HBJ Capital strongly believe that by next DIWALI we all will be enjoying BULL Market again!!!

Dear Investors,
One of our subscriber has raised few queries/worries after seeing current market turmoil, which are responded here such that it will help other readers too. Just to re-iterate that HBJ Capital is an independent research house provides un-biased advice.

We just want to clarify it and send a clear message to all, that we are not a brokerage firm who will encourage you to trade or suggest you to keep buying and selling just because they get some brokerages. We will ask you to hold cash and deploy only when it is right time.

We also don’t manage public funds or do PMS services (except funds from Angel Investors) hence we neither encourage anyone to provide more and more fund for buying now or encourage anyone to come join us for portfolio management. We believe in less number of transaction with more time on research & understanding the company.

We at HBJ Capital are an independent entity with dedicated team of research analysts with a common mission to provide facts on the table, what we speak or write is what the truth is. Our duty is to educate you on the latest happenings in the market based on the micro/macro economic factors. We not only provide exhaustive research on which stock to buy but also mention very clear entry and exit criterion for the same. At the sametime what we recommend we provide follow-ups and advice our paid subscribers to take appropriate action during different market condition.

We proudly say that, in Dec’07 we suggested our subscribers to lighten up their portfolio, take the profit out from the table & again after Jan’08 fall (not before the fall) we suggested them to exit completely. So the advice or suggestions provided to all the paid subscribers are un-biased and very clear.

It is very simple “As long as our subscribers are making money, HBJ Capital will survive”. We will ceased to exist on the day when you start losing your wealth listening to us. That is why an independent, un-biased and very clear guideline is given to all our subscribers.

Due to ongoing carnage in the stock market, something which never happened in the lifetime of most of the investors/traders, there is panic around, no body has conviction to buy (For your info, HBJ Capital is in buying mode now). Hence in the current scenarios there is nothing wrong if anyone get tensed but one must take a wise decision or act properly. One should avoid, Real Estate, Banks, Brokerages sector and look for companies in the field of Consumption, Education, Telecom VAS, Broadband etc

Recently we got a mail from one of our esteem customer, and we would like to address his queries (also a chat transcript); answer for which most of the investors are looking for……

1. I terribly need your help after going through the last week's losses. When can I start buying? Are we done with the sell off?
[HBJ Capital] - We are here to help you out, current market scenario is rare or say once in a lifetime, but you have to get a habit of seeing such fall or sharp rise because we are in the new era where market will rise fast, and fall faster and rise fastest so on. Just listen to us, on when to enter in the market and when to exit. As far as buying is concerned, you must divide your cash which you don't need for next 2-3 years into 3 part (equally is fine)......

• Invest 1st part now say within next 10 days. Because this market is going like bottom less coke, with no buyers, we want you to buy. Yes it can be like catching a falling knife but we don't want you to miss this opportunity in case if knife bounces back. It is simple if you have seen a stock falling from Rs 100 to say Rs30 and you have not bought thinking it as falling knife or expecting it to come down to Rs 20, then you will not buy when it bounces back to Rs 40 and you will never buy when it moves further to Rs 50. So, here you missed an opportunity. If you buy at Rs 30 and it falls down to Rs 20, then average down yaar, as long as research is done on the company well, homework is done fine then why do we care about price from 30 to 20 or from 20 to 10. Promise is made to keep it for 3 years then why crib after 6 month only!!!
• 2nd part of cash you need to invest when you see couple of corporate getting collapse in India, when you see analyst advicing not to buy in this market, when you see real estate prices falling down sharply, when no one talks about stock market, people hates, newspapers stopped writing about market falls (look for TOI newspaper); such things expected to happen post diwali, may be around Dec'08-Jan'09.
• 3rd part of your cash you hold tight, until central govt comes with some monitory package, Sovereign etc, when you see ratio between NSE Cash & NSE FnO is close to 1:3 (as of now it is 1:5 or 1:6) leverage, you can see this type of activities around next year Mar-Apr'09. Make sure that you invest your 3rd part of cash before central election expected in May'09. It doesn't make any diff who is forming the govt, once election gets over you can see our market recovering.

