Equity Wealth

Equity Wealth Equity Wealth is an SEBI Registered (INA300011991) equity advisory company for retail and high net worth investors. Stock markets

We provide equity advisory and portfolio management services. Our goal is to help our clients build wealth from equities.

17/02/2021

The importance of a superior network/Acquaintances!!

Often in my earlier days, I would pick some scrips presuming them to be next set of mega multibaggers and they wouldn't even move an inch for ages. I was bit perplexed as to why the desired returns are not happening and what I figured out was the fact of inherent, inbuilt over biasness which would potentially undermine the negatives. The only solution was to have a superior network and brainstorm, discuss with them. You really need people who also can play the part of a Devils advocate. Needless to say since that realization, the overall returns been very very healthy. Am lucky to have great investors, mentors around who have seen it all and adds so much of value to my investing career. Anyways to make this post relevant, reached out to couple of them(Hemant Gupta and Aniket Gore) for their views regarding couple of very interesting market related aspects and as always they chipped in with their amazing wisdom.

Q) Hemant bhai what do you think about this bull market and most important question is like what not to do or what is the mistake that you feel an investor commits in such a raging Bull market?

Ans) Bull market starts with a bear market. You would most likely start with a concentrated portfolio then as growth visibility would be there only for few stocks. Then as bull market slowly takes shape and rally broadens, you would almost invariably diversify into many stocks as FOMO of missing so many running stocks starts to play in your mind. That's very natural. By the end of the bull market, the quality of portfolio deteriorates significantly. So you do know what one shouldn't do. Actually most of the times, people would sell bit of the stocks that have run up to buy the ones which have just started running up. So very rarely the performers reach their automatic concentration in the portfolio. In a bull market, portfolio almost surely ends up looking like a zoo

Q) Aniket bhai plenty of readers would want to know the secret to achieve an Alpha in markets?

Ans) With the flood of information available today one has to work harder to create a sustainable edge Having a good checklist, good networking, some scuttlebutt, ability to understand the sector, disruption risk, trends, keeping ear to the ground, understanding balance sheet all this things would help. When investing in smaller companies understanding the promoter DNA, integrity to minority share holders, ex*****on and delegation capability, team building, and ability to operate at 5x or 10x current scale. Being dispassionate and exiting when facts change, ability to acknowledge our mistakes or blind spots are also key. If the process is right along with some needed luck, one will make Alpha for sure. If we retain our edge, we will beat the market over longer period of time.

Btw: For any suggestions, WhatsApp ( 9831291631 )

Regards,
UJJAL

14/12/2020

Few of my observations and Suggestions:-

For Stock / Investment Queries Please ping me on 9831291631 ( WhatsApp / Telegram )

1..Ships don't sink because of water around them but because of water in them. Your wealth too doesn't sink due to volatility in the market but because of volatility in your head. When market teaches you a lesson and takes your money, the choice is yours whether you use it as motivation or an excuse to give up..

2..G.Kasparov once said that one of the biggest mistakes chess players make is trying to 'undo' a bad move,when in reality, once a bad move is played,it's already a whole new game and an entirely fresh mindset is required. It struck me that investors make the exact same mistake.

3.."In my initial days, it took me quite a few years to realise that just 1-2 solid stock ideas a year is more than enough,only if we bet big,average up those winning ideas". With time,most things would fall in place.

4..Deferring your consumption in luxury and investing in equities in the first 10 years of your earning life, would give you an unassailable lead in wealth building. Also, All great companies started as small companies. Find them.

5..Future multibaggers are going to come from those companies who solve climate change,or precision medicine to cure cancer. Water purification and anything related to organic or anything where's there scope of value added products, should do great too. Anything which is doing innovations in the IOT/ ML arena will have gala days ahead. Am also high on the API-Pharma and manufacturing theme..

6..While selecting companies for long term investments-Look out for companies which can grow at 15% for next 10-20 years instead which can grow 50% for next 1-2 years. Consistency is more important than speed of growth. Market is very fond of such companies and rewards handsomely..

