CAPM Stop Losses : Action Post (Premium)
This is an archive post for Capital Mind Premium Subscribers, sent on 27 May 2014. Click here to Subscribe.
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In the CAPM portfolio, Two stop losses have been hit today.
Gitanjali Gems went down big time, and we exited at Rs. 81 today. The stock has broken down substantially from it’s high of 102 and gives us a 10% loss effectively. We had a wide stop, but what goes up fast comes down fast too, apparently.
Remember the fundamentals are intact. This is a technical exit based on our 15% stop loss when we started. (Which was Rs. 87)
The second stock we’ll exit is GAIL. The stock, which we bought at 433, is now at Rs. 378 and below our stop loss of Rs. 390. The stock narrowly avoided the stop yesterday, but it’s below today and we don’t have a choice but to exit.
Again, here, the fundamentals are intact but we didn’t get in on the fundamentals.
The portfolio now looks subdued:
However, it’s still decently positive, and over 160% on CAGR basis. The point in markets is to book losses early and let your profits run.
Note: If you like the fundamentals on both stocks you can choose to reduce the position size and run it with a larger stop loss. We’ve discussed in the google group about a lower stop of Rs. 76, or Rs. 70 (the last high) for Gitanjali. GAIL too can be a 20% stop player. We won’t do this in the portfolio as it is more difficult to track, and we’re not assigning weights.
Apologies for all the action, again. It’s one of those times where if we didn’t take action, we might have to suffer later. We learn though that Kaveri Seeds (which we exited earlier) is now back to its highs, and KPIT has recovered. Alembic remains lower than our exit point.
Disclaimer
Nothing in this newsletter is financial advice and should not be construed as such. Please do not take trading decisions based solely on the matter above; if you do, it is entirely at your own risk without any liability to Capital Mind. This is educational or informational matter only, and is provided as an opinion.
Disclosure: The authors at Capital Mind have positions in the market and some of them may support or contradict the material given above, or may involve a direction derived from independent analysis.
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