Recently, I was travelling from Mumbai to Pune by train, with about 100 other co-passengers on board. Since it was early in the morning, I decided to take a nap and have my coffee after crossing Lonavla. However, I woke up to find out that I was now travelling to Bangalore. When I enquired about the reason for the same, I was told that there was another train with about a 1000 passengers, routed towards Bangalore, which, due to some fault in its engine, could not go ahead. Hence, they decided to attach all the bogies of the Bangalore bound train to the one going to Pune and the passengers of Pune train were given a 5 minutes window to either alight from the train or travel to Bangalore. Since I was asleep, I had missed that chance to alight from the train. Though astounded, I had some questions in mind:
This article written by Nimisha Pandit, Head of Research and Analysis, Multi-Act is originally published on Moneycontrol.com
Recently, multiple cases of frauds have come to light where shareholders have suffered near permanent loss of their capital because of dubious promoters or management. In addition to financial and business analysis, assessing the quality of management in equally important. Before investing in any company you must evaluate management’s
Management’s competency will influence upside return while Integrity is essential to protect from downside risk.
In this post, we will discuss how to evaluate management’s Integrity.
The advantages of focusing on quality cannot be understated. By investing in quality you significantly reduce the probability of permanent loss of capital.
And since the business is strong, the long term returns are far superior to average quality businesses. Thus investing in quality is the perfect recipe to generate superior risk adjusted returns. But quality has become a generic term today when it comes to investing. No investor would tell you that they don’t invest in quality stocks. But the definition of quality is different for everyone and one might even say that quality is often in the eye of the beholder.
Rather than debating on the various definitions of quality we would like to discuss how we look at quality in Multi-Act.
There is a lot of literature out there on investing that mostly focuses on buying decision. However, you would find very limited discussion on what to do once you have bought i.e. when to sell. Possibly the reason for it could be there is no correct answer to this question. We would like to approach the sell decision through a different route. Thus rather than focusing on when to sell we would like to address this by answering the question – How long to stay invested? We believe if we try to bring in a disciplined approach to our sell decision in addition to the buy decision, we would avoid the behavioural pitfalls that most investors have to go through.
‘A slow sort of country!’ said the Queen. ‘Now, here, you see, it takes all the running you can do, to keep in the same place.
(Through the Looking Glass)
Ultra High Net worth Individuals (UNHIs) and High Net worth Individuals (HNIs) know that successful investing entails diversifying their assets and building portfolios that can handle any form of turmoil in the markets. The secret to this is to build portfolios with assets that are contrary to each other to a certain extent. Prashant Trivedi, Chairman of Multi-Act Trade & Investments Ltd. states “Essentially the way in which the portfolio is constructed is, you give one-fourth to different asset classes – one-fourth to cash (and/or gold), one-fourth to fixed income, one-fourth goes into equity and one-fourth is given to real estate”.
There are gurus and there are finance gurus. Most people approach the markets like a maze or a puzzle expecting to be confused and overwhelmed losing their way in the many alleyways and avenues in the investing world. There are some who are more enlightened when it comes to navigating finance with fresh approaches and successful strategies that serve as guides for others. We’ve put together what we consider to be some of the best investment quotes from these experts! Read More
When discussing portfolio construction with Indian investors, one question that frequently comes up is whether it makes sense for an Indian investor to invest outside of India. Indian equity markets have compounded capital at high double digit rates over the past thirty plus years and with the Indian economy expected to grow at the fastest pace of the large economies globally, investors continue to expect great returns from the Indian equity markets. Why then invest outside India? Read More
“The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.”
– Seth Klarman.
When Warren Buffett famously stated that investing was simple but not easy, he meant that the rules we ought to use in order to make good investment decisions are easy to learn but actually adhering to them is difficult. Disregarding rules while investing cannot be attributed to open rebellion but can be ascribed to the basic human survival instincts that have been ingrained in us since time immemorial. Certain traits favored in the process of Natural Selection and helped our ancestors survive in the jungle actually do not help in the market.