memories 🙂

    And some lame ones aswell, as I sold it at 28 rupees, whilst it had passed the then instrinsic value. I wont call that naive, because Grahamian principles donot factor in growth as they do the margin of safety.

    But now that I think of it, growth is also another ‘margin of safety’. (Much like a flowing river is appreciated more to a placid lake .. being poetic)

    Rgds
    Shankar

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