After the Punjab National Bank fraud the stock has fallen. Is it time to buy for the long term?

PNB_Fraud

 

I have been in the stock market for last 2 years and have seen both profits and loss. I wish to give you my 5 cents on it.

A fall in stock price because of odd market pressures like less demand, cyclical movements, business expansion etc. is understandable.

What you do need to understand here is you are investing your hard earned money in cheats and handicapped people (read NPA). These people make profits by cheating people like you and me. Go to a bank and see the arrogance of an average bank executive in a PSU. They make you feel like shit.

Never invest in a business which have a weak base.

Never invest in a business managed by cheats.

Never invest in a business which is liable to frauds like these.

Never invest in a business you do not understand.

There are high chances that the NPA problem is not solved yet or we do not have complete information about it.

There are high chances that this fraud might engulf other banks too.

There are high chances that frauds like these will happen again.

Considering the present political and social scenario do not invest in managements which are not reliable (see the interview of the PNB CEO, the man and the board should have been sacked by now and he was telling us about the history of the bank). If they being in such niche profession took 7 years to understand how can you give them your money???

Considering the present price of the stock there is a high possibility that you will make a lot of money, but when. Are you willing to wait till NPA mess clears out, or till profits increase. Maybe you will get 50% returns in a year. But are you ready to see your portfolio in negative for another 6 months and all this when you cannot understand what is actually happening.

Eventually in a country like ours,

  1. Another demo is not possible. So there cannot be an increase in liquidity for banks. This is the maximum amount of money they will ever have for lending.
  2. There is a limit to bank recap also. NPAs will always increase because that the way things work in our country (NPAs is modified corruption).

So I would suggest you to do this-

  1. Invest in any sector like IT/FMCG/Pharma. Where money comes on basis of product/service and not cheating.
  2. I would always trust somebody like FDA in honesty than our banks.
  3. Have a sound sleep.

Investing in PNB is not investing but speculating.

Source –  Quora

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