investing

How to pick investment worthy stocks

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equity investor insights - how to pick stocks

This is Part 2 of the note by Balaji Sridharan, an equity investor, who shares his approach and thought process on  investing.

In Part 1 he suggests that every equity investor asks two questions:

  • Am I an above average investor objectively?
  • Is investing worth my time?

He then goes to explain how possibly can an individual investor seek those answers.

Subsequently, he questions whether one is ready to be an equity investor by taking up three 3 hurdles that one has to face.

You can read the Part 1 here.

Part 2 continues.

Once you are past all these hurdles, the question “how does one think about companies” arises?

There is enough literature out there from Ben Graham, Seth Klarman to Phil Fisher taking from deep value to high quality, growth companies. We will not rehash about any of these. Instead we will talk about a few of the filters that I use to pick stocks.

At the top of the list is whether the business is predictable.

What this essentially means is that can you envision what the company will look like five years from now?

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The Truth about investing in PMS

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The truth about Portfolio Management Services - PMS

Deepak was meeting me after a long time. Even though we were working and living in the same city for many years, we couldn’t meet. As a senior sales guy, he has a traveling job and that made it all the more difficult.

Finally, we did meet up.

The conversation was all around from college days to family and finally to investments. Yeah, you must have guessed it.

“Hey, it’s nice to know you are doing your own practice as an Investment Adviser.”

“Yes, it is very fulfilling.” I tried to reflect on the purpose.

“How have you been investing?” I asked.

“Nothing much, my bank RM keeps coming back to me with options and I put some of my money there. I also make direct stock investments based on ideas that I get from the market and advice from friends. I also get some insights from experts I follow on social media.”

“Hmm. Hmm.” I could sense where this was going.

He continued, “You know I have just spoken to this company and they have offered me to invest through their best PMS.

“PMS? Why?”

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Investing – Insights from an equity investor

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equity investor insights - how to pick stocks

To be an equity investor is difficult. For some, it can be downright scary. The fact remains that more people lose money in equity investing than make in it. Why is that so?

You see equity investing is a science. There is a whole lot of financial analysis and valuation methodologies that enable an investor to make decisions. Interestingly, it is an art too as it is subject to ‘views’ of individuals. The simplest example of it being an art is that one company can be valued very differently by two individuals.

The real magic of investing happens at the ‘horizon’ where the ‘art’ and ‘science’ meet.

I have been on the search to find real world investors who practice this amalgamation of ‘art’ and ‘science’.

By pure chance, I came across Balaji Sridharan, an equity investor who also has a full time job as a CXO of an organisation. Balaji has generously shared his approach and thought process on equity investing.

You might be investing in direct equity or via equity mutual funds or just be getting prepared to start your journey as an equity investor, I am sure you will benefit from his ideas. I have benefited for sure.

This is Part 1 of the note. You can read Part 2 here.

So, let’s read what Balaji has to share.

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Announcing “Money and You” Workshop Bangalore

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Investing Workshop - Money and You - Vipin Khandelwal

More than an year ago, I started this blog with a simple objective –

to share simple actionable ideas on money and help you become a smarter investor.

Thank you for being a reader of this blog. The truth is you are the one who has made it worthwhile.

It has been an exhilarating journey over the past 1 year. I believe now it’s time to take it to its next level – to come and meet you – face to face.

There is different power in personal interactions – it propels our thoughts into actions. It provides room for discussion and discovery.

With that perspective in mind, I am happy to announce my new initiative – investing workshop – “Money and You”.

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Slay your Ravanas – Greed and Fear

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GREED AND FEAR - THE RAVANAS

“Can you please suggest me some mutual funds which will give high returns over the time period of 5 years?”

“Please tell me mutual funds that can give me 30% to 35% returns on an average.”

Two queries that I received in the past few days.

What’s this?

Unrealistic expectations!

Greed!

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“I don’t want to see even a single rupee negative on my investment.”

“…don’t want to invest in equity.”

“My portfolio has 37 schemes.”

What’s this?

Unrealistic expectations!

Fear!

Fear of missing out (FOMO)!

Greed and fear are two of the many faces of Ravana in your life.

Now that the Dusshera of 2016 is here, I call upon you to slay them.

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Here’s what SEBI wants you to know and tell about Investment Advisers

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Investment Advisers

SEBI has been working for you, the investor, and how

SEBI has been pushing the pedal on protecting your, the investor’s, interest. It has taken several steps to eliminate conflict of interest between your adviser/distributor and you. This is specially true for mutual funds.

As a first step, in 2009, it banned upfront commissions on sale of mutual fund products.

Then in 2013, on its behest, mutual funds introduced direct plans of all their mutual fund schemes. In my view, this was the best thing to happen. Direct Plans means no commissions paid out to anyone and all the resultant savings adding up to an investors returns.

In contrast, regular plans are sold by distributors where they receive regular commissions as a % of the marked value of your investments.  

Further, in the same year, that is 2013, SEBI also introduced the Investment Advisers (IA) Regulations 2013.

Simply put, any advisor who is offering one to one investment advice to investors related to securities, etc. must register as an Investment Adviser.

As per SEBI Investment Adviser regulations, “investment advice” means advice relating to investing in, purchasing, selling or otherwise dealing in securities or investment products, and advice on investment portfolio containing securities or investment products, whether written, oral or though any other means of communication for the benefit of the client and shall include financial planning.

Did you know this?

Here are some more facts about Investment Advisers

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