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Avanti Feeds and Sakuma Exports: Time to Pocket the Gains? - Views on News from Equitymaster

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  • Nov 16, 2017 - Avanti Feeds and Sakuma Exports: Time to Pocket the Gains?

Avanti Feeds and Sakuma Exports: Time to Pocket the Gains?
Nov 16, 2017

Considered in isolation, a gain of 29% in a little over two months does seem fantastic. On an annual basis, this translates into a huge 174%.

However, what may somewhat sour the return experience for our subscribers is the opportunity foregone. We had a chance to book more than 40% profits in Avanti Feeds but we abandoned the idea in favor of the process.

You see, we let our winners run and only when they are down 15%-20% from their highs, we consider giving a SELL. This is precisely what happened with Avanti Feeds. It fell sharply in the past few trading sessions and is now trading at levels where the trailing stop loss has been triggered.

While 29% gains are nothing to be ashamed off, I am sure all of you must be wondering if there's a way to fine tune this process. Can we make changes to the stop loss criteria so that gains are maximized and losses minimized still further?

Honestly, we don't have a clear-cut answer to this question right now. May be there is a scope or maybe there isn't. We need to see how few such recommendations pan out.

If there are too many that go up a good 40%-50% and then settle down to lower levels, maybe we could revise our stop losses. But do remember that this is a double-edged sword.

There could also be stocks which pause for a breather after going up 40%-50% and because of our insistence of a narrower stop loss, we are forced to exit and in the process, miss the gains that come later.

Consequently, any such step needs to be carefully evaluated and one should not rush into it based on just a couple of instances.

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