Tag: #pitfalls

Rule #4 – To Win Big in Investing, you have to Deal with Losses

Leave a comment

Early in my investing career, a loans expert asked me, “what are you going to do, if the firm you have invested in suffers a large share price loss”?

No one invests to lose money.

But investing in equity markets is different from giving a loan or buying a product from Amazon. If you buy a product on Amazon and it is defective, you return it and should get a refund. When you give a loan, you try to ensure it is repaid to you in full. If repayment is interrupted, you try to understand why and encourage compliance.

In Direct equity investing, one has to expect some amount of losses. If you do a lump sum investment in 10 companies of an equal amount, the returns in a 5 years period will look something like this. 5 companies will be loss making for you. 3 will be barely giving average returns. But 2 should give you outsize returns, of 5-10X. All this together should give you Sensex average or Sensex plus returns.

The right thing to do when you see an equity investment fail, is to exit fast and reinvest in the stronger firms. Exit the losers and reinvest in the winners.

To the loans expert, my answer is, “book your losses, and lose the battle, to win the war”.

Here’s where JainMatrix Investments services can help you. To find out more reach out to us on

CONTACT US

Or explore on this website

OFFERINGS

Comment, leave a reply below, and like and share this post with your friends.

Regards, Punit Jain

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. This is a marketing collateral. The securities quoted here, if any, are for illustration only and are not recommendatory. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. Registration granted by SEBI, and certification from NISM in no way guarantee performance of the RA or provide any assurance of returns to investors. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747.

Rule #3 Investing timeframes

Leave a comment

Dear investors,

One of the biggest hurdles for Investors is patience.

Fundamentals based investing is about identifying mismatches between Share price of a company and value lying within the company. This value may be created by 1) Expected growth of the company or business revival, and 2) a share price correction or fall, due to an external event.

In both these scenarios, the mismatch may take some time to unfold, or be recognized and understood. An Equity Research on a company may identify the mismatch, but the firm may still be far from the value unlocking.

Rule #3 – Investing based on Fundamentals should be done with minimum timeframe of 2-3 years

All fundamentals based investing is prone to unexpected news, internal and external, and business cycles. Sometimes we can be lucky, and get quick returns from our investments. Most other times, its worth it to wait for value unlocking, even using a SIP method of investing, where we systematically buy the shares of a target company based on the Equity Research recommendations.

Another aspect I have come across is “triggers for investments”. Here the analyst identifies a target company, but waits patiently for the triggers to be in place for share price revival, rather than investing from earlier. This however is fraught with unknowns. Will we recognize the triggers in time? Will we be able to buy at this time?

Thus its better to give investments a 2-3 year timeframe to unlock value. Here’s where JainMatrix Investments services can help you. To find out more reach out to us on

CONTACT US

Or explore on this website

OFFERINGS

Comment, leave a reply below, and like and share this post with your friends.

Join us for a Q&A session on 10th June. Register for this on https://forms.gle/ZPsHbz8h6dfVE99u8

Regards, Punit Jain

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. This is a marketing collateral. The securities quoted here, if any, are for illustration only and are not recommendatory. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. Registration granted by SEBI, and certification from NISM in no way guarantee performance of the RA or provide any assurance of returns to investors. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747.

Rule #2 – Long Term Equity Investments must not be funded by loans

Leave a comment

Dear investor,

Long Term Equity Investments must be made using your savings or available cash surpluses.

While equity can give very high returns occasionally, this is not predictable. The volatility in the asset class means that there can even be several years of underperformance followed by a reversal. Taking a loan for such investments can place payments pressure on the investor, and cash flow issues.

In my experience the pressure of a loan EMI payment itself can result in wrong equity investment choices.

Long Term Equity investments are best done with savings from salary or business.

This is quite unlike the asset class of Real Estate. Home loans are common, and loans can certainly be taken to fund such an asset purchase. Here the home value is frozen at purchase and the loan can help fund this out of the individual’s future earnings.