2. Now, the biggest danger that I see is that I am not sure if a particular stock has hit bottom. Even though the index slides by 4 or 5%, there are stocks sliding by 20% and more. When do you want me to stock buying in general?

[HBJ Capital] - Not only you, nobody in this world can talk with accuracy about where is the bottom and where is the top. Never try to catch the top/bottom, you can't, you will never be able to do that. So best is to invest systematically phase by phase as mentioned above. Look for the scenarios around and deploy your cash accordingly.

Stock falls more compare to index, as on today index is down 60% but most of the stocks are down 80% or more. And when you buy mid-cap or small-cap, the probability of fall will be more due to the nature of stock, liquidity etc. It is simple more risk, more gain. At the same time when index moves up 50% these mid/small caps will be 100-200% up.

So, better buy phase by phase, and get in touch with us immediately if you are not clear about what prices to buy?

3. Do you really think that the carnage is over? I accept that your recommendations are great but it really seems like none of 10in3 stocks would really give any returns close to the 10 times that you are saying. This is what I think.
[HBJ Capital] - Carnage is not over, we are expecting 10-15% fall further from these levels, we are not pessimistic but don't know why it looks like movie is not yet over because at the end of the movie when public comes out of theater, they see real street, they see what is really happening around, they come out of the dream world of fantasy. Similarly, compare to billion and billion of losses in US, I still don't see my US friends crying or cribing or talking anything very serious.

In India too, stock market crashed but yet to see the impact in real street. I was buying vegetable today and bhindi was Rs32 per kg, tomatos are around Rs29 per kg. Market has crashed but this vegetable seller is still enjoying boom time. Did you said who has money to buy these vegetables or stocks? Everybody has money, there are lots of money available with everyone, the issue here is money is not flowing due to fear of unknown, because no one trust each other.

When we come out with 10in3 stocks, we promise 10 times returns in 3 years under average market condition, when there is once in a century type of market crash, one must not expect 10 times returns but yes, it will definitely be much much better than other stocks and will be able to deliver better returns because all 10in3 stocks are leaders in their own field and backed by strong earning growth.

4. A huge amount of wealth has been destroyed in the recent months. In order for the markets to start being bullish again and go up, you really need the same amount of wealth that was destroyed and this is going to take a lot of time. Wealth needs to be created first so that it can come back into stocks again.
[HBJ Capital] - What is wealth? It is just an idea, it is just an information. It is neither created nor distroyed but moves from one hand to other, one form to other. Central govt can't print currency just like that, they need to weigh it with gold or any other commodity or if they print more currency then inflation will be high, so commodity producer will get more money for less commodity so on.....

Now a days wealth creation is fast activity, Microsoft and Google both are in the same field right, it took 25 years for Microsoft to create same wealth compare to 10 years for Google. Similarly wealth erosion is also a fast forward phenomenon; look at our own Unitech, it took just 1 years from 2007-08 for Unitech to become x bagger stock and just 6 months to comes down to 95%. What I mean to say is earth is rotation with same speed around its own axis but we started running fast.

We need everything soon hence we are creating and distroying wealth fast. I would say tighten you seat belt, always have one leg on the break, our personal, professional or market life is going to be much more faster & bumpy. Get use to such type of 5% or 10% market up or down falls. If you don't change yourself you will be extinct just like dinosaurs or why animal yaar, just like Bear or Lehman!!!

5. I personally feel that it would take at least 2 years time to see anything like that.
[HBJ Capital] - You know when I see these techies going for home loan with 30 years of EMI payment, I feel pity, how can they think of 30 years from now, do they know what is going to happen with their carreer in next 5 years. Let me take you to the past, we have seen two recession in just 8 years, and in future such type of events will occur faster.

Thinking about any corporate to exist and stay intact with same pride and prestige for 20-30 years is rare event. How can they see same or better earnings visibility for next 30 years, this is diff era unlike our father who use to work for 30 years in the same company happily. Just ask yourself are you happy working in your current company from last say 2-3 years since you joined, you will get the answer?

