Best time to buy stocks!!!

Its time for an rebound again...strange as it may sound, we are ready for a rebound...Now the word of caution, last time we went into an rebound on 10th of October, it lasted only 2 days...but during those 2 days we rallied by 10%. The reason is the oversold technicals which are warranting a rebound immediately...but the question that is more important is have we made a bottom? Well that is a question that is practically impossible to predict. However what needs to be seen is that when we make this recovery and come back to test the bottoms, will they hold, or would we slip further...Thats a question again I dont think is possible to predict.

From a fundamental perspective, as I had said in my earlier post that some of the individual stocks have bottomed out yet, index stocks might still have some more time to go. For arguments sake, if you take dividend yield as a parameter, then some of the mid caps seem to have bottomed out with a PE of around 4 and a dividend yield of 8-10%. So for e.g. a reliance currently is holding on at 7-8 PE and less than 2% Dividend yield!!! So just imagine if big boys correct to 8-10% dividend yield, then how much more they would have to fall!!! 

But good news is that spectacular valuations are emerging, with dividend yields actually going above 10%. A case in point being TISCO, with dividend yield of around 10% and a PE of around 2!!! So if you build your portfolio carefully, cherry picking good stocks now, over a period of 5-10 years these stocks would give you super super returns with great mouthwatering tax free dividend earnings...Lets take an e.g. if today you bought TISCO worth 30,000 then you would get roughly 3000 Rs worth of dividend this year. Now assuming that TISCO's earnings grow by 15% yoy and the same PE holds (which is abysmally low currently) then after 10 years, you would have a stock price of around 600 Rs and you would have got dividend worth Rs 60,000!!! Now adding all of it up, you would have made roughly 1,60,000 (1,00,000 by worth of stock price and 60,000 by dividend) hence you would have made more than 5 times in 10 years!!!

Hence it is critical not to lose sightof where we are and what valuations are staring us in the face...

Its time like never before to invest...but invest wisely and invest in what you know!!!