Be Your Master – 2

By Author: V.V.K. Prasad
Total Articles: 17
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Be informed! Be empowered!

Be your master – 2 series is for investors who already hold stocks in their account.

Stock market is surely a better vehicle to multiply one’s investment over long term. Does that mean holding on to same stocks for longer term is profitable? Or does it suggest that stocks bought once should be sold only after a long term?

There is a marked difference between long-term investment and long term locked in. Holding on to the same shares with a hope of appreciation, without caring for the facts, is like being locked in. Staying in the market for a long time while ensuring to retain only good stocks and taking out profits at opportune times is what one should learn and practice.

In “Be your master -1”, stock is compared with bus. Holding multiple stocks is like a train with several carts. Unless all carts are in fit condition, train’s movement is adversely affected. To derive optimum benefit, identification of bad carts is essential. Same way, to improve the health of portfolio, the first step is to identify the poor stocks.

In market sense, poor stocks could ...
... be on the price front or performance front. A non-performing stock is as injurious as an over-priced stock. Both need to exit portfolio and the value realized should be used to include better stocks.

Before that, do you even have an idea on what could your portfolio peak or trough be? If it is not wishful thinking, could you spell the reasons for such an assessment? No one in India has ever attempted this and that too at retail client level. Vivekam did! To see how precise Vivekam’s estimated peak and troughs were for your portfolio, send in your portfolio today.

Vivekam’s PORTFOLIO SCANNER helps one to zero-in on overpriced stocks. Even performing stocks could be overpriced, if more people chase the same stock. A non performing stock could be underpriced and may deserve to be in one’s portfolio till it fetches reasonable price to exit.

Beating the average can become easy when we know the fundamentals of average and our portfolios. Vivekam’s PIE helps investors have their portfolio be compared with Index fundamentals line by line item-wise. Once the areas of weakness are understood, PIE helps investors list the stocks causing such weakness one after other and shows the improvement to the health of portfolio with each such move.

But selling stocks at opportune time is the trick few could master. Will cover how Vivekam addressed it after some time when we talk about PRICE.

Decisive actions are called for at opportune times. Opportune times don’t come when you decide some action. Common measure to read how efficient one has been in markets is to check on the growth in his portfolio with market index like Nifty. Making money along with the market’s rally is not to your credit, unless your returns are over the index return. It is here where most investors, claiming to be successful ones, fail flat.

Buying when cash is freely available and selling when the need arises are not hallmarks of wise investment, be it long-term or short-term. Whatever be the money earmarked for investment, one must use it judiciously to earn a higher return than the market index.

Unless one knows the opportunities that were lost, he will not try to stem future losses. How to assess the value of lost opportunities is possible when the process of investment is documented and verified with facts of portfolio management.

Vivekam’s PRICE prides itself in helping people learn the cost of lost opportunities by being locked-in. Once any portfolio is supplied to PRICE and the date of acquisition is stated, it runs the full course of portfolio management and brings out the value of lost opportunities, if any.

Weak stocks identified to be damaging the overall health of portfolio, using PIE, should go out when they are close to their fair values and not below fair values. Other stocks may be allowed to stay in portfolio till they reach possible peak levels to help one’s portfolio do better than index.

What a process driven investment strategy could have yielded vis-à-vis index return for the same period is provided to compare with how a locked-in portfolio performed. In 19 out of 20 portfolios tested for retail clients, PRICE showed the loss of opportunity to be more than 15-20% per year.

If you wish to check whether you too lost out opportunities in the last 3-4 years, send in your portfolio and we shall have a test conducted and the results be sent in 24 hours.

Determined, you will be, once the reports reach you. Stopping this loss of opportunities is addressed by Vivekam in PRICE alert service. In this service, Vivekam runs PIE service everytime a company in one’s portfolio announces results. Once the weak stocks are marked, prices are routinely checked for possible exit at opportune times.

Value realized on sold stocks is invested in Vivekam’s top listed stocks using SPOTS-Current and the BIO-Growth model of investment is run on them. When the rank of such companies fall outside of top 10, those companies are treated as normal, subject to PIE service whenever warranted.

For any further advice from our end you can always log on to our site at Vivekam Financial Services or write to us at info@vivekam.co.in