7..March 2020-Never forget the basics of investment approach.
December 2020-Never forget the basics of investment approach..
Bull or bear market the recipe for sucess remains the same. Dont get carried away in either cases. Markets attract those who want to make quick money but rewards only those who are comfortable getting rich slowly.

8..This remaining part of fiscal 2020-21 or for the remaining 4 months, I strongly feel would be the year for the quality small and midcaps. Mark this message of mine. If it doesn't happen,will post this same message for 2021 April and so on... 😊Happy investing guys.

For Stock / Investment Queries Please ping me on 9831291631 ( WhatsApp / Telegram )

21/08/2020

How do I shortlist companies?

In my last webinar,the most number or question was about "How do I shortlist or select stocks from basket of 6000 listed companies. Here are few of the stuffs I do along with the logic:-

1) Whenever any company hits 52 week highs or all time highs for the first time. Stock market is filled with predators who could smell good things beforehand. So if a company is moving up,there should be some reason. I start my research to find out what's happening.

2) When I meet any company or Promoter-The first question I ask to them would be like,which is the company in your sector that you envy? Often they would name companies which could be more interesting than their own one. Imagine an endorsement from a competitor. That's one heck of an input to start your research.

3) The extension of the above point is like when a big company buys stake in a small company from the same or different sector. That's another way of endorsing too which definitely makes me start my research.

4) Whenever there's a trend or a big rage but probably the companies are not listed. Pulse candy of DS group, Patanjali from Baba Ramdev stable are exampled. What I do is I would search for the Proxies. Say their Raw material supplier or packaging supplier or anyone who works with them. They certainly could be listed. It's obvious if their client grows,they too would grow along with them.

5) Any company which after ages sees big spike in Operating profit margins or sales. That's a good starting time. Often what starts with a spike,continues for few more quarters which re rates the stock. I would often research on those companies.

There are many more patterns or metrics which I will keep you guys posted. Till then,enjoy this 5 cool ones. Happy learning Folks...

13/08/2020

Next Shiv Nadars, Azim Premji and Narayan Murthys will come from contract manufacturing in pharma and chemicals & specialty chemicals companies sectors - need to find and bet on the right managements.

- Nilesh Shah

13/08/2020

Few Interesting Things to Look At...

Investors should lower their expectations and should not expect same bumper returns. Moreover, there may be profit booking at every rise. Partly, investors are also to be blamed for picking stocks at any price (upon hearsay) without looking at fundamentals of the company or at the valuations.This time, investors should try to avoid following mistakes:

1) It will double in 1 month: If it were so, why tipster will tell you to make so much money?Instead, he himself will beg,borrow or steal to have enough money and buy entire quantity of such scrip for himself.

2 )Looks good on the chart: Intraday or short term traders may sometimes make money on this basis.However,it is a strict No No for long term investors.One should remember that no business enterprise runs on charts.Hence, how business of share investing can run on charts?

3) Company has got an order: One should verify what is the ex*****on period of such an order, when and how much it will contribute to company's topline and bottomline? Sometimes,bigger the order,lower the profit margin.

4) They are planning an expansion:Expansion of production capacity necessarily does not mean expansion of bottomline also.Whether big investment in new capacity will yield judicious returns?Whether there is enough demand to meet expanded capacity? In the past,many big companies became BIFR case after their mad expansion.

5) Won some export orders: Such order will constitute how much of total turnover in percentage terms? Did management clarify whether export orders are more remunerative or less remunerative?Export orders do not necessarily translate into higher profits.

6) Big Bull is buying: Did they ever tell you what big bull is selling?

7) Big Operator is buying: By the time such news reaches you,such operator has already turned into a seller and most probably,you are buyer of his sold quantities.

8) Brokers tells you to average the scrip. It is advisable to average the scrip only if price has come down due to bad sentiment.However, in many cases, price is coming down due to expected lower performance in view of which lay investor is not aware.It is like betting again and again, more and more on a losing horse.Instead, investors can make up for their mistakes by investing additional money only in some other companies which are doing better.

