Tale of Bajajs

I started investing in stock market through Equity Mutual Funds, using SIP, in 2006. I used to buy additional units, whenever market was down. Overall returns were amazing - but till the end of 2007 only.

As index started moving down in 2008 - instead of adding MF units - this time I decided to try my hands in stock market directly. Reasons:

- Watching shares moving 20% up in a day. Why can't I select such stocks and become rich overnight???
- why I let other people manage my money and pay fee? I am smart enough to manage my own money!

I started buying stocks of different companies. Selection criteria:

- Praise on newspaper / TV
- Company I like for it's product
- Green technology - Suzlon
- Corporate Action (Split / De-merger)

Practically, I was not valuing the company at all. A drop of 20-30% in the share price from 52 weeks high was enough for me to load the shares of companies.

One of such company was Bajaj Auto. I bought the shares at an average of 2200. Bajaj Auto separated into 3 companies - Bajaj Holdings & Investment (Holding company), Bajaj Auto (Auto Business) and Bajaj Finserv (Insurance & financing business). After the split, shares of each entity were listed, I was down about 50% or so at that time.

But by that time I learned a bit about investing and valuation, mainly form Rohit Chouhan's blog. I added shares of each entity, after evaluating the fair value, between Oct, 08 & May, 09.

I sold off Bajaj Auto in Dec, 09 (too early in hindsight, as price zoomed to ~3000 or so with in few months). I sold off Bajaj Holding & Bajaj Finserve in May, 10.

IRR was 25% on my investment on Bajaj. Great....No!!!

In the end I was lucky to make such returns with out evaluating companies, thanks to world wide crash in 2008 and some good blogs on value investing.

Lesson - Never invest without properly evaluating company, as you may not be lucky each time (Or stop watching TV and reading recommendations on newspaper, etc).

Thanks
Investing Thoughts