Investors are spooked by the uncertainty arising from various state elections and general elections in next five months. There is a common belief that if ruling party comes to power it will be good for the stock market. Any adverse result may put stock market into the tailspin. In today’s post, we are trying to analyse from two angles, one from what historic data tells us starting from 1980s and another from what common sense tells us. Let’s find more details about it.

mind the gap

This concept was originally published as part of our Tiny CAPS report on 18 Nov’18. To suit AI post, certain portions have been modified for easy understanding.

Today’s AI post focuses on the behavioral aspect of investment. Emotions play a far larger role in wealth creation than any high end analytical or robotic capabilities. In equity, your EQ (Emotional Quotient) matter more than your IQ (Intelligence quotient). There is a famous saying from Warren Buffet that “Buy when there is blood on wall street and sell when there is euphoria”. I know you have read it several times all over the internet but are we able to implement it when time is right? Currently, there is blood on at least dalal street which means we should be buying Indian stocks right now but how many of us have that courage to do it?

If this question was asked last year, I am sure many would have said, “Surely, I can implement what Mr Buffet is saying during next stock correction”. Knowing the path is one thing, walking down that path is another. Do you know why this happens? Fear, of course is one short answer but we are looking in-depth here. What induces this fear? How come last year’s confident & aggressive investor has transformed into unsure & risk-averse investor. This is what we are trying to answer in today’s AI Post. We have coined this phenomenon into a term “Bear Market Brainwash”. Let’s read about it.

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This is a question which every investor thinks at some point of time. The question is “How do rich people or so-called super investors invest their money? They must be investing into the best opportunity available in the market. So I shall do the same.”

There is nothing wrong in aspiring to create more wealth out of small sums of money but every strategy has some pros and cons which must be understood well before blindly following others. In this article, we bring some unorthodox investment strategies which many rich investors deploy in the hope of market beating returns.

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We have always maintained that small cap stock investment is way different from a large cap or vanilla stock investment approaches. This is very well understood at institutional levels but somehow when it comes to retail investors, people are happy to advise same approach for all. While basics remain same but mental model of a small cap investor has to be way different. It needs more mental toughness and firm belief to be successful small cap investor. There are not many text available on internet which focuses on pure small cap investment in India context. We are doing our bit as part of AI post to benefit our Ace Readers.

In this article, we will share why we think small cap investment is different and we hope you will benefit from it.

unforced eroorIn tennis, the word “unforced error” is described as a missed shot that is entirely a result of the player’s own blunder and has nothing to do with opposition’s skill. Mostly the player with lesser committed unforced errors wins the game. In investing also, if we can minimize unforced errors, the chances of getting multibagger return shoots up.

World of small cap investment is full of risks & rewards, but at times investors tend to go overboard & increase their risk unnecessarily. Blindly taking more risk does not increase return, in fact it’s detrimental to your wealth. In this article, we will figure out the most common mistakes which many small cap investors commit. We believe if a small cap investor can manage “unforced errors”, there is no stopping of his wealth multiplication.

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Keeping up the tradition, we continue to post different varieties of topics under AI Post.  Today, we are publishing investment story of one of our subscribers. He wants to keep his name confidential but agreed to share his investment experience with us. There are plenty of lessons in his story and I am sure at some point of time, all of us have committed to same mistakes during early days of our investment journey. Without wasting more time, over to him.

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2017 has been a great year for equities, BSE Sensex has given around 26% returns so far. Year was abuzz with lot of activities, investors had a fair share of happiness and heartburn. FIIs pumped in money earlier in the year then pulled out later around September. Domestic inflows remained strong and continues to be strong as a rock. Many investors must have made good profit during the year but are they satisfied? Not many, since there is always a neighbor or colleague who apparently made more money than you. As this year comes to an end, it is a good time to retrospect & ask yourself, what type of investor are you? The one who loves hitting boundaries like Yusuf Pathan or the one who runs hard like Virat Kohli. Many Indians love cricket and no better way to learn investment lessons other than cricket. No one was born as a successful investor they improved with time. In this article, we will share our thoughts on making of a successful investor using cricket as analogy. You can decide whether you invest like Yusuf or Virat.

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Is it possible to create an investment which pays me for lifelong & beyond?  This is a question every investor must have asked himself at some point in time. What if you are told that it is very much possible. There is solid mathematical certainty behind it. Last 30 years of market statistics are also supporting us. You can create such investment & enjoy lifelong earnings. The best part, you can even pass this to future generations as your legacy.

Next question will be why it is not known till date? Well, everyone who has a basic understanding of equities, knows but not realizes because of certain predispositions of financial industry. I highly encourage you to read this article entirely. This can be one of the life changing articles, you will ever come across on Internet.

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Everyone invest in small cap stocks for getting multibagger returns. Interestingly, many stocks achieve great returns in due course of time but alas we sell them too early. We can have the best of research process backing us but at the end, it all boils down to how much actual profit we are making. The question remains unknown to most investors as in how much time shall one wait before booking complete profit. In this article, we will try to analyse a recent multibagger stock’s journey ‘Avanti Feeds’ and understand why it is tough to achieve multibagger returns & how to overcome them.

Maslow black

There has been flash flood of money into the equities in last couple of years and this snowball is becoming bigger & bigger as it rolls down the hill. Falling interest rates have only pushed normal person to suddenly discover his risk appetite and start pouring money from bank deposit to stock market. While domestic participation is the best thing that can happen to any country’s stock market but are these new joiners well prepared before taking a plunge into the risky world of equities? The side effects of neglecting the risks associated with equities are huge. Let’s try to find out what all should be covered using Maslow’s theory as a parallel.

retirement

Majority of the small cap investors are trying to find next multibagger stock to make huge money and retire at a serene location as depicted in the picture. It makes perfect sense, after all getting 100x returns can do wonders to your personal wealth. But getting multibagger returns are easier said than done. Not only because it’s difficult to find a multibagger stock but also due to other challenges. Many stock advisory services also lack a crucial element in their approach and thus investors never receive multibagger returns even with a paid stock advisory service. At AI, we believe in making investing simpler for investors & this post is dedicated to highlight major challenges which keeps multibagger returns away from many of us. It includes a unique challenge which most stock advisory companies will shy away from telling you.

With increasing retail participation in Indian equity market, there is a strong inflow into small cap universe. Such is the impact that small caps have beaten large & mid caps, second year in a row. Most people have jumped in this narrow space to search for next multibagger stock. While it is difficult to spot a multibagger from pure data analysis, it can be little easier if you are actively taking a note of economic trends around you. At AI, we are sharing our view & personal experience on this.

crash

Market is going up everyday & touching new highs. I am sure you will be happy to see your portfolio grow stronger than ever. However, it will be different challenge when market slides down. As humans, we have affinity towards profit and aversion to loss. However, the fact is that loss occupies more space in our mind than profit. Markets are bound to go up & down and as ace investor, we should be ready to deal with both situations. So, do you have a loss containing strategy? If not, we are sharing some of our thoughts & explaining its impact, if not managed properly.