No one can exactly say whether market has bottomed or not? Investors should see whether the market will be higher than current level 6 to 12 month hence. If answer is yes, start investing.Equity is a long term instrument and if there is nothing wrong with the Indian companies you want to invest in, or the Indian economy and country as a whole, and if market is going down due to technical factors, investors should not panic, and wait.If, some FII are selling today,tomorrow, other FII will come to buy. There is no problem for long term investors.We should change our views only if fundamentals change.Finally, if, Indian economy is doing well and if Indian Equities are attractive,I feel that it is not due to Rahu-Ketu (politicians-bureaucrats) but Inspite of them. Things are happening due to perseverance, intelligence, tolerance, hard work and ambition of Indian citizens who deserve the real credit for nation building.Please correct me if I am wrong folks. HAPPY INVESTING 😊😊😊

12/08/2020

A Bit of Sage Advice in Stock Market...

Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ.Once u have ordinary intelligence, what u need is the temperament to control the urges that get other people into trouble in investing"-Warren Buffet.

Coming from the legendary investor, this piece of advice should serve as the guiding post for all those who want to be successful investors in equities. The world’s most successful investor believes that emotions play a major role in influencing investors into making grave errors which are then compounded by taking further rash actions. This creates the kind of market fluctuation that we are now witnessing.

Sometimes back i read an article, i assume its few years ago when i was 25, it struck me a lot..It was by Whitney Tilson, which said "Peter Bernstein in "Against the Gods" states that evidence reveals repeated patterns of irrationality,inconsistency and incompetence in the ways human beings arrives at a decisions and choices when faced with uncertainty.

It means that when we are faced with uncertainty,like in the stock markets where different opinions exists,the decision making is often irrational and inconsistent and such errors are most likely repeated by individuals. While after every debacle most investors seems to believe that they have now learnt their lesson,but many of them repeats the same mistakes.

Almost everyone in the equity markets makes huge mistakes. They often buy dud stocks, Invests on rumors despite knowing that it is not advisable, refuse to sell when prices fall etc. Examples are innumerable. However only those who are able to avoid repeating their mistakes are ones who succeeds. Such individuals are very,very few.This also reinforces the buffet advice that it does not need extra brilliance to make profitable investment decisions but it needs a lot of discipline.

I know these article of mine would find a lot of people who would be influenced after going through the full coverage.But to be very frank and honest most would find it like an induction. Still i am making these points because i believe that we are headed for volatile times in equity markets over the next few months.Even a bit of discipline and caution may prove to be a world of good for all.Times would come where investors would be torn between fundamentals and strong news flow. High crude prices,over expensive valuations, FII trend will create uncertainty. The indices could swing wildly as bulls and bears will slug it out according to their faith.

Amidst all this,investors could swing between extremes of panic buying and selling.In such times,it would be important to remember Buffets"s advice."Avoid herd mentality and keep your own counsel.

Extra laboring over market volatility,diverse analyst opinions and unsolicited broker advice would confuse investors.It would be important that they maintain balance and avoid panic reactions while buying or selling.

10/08/2020

2020 is biggest example of why temperament is superior to anything else in markets. I would know so many guys who lost both ways. Saw 50-60% erosion in a single month, sold evrything only to see those same companies doubling-tripling. Until and unless you experience this phases, you are an incomplete investor.

03/08/2020

and wealth generation continues. Valuation is on higher side now but coming 3-4 yrs both cos should grow their profit by 50% CAGR. So they won't be available cheap and quality would never lack takers. Happy for guys who been part of this journey.

31/07/2020

"If you are honest, hardworking, reasonably intelligent and have good common sense, you can do well in the investment field as long as you are not too greedy and don't get too emotional when things go against you."

--Walter Schloss

27/07/2020

Indian footwear market is almost 5X toothpaste market at about 50,000 cr. It's highly fragmented with over 300,000 players. Top 5 organised players have-combined single digit share of market.Toothpaste market is highly concentrated market with top 5 organised players having over 90%.

23/07/2020

PI industries massive wealth creation. (2009-2020)

Sales up 7x from 460crs to 3300crs,

PAT up nearly 19x from 24crs to 457crs,

Stock Price up 215 times in last 11 years,

From Rs 8 to Rs 1730.

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