Follow the Leader – the boss is always right and so is the leader!

In 2008, Buffett bought a large stake in the stock of Conoco Phillips as a play on future energy prices. However, this turned out to be a bad investment, because Buffett bought in at too high of a price, resulting in a multibillion-dollar loss to Berkshire. The difference between a great company and a great investment is the price at which you buy stock, and this time around Buffett was "dead wrong." Since crude oil prices were well over $100 a barrel at the time, oil company stocks were way up.Buffett says: "When investing, pessimism is your friend, euphoria the enemy."

On our home turf too we have Rakesh Jhunjhunwala who suffered a severe set back in Praj Industries. Rakesh Jhunjhunwala‘s holding value in Praj Industries plumetted from Rs 357 crores to Rs 101 crores. The stock which was quoting a tad bit over Rs.100/share in first week of January 2010 has benn languishing in the Rs.70 to 80 price range for several months.

On the other hand, Rakeshji made huge losses on Titan Industries by reducing his stake from 4.13 million shares to 3.81 million shares when Titan’s share price continues to spike and kissed Rs.4244 on 11 November 2010 though it slid today by Rs.177.20 to close at Rs.3953.85/share.

A few months back I had written an article about Vikas WSP onwww.indianvalueinvestors.com wherein I had in good faith recommended a “Buy” based on the unique business model of the company. But no sooner I had posted the write up I started receiving mails from different sources asking me to justify the reason of recommending a “buy” of a stock which was delisted for a few years by SEBI.

Vikas WSP Limited is an India-based company. The Company is engaged in the manufacturing of guar gum powder (GGP) and its derivatives. The Company supplies to all sectors of the food industry with a range of products. The Company also offers guar gum for technical applications, such as pet food, oil drilling and fracturing, textile printing and paper making. As of March 31, 2010, the Company had manufacturing operations in Rajasthan and Haryana. The products manufactured by the Company are also used in the food production as thickening and binding agents. The company’s total revenues in fiscal 2009-10 stood at Rs. 458 crores and PAT was Rs. 123 crores, generating impressive margins of around 26 per cent.

Without blowing my own trumpet, I wish to tell you guys that the worlds largest Investment Giant Goldman Sachs Investments Mauritius very recently purchased 15,00,000 shares of Vikas WSP @ Rs.31.71/share. The stock rested at Rs.35.70/share today 12 November 2010.

Many savvy investors simply follow what FII’s and DII’s buy – because normally the stocks purchased by the biggies have a tendency to rise no sooner the bulk deals are through. That’s precisely what’s happened to Vikas notwithstanding the company’s bad reputation in the markets. The stock has started is bullish phase thanks to Goldman.

To err is human, to forgive divine. Let’s all forgive Mr.Agarwal and his team just as Goldman has by buying a stake in a company which was delisted from the bourses. As human beings, we all make mistakes – even the Warren’s and Rakeshji’s of the world and I am just a simpleton in an ocean full of good and dangerous creatures.

While Goldman is sitting on profits from the word go, what about you folks. Do you wish to bet on Vikas – do so if you think Goldman has the Midas touch to convert stocks into Gold though at times the touch may become tough at times. After all no one is perfect. We all make blunders, some times Himalayan Blunders. Now, don’t tell me that getting married was the greatest Himalayan Blunder that you’ve ever made!

Remember – the markets don’t guarantee anything to anyone. A person may be a King or Queen and have tons of money but the market cares not for what you have and what you don’t have. The markets don’t recognize a Buffet, a Rakeshji or a Goldman – the markets will do what they are born to do – go up, go down, go zig, go zag, go here, go there, go nowhere but you my friend have to go somewhere - that's to the Land of Wealth.. Therefore, think twice or rather thrice or better still think hard before you invest your hard earned money in the markets.

Planting a money plant in your house will not do the trick for the simple reason that if the money plant does not grow you’ll start wondering whether the God’s are angry with you and in frustration you may end up buying a dud stock instead of buying a star stock. I suggest that you plant a Money Plant in the core of your head and see the Money Plant grow and then you don’t require a Bufffet, a Rakeshji or a Goldman to tell you what to buy and what not to buy! If your wife is superstitious and insists you to buy the real Greeny Money Plant then do as she says but at the same time don’t forget to sow the seeds of the Money Plant in your head and keep visualizing bulky green leaves flowering by the day and by the night too!

Happy Investing!

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd