Investing in the stock market "is more art than science", well-known American investor Howard Marks once said. Many of us would agree with his analogy. So why is mastering this art so difficult?
According to market veteran Madhusudan Kela, it is selling the stock which is a very difficult art. "Sometimes you can be too early, sometimes you can be too late," he says.
With more than 30 years of experience in the stock market, Madhu Kela has been one of the most influential names of Dalal Street in the last decade.
Kela is the former chief investment strategist of Reliance Capital. Earlier, he headed the equities fund management at Reliance Mutual Fund after which, in late 2010, Kela moved to the fund's parent. Before his stint as a fund manager, Kela had worked at broking firms like UBS, Peregrine Securities and Motilal Oswal Securities.
"One of the things of the market is that when you identify that it is a really outsized and large opportunity, do not commit a mistake of timing it," said Kela, in an interview with CNBC-TV18. He also revealed some of the 'big' mistakes he had made while trading which he says cost him "a lot".
Recollecting an episode from 2008, he said, "Let me tell you, this was one of the big mistakes which we made in our Reliance Mutual Fund days. Having realised that the euphoria between 2003 and 2008 is over, we were still hoping against the hope that some of these companies will still bounce back while the market had already given its verdict that it wants to now go for quality, for high ROE, for governance because we were coming from that big investment phase."
Another mistake or what he terms as a "big miss" was Symphony, Kela said. "We analysed this company and we thought that we will be able to time it properly at some point in time because the next two-three quarters are going to be weak and after that their story is going to start. We met the management, visited Ahmedabad multiple times and we were quite convinced about it. Somehow it always looked expensive," he elaborated.
According to Kela, trading, at the end of the day, is all about valuation, however, the question is what phase of the market one is in.
"Value is something which will tell you that you should be attracted to analyse more of this stock but you should never get trapped in value," he adds.Source: CNBC-TV18