Tuesday, August 3, 2010

Contrarian Indicators

When my blog is talking about bubble in FMCG and Pharma, Jayakumar of prime securities has started recommending them. He talks about Asian Paints, Nestle and Glaxosmithkline Pharmaceuticals, all of which have been shown to enter a bubble territory recently on this blog.

How has his recommendation in the past turned out to be? He recommended Bharati Shipyard in January 2010 at a price of 220-230 and said it would be a multibagger for the year 2010. The stock price is still hovering around 235 and change. Thomas cook was recommended in the same article trading at 70-75 and is hovering at 69 and change right now. Sugar space was recommended in the article with a retail sugar price touching 60-65 which was hovering at 50 then. The prices have come off to 30 and sugar companies are bleeding. Balrampur chini was at 140 and going for 83 and change right now. Bajaj Hindustan was 230 and going for 115 and change right now.

He also recommended Nestle and Asian Paints in the same article which were trading at 2500 and 1800 respectively. They have given satisfactory returns where Nestle has appreciated by 20% and Asian Paints has appreciated by around 45%. But they do not seem cheap right now.

Would you want to listen to him?

Any intelligent person, with a good head for figures, should have a veritable picnic on Wall Street, battening off other people’s foolishness. - Benjamin Graham
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