Ask any retail investor about Ashish Dhawan and you will find many of them sharing how they follow this new-age investor’s shareholding patterns and investment holdings before putting money in the market. The former chief of Chrysalis Capital is an alumnus of Harvard Business School and is looked upon as one of the most successful investors in India.
With a net worth exceeding ₹2000 crores, Dhawan has come a long way from a humble background to one of the richest and most sought-after investors in the country.
Dhawan attributes his success to his planned investing decisions based on a lot of research and understanding of the stocks that he betted on. This famous investor turned philanthropist shared some great investment strategies that helped him create wealth and turn him into what he is today. Below are some of his key investing strategies for new-age investors to follow and learn from.
Invest smartly and diversely
The Dot Com bubble destroyed the wealth of many investors who had parked their money in telecom companies. Dhawan also suffered the blow though he got rescued in time due to the earnings from his diversified investments. The losses he suffered from his telecom companies’ investments were well compensated in time with the massive gains he earned from his investments in stocks of other businesses.
Assess the market
You cannot jump into the market thinking that it will make you rich overnight. There are myriad pros and cons involved that you must evaluate before deciding to invest your money. Before investing, investors must analyse the market benefits and potential risks to be satisfied with the business investment. Analysing the various risks involved and recognizing their resulting characteristics can help your business succeed.
Have a long-term approach
Markets are bound to be volatile if you adopt an immediate approach towards them. Having a short-term outlook will always make you susceptible to the highs and lows in the market. Instead, gear up in a way that you plan and invest for the long run. By focusing on long-term investments, you can achieve higher returns and avoid short-term market volatility.
Dhawan explains this with the help of an example. In 2001, he bought some shares of Mphasis, with each share being priced at ₹350. Mphasis' share price soon slumped to ₹50, but Dhawan stuck to his conviction and later earned at least five times the returns on his investments.
Building a smart portfolio
Your portfolio reflects your understanding of the market. A smart portfolio underscores a well-researched investment portfolio that will not help you earn adequate returns but compensate for the losses from other investments in the long run. One must never attempt to have too many stocks in his portfolio. The idea must conform to a strong and concentrated portfolio containing some good stocks bought after a lot of deliberation and research.
The “Rags to Riches” dream can be made real only if you are willing to work for it. The market treats you the way you treat it. If you treat investing in the stock market like a business, it will reward you like a business only. However, if treat your investments in the stock market like a casino or a lottery, it will treat you the way it treats gamblers.