I don't see this bear market to be longer, exact time is difficult to say but once we are done with market fall, 2 years will be too much for young and energatic nation like India to sit idle.

6. Given my view, do you personally recommend me to go ahead and buy the stocks preferably 10in3? There is no point in buying and simply holding them for 2 years.
[HBJ Capital] - As explained in 1st question, always buy in phase manner, if you believe on us, then buy only the stocks reco by us because they are well researched either it can be 10in3 stocks or 5 best stocks from Mid-Cap mela. Buddy, you don't need to wait for 2 years to see the return, meet me after next diwali with some sweets & smile on your face!!!

Chat transcript between HBJ Capital & Ankit (Our Subscriber - Name Changed).

Ankit: Hi HBJ Team, just a quick Qn. you have some time for me? 4 mins
HBJ Team: yes pls go ahead Ankit: :)

Ankit: In the blog, you have said that by Next Diwali we will be in another bull run
HBJ: yup

Ankit: All along, i have been seeing you re iterating that we will soon be in a bull run
HBJ: we will be

Ankit: and even gave a sensex target of 30K by 2011. Could you please tell me on what basis you arrive at these conclusions?
HBJ: :-) ok let me tell u...it is simple. how long it took for you dad to earn what you earned in just 3-4years? tell me

Ankit: i dont know, but prob a longer time
HBJ: assuming that your dad is a service man, let us take another eg...this was a bit personal;-)Ankit: :)
HBJ: tata steel one of the oldest company took more than 20years to build something which Infy might have take 10years and google just 3-5 years....so what i mean to say, the speed with which wealth is created in the info age is very high at the same time speed at which wealth erosion will be high...we will see sharp fall and sharp rise in the mkt, no one has time....who says 4-5 years bear run, whole world will change in next 5 years buddy.

Ankit: but who has the wealth HBJ?
HBJ: note my words just 1 more year we will be back on track

Ankit: where will the money come from ?
HBJ: remember buddy, just like energy which is neither created nor distroyed, money is also neither created nor distroyed it gets transfer from one party to other or one form to other.

Ankit: hmm, i share the same view with you in the longer term but a bull run so soon i couldnt believe that anything else that you would like to add? or want me know in this regard? :)
HBJ: oh...yes, my cook was saying that he will not come tomm koz of diwali

Ankit: :)))))))))))))))))))))0000 lol, HBJ, i am just learning from you thats why i wanted to make sure that i did not miss any information from you
HBJ: the speed with which market fell down across globe is saying something abt the change in human nature now

Ankit: wat?
HBJ: compare ourself with our parents, their expectations, their choices were limited compare to ours

Ankit: yes
HBJ: we want everything in short span of time

Ankit: we are more risk savvy and we dream big
HBJ: what does it means, buy fast, sell fast....earlier it was paper share now it is demat

Ankit: do u really mean that time tested correction will go away in the future
HBJ: what is mean to say is, world has changed a lot and everyone want quick fix...such big giants in US fell down like anything...power is shifting yes yes ur right.....bear market especially for us or china or asian economy will not last more than 1year i bet

Ankit: hmmm we are done with 10 months will sure see if your bet is right
HBJ: we are growing, we consume, we are young, how can you expect young guy like me (not old like you:-) to just sit and watch whole world in recession, i will build the wealth irrespective of where the world economy is going...if you see japan, they were in recession for long, a nation with old guys, slow growth, low consumption...totally diff from Indian prespective

Ankit: hmm, i basically have a feel that we will have a bull run simlar to the japanese run that we had in the 80's
HBJ: true, that is what RJ also feels, and i agree with him that mother of all bull run for india is yet to come

Ankit: hmm, HBJ thanks for your time
HBJ: no prob buddy, you are someone for whom i like spending time but what to do with books, blogs, hbj team, family keeps me busy:-) chalo take care bye bye
Ankit: byeee

-HBJ Capital Team