These are insights from a 100-year-old chamber, which does Market Analysis, along with top wealth managers, from time immemorial. The analysis is based on Equity Markets only, and we would consider other Asset Markets later. The first insight is that before going into any company’s balance sheet and stock price movement, please look at product sales. An ordinary Indian, the Aam Aadmi can be the first to catch hold of a wealth-generating stock, by looking at retail volume sales, before the analyst does fundamental and technical analysis. Next insight is never take a bull run for granted, because there are bulls as well as bears in the market. People who ignored signs of trouble in the years leading up to 2008 suffered a lot. The third insight is to build your own portfolio, based on your own knowledge. You may, of course, do competition analysis, but always cross-check acquired ideas before accepting them. Next, all asset price bubbles are the same. Quoting James Montier, we agree that all bubbles follow 5 stages: (a) Displacement (b) Credit Creation (c) Euphoria (d) Distress and (e) Revulsion. The fifth insight is that buying anything cheap is usually better than buying anything expensive. We would like to edit this a bit-Consider SIP (Small Investment Plans) in Stocks, to average out the prices from bull and bear runs in the market. The sixth investment is to Be Patient if you want to win. We Indians have been taught patience and meditation from the Vedas. Do apply them here. One famous finance company in India crashed by 80% in 2008-09, but increased by over 100,000% in the next 15 years. The next insight is Stock market is not a zero-sum game – it is a Positive Sum Game where wealth is created through Company growth and value, and it is a Negative Sum game where Company value decreases through falling Sales. There are plenty of examples of both Positives and Negatives, but examples of Positives are on the higher side. The eighth insight is to catch value stocks when their prices fall, affected by market sentiments or corrections of existing bubbles, like the market fall, when US tariffs hit the markets. The ninth insight is not to invest in borrowed money, as payment dates near, you may have to engage in distress sales. The tenth insight is never to go into complex models in balance sheets and Technical Analysis, as they do not always reveal the true picture. One company had mixed Fund Flow with Cash Flow, and the true picture was completely covered in the Balance Sheet. The best coverage of course is in derivatives trade, and we need not elaborate on this point further. The eleventh insight is to do a macroeconomic analysis, like GDP growth, per capita income, income distribution, employment generation, etc. as a healthy economy would always have healthy stocks. It is always better not to be tempted with high shortterm gain on market buzz but stick to investment in time-tested stocks with a proven foundation and resilience. The last insight is to take some risk cover in your portfolio, maybe by investing modestly in debts, taking a term insurance cover, etc., along with exposure in the equity market.
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