Long Term Equity investments are best chosen carefully, and as stated in Rule#1, made in a portfolio manner. Here’s where JainMatrix Investments services can help you. To find out more reach out to us on

CONTACT US

Or explore on this website

OFFERINGS

Comment, leave a reply below, and like and share this post with your friends.

Join us for a Q&A session on 03rd June. Register for this on https://forms.gle/ZPsHbz8h6dfVE99u8

Regards, Punit Jain

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. This is a marketing collateral. The securities quoted here, if any, are for illustration only and are not recommendatory. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. Registration granted by SEBI, and certification from NISM in no way guarantee performance of the RA or provide any assurance of returns to investors. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747.

Pitfalls – Rule #1 – Overinvesting in a single stock

Leave a comment

JainMatrix Investments shares Pitfalls – Rule #1 in the video below

Dear Investor,

In my Research Analyst advisory practice, I often found that investors can fall in love with a particular stock, and overinvest in it, rather than taking a basket or portfolio approach. This exposes investors to this risk.

In the equity markets, there is always a small probability that any one company can be negatively affected by an unexpected event. It could be a business cycle downturn. It could be a fire in a factory. It could be raising of interest rates by RBI. Or a random or unpredictable event. Some examples of sudden falls can include Yes Bank, IL&FS Ltd., Vakrangee Ltd, Future Retail, etc. These companies suffered a sudden fall in recent years, and surprised many investors, sometimes after many years of doing very well.

The hedge against this for an investor is, to invest in a basket or portfolio of stocks at a time.

Over a period of time this basket or portfolio may have widely different results in terms of individual performances. Some shares may appreciate very well, while others stay flat or worse. But at least the single stock investment risk is not there.

If chosen well, this investment in a group of stocks can be a great step in your wealth building process.

Here’s where JainMatrix Investments services can help you. To find out more reach out to us on

Contact Us

Or explore on this website

Offerings

Comment, leave a reply below, and like and share this post with your friends.

Join us for a Q&A session on 03rd June. Register for this on https://forms.gle/ZPsHbz8h6dfVE99u8

Regards, Punit Jain

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. This is a marketing collateral. The securities quoted here are for illustration only and are not recommendatory. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. Registration granted by SEBI, and certification from NISM in no way guarantee performance of the RA or provide any assurance of returns to investors. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747.

Lessons from 10 years, and Pitfalls in Investing

1 Comment

Dear Investor,

At JainMatrix Investments, I am happy to announce we have completed 10 years as a Research Analyst company. (we did get the RA certification in 2016, when the norms kicked in, but were practicing from earlier).

On this occasion, the best thing I can share with you, dear investor, are my learnings from the profession. Just like any equity investor in India, over the last decade we have seen upcycles and downcycles. The USA real estate crash of 2008 and the 2014 euphoria of Indian elections. Demonetization of 2016. The covid collapse of 2020 and the IT sector excitement of 2021. Add to this company and industry specific up and down cycles.

Survival and even success through these periods has been based on learnings of what to do, and also not do on our investment portfolio. The latter can be called as Pitfalls.

In this campaign, we will share with you the Pitfalls you must avoid in order to succeed as an investor. These are the rules I thought of, realized were required, experimented with and against, and finally established as a Gold Standard Rule. I would recommend every single individual investor to follow these, to get a better chance of success.

In wealth management as well as in Direct Equity investments, these Rules must be followed.

Pitfalls and Lessons

Rule #1 – Overinvesting in a single stock.

Rule #2 – Long Term Equity Investments must not be funded by loans

Rule #3 Investing timeframes

Rule #4 – To Win Big in Investing, you have to Deal with Losses

Rule #5 Pitfalls – Do you have too many stocks in your equity Portfolio?

Rule #6 Pitfalls – To be a good investor, do things differently

Rule#7 Pitfalls – If you want to invest in Indian markets, start NOW

Here’s to your profitable investing.

Regards, Punit Jain

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. This is a marketing collateral, and there is no stock mentioned here, no price target here, or even a recommendation of BUY / HOLD / SELL. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. Registration granted by SEBI, and certification from NISM in no way guarantee performance of the RA or provide any assurance of returns to investors. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747.