Stonks - An unconventional way of picking stocks

October 20, 2022

I’ve been very lazy to get to this blog over the last year and thought of updating with a topic I’m recently very keen about.

Sidenotes first:

• I’ve started a documentation process for my tech stuff so most of the guides will probably go there and it’ll be more of a rant here I guess. Check it out here if you’re interested in tech documents or guides.
• My K20 Pro is my daily driver still, so making guides on that is difficult at the moment. I’ve had someone reach out to me for the Nethunter guide’s part 2, but unfortunately, I bootlooped my device trying to get a custom ROM on it (thanks to FBEv2) and it took too much effort just to get it back to working again. I’ll probably have some guides as soon as I upgrade my phone and my K20 Pro is an additional device.

Stonks

BIG DISCLAIMER

In no way the stocks mentioned or the strategies/methods mentioned in this post is supposed to be taken as legitimate financial advice. Use your own judgement for your own money pls, thanks. This is because I am in loss since the Russia-Ukraine war started, so, not the guy you want financial advice from. (:

I started investing about a year ago, sometime in July/August of 2021. I’ve only invested in stocks listed in the Indian markets, NSE and BSE, and I’ve also recently tried out some options action. My main motivation to try options and become extremely curious about trading was this video I watched:

So, after going through quite a bit of these meme videos, I grew more interested in knowing how to trade actively.

Trading

I’ll keep this short, as I tried this only a couple of times.

I bought a 17500 CE (call) on Nifty50 and I was making loss on the day (Friday) I bought, there was a weekend ahead, so I passively lost money as well. I was about Rs. 2000 down and I closed the position. The day after I close the position my call turns out to be right and Nifty50 does hit 17500, motherfu-.

Having learnt my lesson, I decided to make another call. I looked at RIL (Reliance Industries Limited) and it had recently risen by 2% and I felt like it was on course to hit 2600, so I bought a 2600 CE on RIL and I started losing money again. I held onto my call and believed I was right, and turns out, I was. I made about Rs. 1700 on an investment of Rs. 1700, so that’s about 100% profit (pre-tax, pre-brokerage etc). So, I’ve almost gotten to a breakeven position in trading.

Moral of the story, don’t do trading kids.

How I pick Stocks to buy

Things I look for:

• P/E and P/B (I’ve seen people look at TTM stuff, but I honestly don’t know and understand what that is, so never checked.)
• RSI and volatility - A low RSI and volatility seems to be a good combination as it means the stock is not overbought and it is going to make some moves while it increases volatility (law of averages) and generally low RSI stocks will start seeing buyers, so moves up.
• Companay financials - A company that is in a good financial standing, self explanatory.
• Chart - I don’t do Technical Analysis on the chart (cup formation or whatever), but I do look at the chart and try to get a sense of what’s the next few months/years looking like for the stock.

There’s other things like industry viability, government/regulatory policies that could affect the company, and current global situations that I take into consideration, but it’s extremely unreliable as things can change almost any time (rare, but a possible risk).

Recommendation(s)

I would very strongly recommend to not take my stock recommendations because you could seriously lose your money.

Having said that, let’s take a look at the stocks!

1. Suzlon Energy (NSE: SUZLON) | CMP: INR 8.85 (As of 2022-10-20)

A penny stock, but one I’m actually rooting for!

• Has a decent enough market share to make an impact.
• Recently had a rights issue to get rid of their debt.
• Renewable energy industry, will be crucial in the future (I’m still leaning towards Solar than Wind, but let’s see).
• Low cost of investment, high profitability chance. This doesn’t mean much as it could just axe 90% of my holdings and I’d be lost for words, but the company has decent financials, especially once they get rid of their debts.

2. HDFC (NSE: HDFC) | CMP: INR 2,371.40 (As of 2022-10-20)

A blue chip stock to offset the penny stock. A bit of a gamble.

• One of the stocks in Nifty50 (Indian Index).
• Merging with HDFC Bank soon, so about to be delisted from the market.
• However, in swap ratio, if you hold 25 shares of HDFC, you get 42 shares of HDFC Bank.
• Since it’s a blue chip stock, it’s financially sound, has a good liquidity, mind boggling market cap etc.
• One of the well known banks in India and seems like a good bet.

Final thoughts

Well, at the end of a boring an very uninformative post, I’ll leave you with a bit of solid advice.

If you want to invest/trade, set aside an amount you’re willing to lose. 100% forever. Consider it charity. This way, if the market does fall face first, you wouldn’t regret as much.

Hopefully your investing/trading journey goes better than mine and you make some meaningful money.

STONKS 📈 TO THE MOON! 🚀

See you in the next one,
- Paradox ❤️

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