Investor Awareness Programme on Investment in Equity: by Dr. Uma Sashikant, MD, CIEL. - 26-05-2014

Master Class Series: Mastering Equity - Investor Awareness Programme on Investment in Equity: by Dr. Uma Sashikant, MD, CIEL @ Goldfinch, Mangalore.

Highlights: Identify Equity market and Business cycles, Active vs Passive portfolio, Long Term focus and value of stocks selection, returns and macro factors.etc It was a very impressive talk on the given subject of equity. 

It was a very good introduction of Dr. Uma Sashikant, who could mix english and kannada to the audience to get them understand. She explained how equity is unpredictable like marriage and only after marriage that we realise how the other person is, in matrimony ad we all tell only good about ourselves. She explained if you have wrong stock in your portfolio and try to hold on to it and get better out of it, its exactly like keeping spoiled food in the fridge expecting that after it cools it will be fine, but never realise that fridge can only  help good food from not getting spoiled.. (so select only good stocks and sell the bad stocks). When somebody would have predicted stock markets, then why will he write books and sell them for a living. Stock markets don't have any pattern to be followed, it can behaves in any direction (fall one yr, jump another yr).

Equity is a instrument which don't have protection and its like a business which you need to bet upon, you give your money and try to get more money out of it. If anybody asks you for your car whether you will immediately agree or think many times before giving by asking many questions like DL, references etc, but with stock you never think and give money without asking any questions about the company. We all follow the tide and try to enter a bus which is full and not the bus which is empty thinking that the full bus will go earlier and this is the risk involved like the stocks which is overbought. How to understand, the markets are at the top? If we compare returns of all 20 yrs, we will see that there is not a single year when stocks have consistently performed, so timing is very important. We will all face the situation like emotion, intuition, fear, greed, expectation, over reaction etc.

We all have rights of democratic decisions on what to buy and what to sell at any give time, we need to follow the business cycles, sentiments, timing and macro conditions. We sometimes go with unknown stocks and never confident of good stocks which you think is highly valued. We need to realised the difference between bad time and good time, new stocks and old stocks, costly stocks and cheap stocks.  Bad times means when company has not utilised its fund and planning to do something and good time it when company is in restructuring business and capital is utilised for proper use and realised the mistakes done in the past. Eg: DLF had no fair idea of what to do with the IPO money and now they are busy restructuring and settling their loans. We also need to follow various macro factors importantly govt policy which will affect the stocks decisions to a larger extent. Then comes liquidity issues and when to sell. Timing and selection of stocks in the market is also very important because everybody has a stock story to be told and never the lost stories will be told. Understanding the company is important, where is it, what is the business, how is it doing, who is the MD etc along with timing. 

20-30 stocks are ideal for a good portfolio. Never continue to hold the loser stocks in the portfolio for long, if your call on the stock is wrong quit immediately. when Sensex started in 1986 with 100 points and now with 25000 points in 28 years, the returns is 2%, because most of the stocks which comprised of sensex don't exist today and the stocks keep on changing from the list each time. Top 30 stocks are never same, only performing stocks come in the list of Sensex. Have systematic approach towards investment. When to sell is the great challenge for anybody and follow the basic principle of selling the stock 15-20% down from the top could avoid most of your  worry of holding for long term. When market are very bad and nobody is talking about stocks its the right time to invest. And start with sector, then to thematic, then small and midcap, then diversified fund, finally to large cap and then profit booking to liquid fund, but we do exactly the reverse.  We all enter markets when everybody talk about it and when we lose money we complain stock markets are bad and advisor is bad. An advisor's job is to sell and its his right to call you to invest like the conductor in the bus stop or a salesperson in the retail shop, its you to decide which bus you want to take or which jeans you want to buy, no sales guy will sell one type of jeans to all and tell put your belts tight. Likewise in stocks there are variety of stocks and funds, its you who need to decide which suits you. Never select unknown, cheap stocks and good stocks will never come for cheap price, understand the company business, never go with the tide and always follow quality in choice.