Learning never stops, and this is what Harsha Upadhyaya, Chief Information Officer, Kotak Asset Management Company shares with Value Research analysts while elucidating his investment strategy. Upadhyaya who has more than two decades of experience in analysing and managing investments says that there is a learning for anyone and everyone who dabbles in the stock market.
As opposed to sports events wherein there is a scope for hitting the bull’s eye, you can never be too sure of your investments. Facts and factors change here every minute leaving you vulnerable and uncovered. Even some of the best investors achieve a strike rate of six or seven out of 10. In todays’ investment scenario, this is deemed to be a good score needed for parking your money in equity investments in the long run. Identifying winners among the companies listed in the stock exchanges and staying invested in them is more important than how much we have lost due to our investment mistakes. Mistakes are inevitable, which is why you must accept and correct them.
Invaluable learnings from the stock market
Upadhyaya shares some valuable lessons that he describes as simple and powerful measures of money management.
- Studying the company’s fundamentals to decide whether to invest in it or not. Fundamental analysis is the first basic step to choose which business to invest in.
- Diversification of a portfolio is essential to mitigating the risks of investing. A diversified portfolio includes shares of different companies or different sectors.
- Cut the noise. It does not matter what people around you about your investments. Have conviction in your decisions. Conviction stems from knowledge and research. The test of your conviction and skill depends on how long you can hold on to your investments. Instead of reacting to the short-term volatility in the stock market, you must have the patience to sail through and continue with your predetermined investment strategies.
Respect your stocks
Treat your investments like your baby, which means that you do not throw them away at the behest of others. However, this does not mean that you rush your way to buy every stock that you find good. As the saying goes, “Stocks are like children. Have only that much in your portfolio that you can manage.”
Details shared by the country’s two main depositories, Central Depositories Services Ltd (CDSL) and National Securities Depository Ltd (NSDL) revealed how the number of active investor accounts in the stock market has reached a whopping number. More people now gift stocks than useless items to their loved ones. Having good shares in your portfolio enhances a feeling of financial security as opposed to most other investment options whose returns rarely exceed market returns.
Investing regularly
Millennials are now flocking to free educational videos to learn how to assess the fundamentals of any company. Investment is one per cent learning and 99 per cent practical. This explains why more millennials are now allocating a part of their salaries to investments in mutual funds and stocks.
Most young Indians started investing in stocks when the market tanked below a certain limit during the pandemic. Some of the best shares were available at affordable prices and Indian investors realized it as the perfect opportunity to enter the market. The journey in the stock market has been exciting and continued ever since.