Zensar Technologies

Reasons for buying:

Buy PE was reasonable at 12.98.

The 5-year earnings average is 12% and earnings increasing since 2012 except in 2017, and 2020.

Return on equity is good at 16.56% but the 5-year average is 15%.

The market cap of the company is ₹5,045 Cr.

Zero debt company with ₹1,019.50 Cr cash. I have bought this stock on three different occasions.

Buy date: 13-Jun-2022

Qty: 35 Buy Price: ₹277.95 Buy EPS: ₹18.27 Buy PE: 15.21

Buy date: 27-Jul-2022

Qty: 40 Buy Price: ₹249.65 Buy EPS: ₹18.27 Buy PE: 13.66

Buy date: 22-Sep-2022

Qty: 45 Buy Price: ₹221.8 Buy EPS: ₹17.08 Buy PE: 12.98

Will stop buying when EPS drops below ₹13.89 or R3 does not satisfy.

Zensar Technologies Ltd provides a range of information technology services and sells IT-related products. The company segments include Digital and Application Services (DAS) and Digital Foundation Services (DFS). It generates maximum revenue from the DAS  segment. The Digital and Application services (DAS) segment is engaged in CUstom Applications Management services that include Application Development, Maintenance, Support Modernization, and Testing services across a wide technology spectrum and Industry verticals. The majority of revenue comes from the United States.

Quotes

 “Unless you can watch your stock holding decline by 50 percent without becoming panic-stricken, you should not be in the stock market.” —Warren Buffett

“Time is the great healer. It is the investor’s most powerful ally. You may be without luck or wealth, but stay healthy and you will always have time. Unless, of course, you buy a bad stock in which case an eternity won’t help.” —Unknown

“I’ve never bought a stock unless, in my view, it was on sale.” —John Neff 

“Invest at the point of maximum pessimism.” —John Templeton

“Wall Street has become fabulously successful at separating capital from its owners.” —Ted Aronson

“I recommend index funds for people who don’t want to spend time studying the market. They are good for 95 percent of the population.” —Warren Buffett

“I have enough money to last me the rest of my life unless I buy something.” —Jackie Mason

“By working faithfully 8 hours a day you may eventually get to be boss and work 12 hours a day.” —Robert Frost

“Prayer is your biggest tool when dealing with investments that are managed by someone else.” —Harry Newton

“Never invest in any idea you can’t illustrate with a crayon.” —Peter Lynch

Housing and Urban Development Corporation Ltd

I bought 271 shares on 19-09-2022 at ₹36.9 when the book value is 72. I noticed that from 2018 the book has risen from ₹45.79 to ₹68.39 in 2022 which is 49% raise and on top of that it provided a ₹3.5 dividends this year.

Stop loss or take profit will be at book value will monitor the value every quarter, this investment is part of my book value strategy.

Cash flow system

I have planned to implement 3 bank account systems for cash flow. 

1. Income account (HDFC Salary account)

2. Spend it account (RBL bank)

3. Invest it account (SBI account as I consider it safest)

As soon as the money arrives I move money from income to spend and then to invest. Moving money from investing it to spending it is not allowed.

Rule based test

1. Identify 5-star morningstar stocks with dividends of at least 4% and update them every weekend in excel.

2. Buy buy orders for 5-star morningstar stocks on Monday. Use value research online as part of paper trading.

3. Check weekly if the star rating changes.

4. Place sell orders on weekends when it's 3 stars.

Will try to see what type of returns can be expected.

20-09-2022

I tried investing in Indus towers and it's in loss so was not comfortable when ratings change in days. I will stop this test and will try to sell at morningstar's fair value.

Rules to become a successful system trader

Follow these ten most important rules to become a successful system trader:

✓  To be a long-term successful trader, you should be okay being a short-term loser. Learn to accept the losses.

✓  You can’t be a winner always. Instead of fighting against drawdown, make peace with it, learn to live with it.

✓ Always remember that every trading outcome is random in nature. Most traders at times think “I faced three continuous winning trades, fourth can be a losing trade and hence I am not taking the fourth trade.” No, don’t do that. You can never be sure about the outcome of your next trade.

✓  Never override your trading system. The trading system always wins in the longer run. Let it do its job, do not interfere with it.

✓ There are traders on Twitter who always make profit without any drawdowns. Don’t fool yourself. It’s better to un-follow such handles.

✓  Failures and setbacks are part of life; we are able to live with it, and we know only when we deal with such setbacks that we can come up in life. Similarly, drawdowns are inevitable; it is only when you learn to handle them and deal with them that you can hit the new equity high.

✓  Always doubt your trading system before implementing it not after going live. If a trading system is with small or insignificant drawdowns it is more likely a result of chance, randomness or curve fitting.

✓ Always trade small when you start trading a system. Get used to its daily fluctuations and gradually increase your stake in it.

✓  No matter how high the returns look like, don’t fall for it. Always check how much risk you need to take in order to achieve those returns. If the returns to drawdown ratio is very small, you can avoid it or reduce the leverage and trade it.

✓  Above all, always assume that your biggest drawdown is always in the future. So take a smaller risk with each trade if you want to strive in this business for the long term.