Doing the unthinkable I am selling a stock - half of Indian bank HDFC Bank (HDB) as the stock has gone on a very nice run of late. Then again, as I wind up my arm to throw a dart at the stock section of the Wall Street Journal pondering my next purchase, what hasn't?
When HDB broke out over the 50 day on March 2nd, we added a batch of allocation, so I am essentially taking that allocation off the table, 5 weeks later.
Normally there would be a good chance the stock comes in and falls to some longer term moving average where we could buy back the stake just let go. However the past 6-7 weeks stocks have run up, and simply gone sideways as they wait to go on a new breakout. Until the market proves otherwise, this sale will be foolish... as is almost any sale of equity. But I need to stick to some sort of framework - no matter how atypical the market is.
That said a part of me wants to sell all my positions and go to cash since no one on Financial Entertainment TeeVee one can find a reason for stocks to fall. Also the top 2 most popular stories on Seeking Alpha for the first time that I can remember are Jim Cramer "buy buy buy" stories - it's 2007 all over again. My contrary antenna are flashing "Will Robinson danger!"**
I don't even bother to talk about valuations anymore since the market could care less - 1999 style - but this bank (which is in a great market and very well run) is sporting a lovely mid 30s forward PE ratio. Shall we do 40?
** broken record alert: cursory mention that the market is overdue to fall at least 1%, which it has not done in 7+ weeks.
Long HDFC Bank in fund; no personal position
Wednesday, April 7, 2010
Bookkeeping: Selling Half of HDFC Bank (HDB)
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