Whether you call herself a long-term investor, I know that most investors are short term only when they get trapped in the stock turbulence they call themselves long-term investors to calm their nervous souls.
As per the book, small investors should choose one share every week for investing.
This share is from the given list of 100 shares.
Investor starts from Rank#1 stock and that stock must be traded 5% to 15% above from his 200 DMA.
An amount of Rs. 6400 should be invested in each stock.
That means we will either book 20 percent profit or if the stock closes 5% below from its 200-day moving average, then selling it temporarily, and withdraw the remaining cash. After this temporary selling wait for the share again rise to a level of 5 percent from the 200-day moving average, then we purchase the same No. of shares which had been sold.
as the stock traded 5.43% above from 200DMA, Seema Kaushik purchased 18 shares of Chennai Petroleum Corporation; Same may be seen in the snapshot of the trade book:-
On next Wednesday she would be checking 200 DMA of Share ranked No. 2 in my book, if that is 5 to 15 percent more then she will purchase the Rank No. 2 share. Else will check Rank 3 in the share list, if it doesn't fit well, she would move to rank 4 and so on, but will invest in only 1 share per week.
Seema purchased 65 shares of “PTC India Ltd.” at the market price of Rs.97.80 on 5th July 2017. It may be seen in the Trade-Book snapshot given below :
As it has been told in the book that we should not purchase those shares which are already trading at 15% and above their 200 DMA we won’t purchase it either as it is likely to go down, therefore we will buy only those shares trading at 5% to 15% above 200 DMA.
To learn more about this method, it is recommended to the readers to read my book” How Chandu earned and Chinki lost Money in the Stock Market.” It’s available on Amazon , Flipkart, Paytm e.t.c.
Therefore this week there was a delay of 1 day, and we purchased 103 shares of MMTC on 27th July 2017 priced at 63. It may be seen in trade book below:-
My answer is No, we won't as my book has 100 shares listed in it and this year we will purchase only from them, and if PTC India again features in the next edition of my book during 2018-19 and falls under the rank, then we will purchase it.
It means that next year, we will start afresh with a clean slate with Rank 1.If we would be holding some shares at that time, then we won’t purchase them, and if we have already booked some profit on the particular share and it falls in the purchase range, we will surely buy it again.
Chennai Petroleum is going to give a dividend of Rs 21 per share on August 14, 2017, so even if we make a profit of 20 per cent till August 14, 2017, then we have to trade it wisely so that we can enjoy dividend and also keep the profits safe. Learn more about this next week.
Upon checking share list this week, the share of Apar Industries was trading between 5 to 15 percent of its 200 DMA. It can be seen below in this photo:-
Also, many of my Followers and those who have purchased the said book have demanded that I should provide excel sheet of all the shares mentioned in the book so that they can update the daily price and 200 DMA directly into it, I am providing the link to download the excel sheets below, it is password protected and only those who have purchased the book shall be able to open it. The password to this file is the BSE code of the share ranked 100 in my book.
Password: - Enter the BSE Code of Rank 100 in the Book.
We thought that after getting a dividend of Rs. 21 per share even if goes down till 400, we will be in profit.
Share market doesn't always behave the way we anticipate. It fell down to 374 and we had to be content on the dividend of Rs. 21 per share only. We will have to hold this till it reaches 20% profit again. However wise one is, he will eat like Ghishubhai one day, you have read about Ghishubhai in previous posts, you may go back to read it again and refresh the moral of the story.
My wife has provided information regarding this on her new youtube channel, its a start and she will be continuing this series. Those who are interested may check and subscribe the Youtube channel from link given below:-
We will sell this share and book a loss but his loss is not real loss as we will keep a watch on this share keenly and if share doesn't fall further and it closes above 5% of DMA, we will purchase it again i.e. we purchased this share on 18th July 2017 at 108.10 and sold it at 91.50 and obtained our cash. Currently the DMA of the share is around 97, if share closes at 5% above its 200 DMA, i.e., around 102, we will buy our 59 shares again. The loss incurred in this process will be Rs.688.90. Let's see the calculations.
Normally its found that only 5 out of 20 shares after going below 5% of DMA,rises up to 5% above 200 DMA in a quick time.
1. First of all, we will not be worried seeing the prices of shares in our portfolio fall daily.
2.If we keep the money we get back, in the savings saving account, we get 3.5 percent annual interest, however, we can make an FD at 6.75% interest rate for a principal of Rs.50,000 in ICICI Bank, on monthly interest, we will get a monthly interest of Rs. 250 per month which in comparison to shares like Pratibha industries is a better option as will compensate the losses just with the Interest gained.
3. When shares starts increasing, we can buy back the shares at a much lower price than the purchase price.
4.The biggest advantage is that when we sell a stock by holding less than a year then we have to pay a 15 percent income tax on it, as my wife earned a profit of around Rs.1100 by selling shares of PTC India she had to pay income tax at 15 percent rate amounting to Rs.165. The loss incurred in reverse trading i.e. 6426.28-5377.91=1048.37 may be subtracted from the profit , i.e. from the profit gained of 1100 we can reduce the loss incurred of amount 1048 in reverse trading system and will have to pay 15% Income tax on NET profit i.e. 1100-1048=52.
We booked a loss of 1048.37 by selling shares of Jain Irrigation on 11th August.
On August 16, the position of shares and 200 DMA situation was as follows, in which the Jammu and Kashmir Bank was ranked 15, and was trading at 5 to 15% above 200 DMA. It can be seen in the screenshot given below:-
Also, MMTC shares closed at5 percent below its 200 DMA, so we sold it in reverse trading system and thus did not have to put in more money to purchase shares for this week.
This week on 14 August 2017, it was the record date of Chennai Petroleum's Dividend, which means now we will get a dividend of Rs 21 per share, amounting to 378 on 18 shares.It is showed in the balance sheet below.
The balance sheet dated 16.08.2017 shows cash obtained by reverse trading and by dividend is included in cash holding and subsequently invested in shares of Jammu and Kashmir Bank. Therefore there was no need for putting in more money for investment.
Next Part of this story will publish soon.
I look forward to your comments.
Mahesh Chandra Kaushik