Buy, hold or sell?

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
                                                   - Warren Buffett

By Haresh Soneji of CNBC-TV18

In one of the many investment groups I am a member of, there is a healthy and rightful debate among concerned investors - What is the cash position that we must sit on? Though a few investors have started holding cash, on average investors are yet considering booking profits unwilling to sit on cash. It's not about individual mentality. FIIs too have been on the buying spree buying paper through QIPs, but their activity in the secondary market seems to be waning. Off late, they have been net sellers in the derivatives market. Fund managers are doing exactly the opposite. After sitting on lowest cash positions in September, they have sold Rs 5,000 cr worth of equities in October. Surprising or confusing?

Now, let's look at the picture from a different angle. Sell in May, come back in November is the old adage. And history speaks for itself. Consider the average returns Nov-Feb since the Indian economy opened up to the world. Investors have received the best returns during these months with the probability of positive returns more than 70%. It's not only in India. The world over the pattern is the same. The question now is should you be selling this time around? Also, will there be more gush during these four months or will markets the world over peak out?

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