Investment Management

What do you believe in?

The first principle is that you should not fool yourself, and you are the easiest person to fool

– Richard Feynmann

Developing competitive advantage as an investor

Investing literature is rife with guru’s urging investors to buy companies with competitive advantage.

Role of behaviour in long term investment performance

Investor behaviour is as much a determinant of long term investing success, as a fund manager’s skill in building a portfolio.

The pain associated with being a long term investor

Our investment process emphasizes focus on “Secular and Structural” growth opportunities vs “cyclical” ones.   Secular and structural implies growth irrespective of economic conditions while cyclical implies opportunities that will be affected by trends.

Investment Perspectives: Define your Guiding Principles

A prominent research house gave a bearish call on the market at the end of February.  Despite the Index climbing over 16% in the past 2 months, the firm stuck to its guns.

Beware the enemy within

We have found the enemy and he is us

The chart below shows the time the NIFTY has spent in its historical trading bands of between 10-29 trailing earnings. 

Caveat Emptor

Complex products earn higher upfront commissions for Wealth Managers. Hence, there is frequent mis-selling of such complex financial products to investors.

Measuring fund manager performance

Different managers follow different styles and approaches.  By implication, their portfolios carry different levels of risk.  The common wisdom at present is to compare manager performance using the “Sharpe Ratio” which compares the return generated per unit of risk taken.

Investment strategy at the current juncture

A simplistic view taken by many analysts at present is that the Nifty is trading near its 10-year average valuation (see chart below) and hence, one should still be fully invested.

Using the impatience of others to your advantage

Threat of a poor monsoon, and fear of reduces MSPs for crops to control inflation seems to have got Dalal street in a tizzy with many brokerages recommending investors stay off Rural plays.