Get some steel in your lives

Steel has always been something used in common - as a synonym for strength, a synonym for meltdown, the backbone for megastructures. This is why you've got to buy into steel stocks when there's a real meltdown, for it'll become your backbone in a long-term.

Stock market took a pounding dive into the red sea and remained in what I could call "an abyss" for almost 6 months, many of the giant steel makers everywhere around the world (India is not an only exception) were reeling under global steel demand and they too saw a meltdown from the alltime high P/E levels of 14 to alltime low P/E values of even less than 1 within 6 months. This is when shares of Tata Steel fell real fast from ~1000 to ~150, JSW steel saw a plung in its scrip from ~1300 to meager ~170; mining stocks like Sesa Goa fell to ~60. But, I couldn't understand why the investors were in such a panic that they gave away such heavyweights at such low levels. The scrips saw a beating of almost daily 5% fall on a daily basis.

This is why I mentioned "Get some steel in your lives", that was the time to enter to really quadruple, quintuple your money and everybody who invested then could have visibly started noticing the results now. Both Tata Steel and JSW Steel have moved thick and fast from then on (575 and 920 respectively) and imagine the time they could have taken to get there - 6 months. And the kind of dividend Tata Steel pays, picking it for 150-250 was a real good deal - it paid as much as 160% dividend this year i.e. Rs.16/- per share. The dividends paid by it has been on a yearly basis and on an average its dividend yield has been around 150% for the past five years. Nevertheless Tata Steel still remains in quandry till it reinstates the glory of Corus which still remains a worry for investors, it has a quantum upside if it can get rid of the worrisome Corus story.

Cyclical story
Let me explain what 'cyclical' means before proceeding with the details. A cyclical is a commodity which has a upside and a downside and this continues to happen in cycles and the reason why steel falls in this category is because of the demand-supply. Every once in four years, if we could have witnessed as and when Olympics/Commonwealth or such an event is round the corner, the nation hosting it would take tremendous initiatives to boost infrastructure and this is when there'll be a real demand creeping in and the metals especially steel industries emerge strong from there and there are times when they take the path of trough and literally "melt" - that is why we call it a meltdown :) but remember a buying opportunity for sure shouldn't be missed, they'll be available at a discount of 60-80% very much "mouthwatering".

So, the next time you get such a golden dip in your lifetime, if at all it does be ready with grabbing such opportunities - buying into steel, getting some steel into your lives that can make you feel much more stronger once you edge-past the meltdown.