When will this END?

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In 1994 Surat was effected by Plague (which has much higher mortality ratio comparing to corona), nearly 60% of the population left surat, the total death was 52 which was much lesser than the fear, at that time there were no WhatsApp, email, social media, etc. still, humans have proved over a period that “We worry more of Diesease than the Death”, we do everything in excess when we like a certain business we give excess valuation to the stock like the business will never see a downturn for 1- 2 decade same way when we see panic we sell our stocks like the business will end up tomorrow, we have seen both of this emotion in last 30 days.

It is said, you are known in markets by the Seller Circuits and the number of crises you have witnessed & surpassed, this is my 5th Seller Circuit and believe me, all came without informing, all 5 were sharp, unprecedented and the most common was when you see in hindsight all were a great opportunity of learning not to do the same mistake which was done in last seller circuit, this time it took 12 years to give us that hit, every time the reasons were different but the human behavior was the same, there was one common factor and that was Big IPO, this time it came out from nowhere, and till today no one knows when it will end, but from my learning of last 1.5 decade this is are the basic factors that I am extremely confident about:

  1. When a Stock breaks more than 42% from its highest peak, 92% of the time it will never come back to its Peak! (Turtle Research)
  2. The biggest rally will come when mass starts to sell and get out rather than buying more (still I am getting calls what to buy)
  3. This is the 1st time from 2014 after the market crossed 2008 highs of 6400 NIFTY it has entered in bear zone.
  4. If the stock breaks the lower circuit lows (i.e. on 13th March) and closes below it with its 200 DMA is negative are seriously bearish stocks.
  5. The stocks which will do a new ATH in the current scenario will be “Dabbang”!
  6. A great business will recover faster than the mediocre businesses
  7. In this type of market, you come to know how strong is your EQ (Emotional Quotient) and your IQ, most of the time EQ takes over IQ and mass exits at the bottom.
  8. Where markets will go no one knows, so don’t try to predict markets, and ask pundits about what will happen next, rather just focus on the learning and executing.
  9. Buying 20% now and in parts, parts are one of the most mediocre strategies, if you are confident you buy, if you aren’t don’t, there is no HALF Pregnancy!
  10. It’s the 1st time in History that NIFTY has fallen 16 days consecutively without closing higher than the previous day.
  11. The strength of the NIFTY is at the lowest level from its Inception (1990).

God Bless us all!

Regards
RoMe!

Disclaimer: This blog is only for Knowledge and education purpose, all stories are true and not fictional, should not be taken as a recommendation, please consult your Fund Manager for the same, the author is a Fund Manager of SEBI Registered Portfolio Management Services for more details https://turtlewealth.in

Wimbledon’s RMS

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Wimbledon undoubtedly one of the most amazing game to watch for, it is the oldest tennis tournament in the world and the most prestigious, though I have a shallow interest in Tennis its on my bucket list, recently I was going through some of the articles and where my eyes popped up on this story, and I thought it is something I should share with my readers. (FYI (not a investment advise) the towels of Wimbledon is made by our Indian Gujarat Company)

Wimbledon was going to start from June 29 this year, and its one of the game where you need a lot of money to watch, it tickets are from 1000 to 20000 pounds ( 95000 to 19 lac rs.) (depending on the match) and they make a revenue of 250 Million$, but it’s the 1st time after world war II that Wimbledon tournament has called off due to the virus.

But whats Interesting in this? Wimbledon risk and finance subcommittee insisted on a pandemic clause nearly 20 years ago (that’s crazy isn’t it?) so from last 17 years. Wimbledon used to buy nearly 2 Million $ worth Pandemic insurance for last 17 years and paid nearly 34 Million$ as a premium where the possibility of Pandemic in the world was near to 0, still it continued, this time because of the Insurance they took it will receive a whopping claim of 141 Million$ (1 Million $ = 7.5 Cr. Rs.) estimated to cover its losses they have to suffer because of cancellation of tournament, Whooping isn’t it?

But let’s understand the thought process behind it, a committee to come to a point to take insurance before 20 years for a PANDEMIC which is the rarest to happen and for 17 years continuing to pay a big premium of 2 Million$ equals to 34 Million$ which has no return on it, what a risk management system it would have and the perseverance to follow it, for nearly 2 Decades, is just commendable, today we all would be feeling wow 141 Million $, its so great, but it has also taken the pain of paying 34 Million $ in premium for last 17 years, where the whole world would have thought they are doing the stupid thing and wasting 2 Million $ a year and making the insurance company richer.

When it comes to our Wealth Management Division, and we consult our client for the Security Basket – Most of them require High Life insurance as they are the single bread earner or you need a pump in your health insurance, may be you need a better business insurance etc. we have got feedback from intelligent people that it’s a waste of money and nothing happens, also when we research a company we check do they have adequate insurance for something uneven happens to the factory or to the facility, we have also seen families to stop Health Insurance just because they have paid premium for 10 years and never used the insurance service not only individuals but most of the companies in India don’t have adequate Risk Management Systems because we never think and sit on the uneven risk that we can get in our life, business or profession, we just go with the flow, trust on god and our luck, but it’s a serious need of the hour for all of us to sit and think what are the risk ahead in life, business, health etc and to plan like Wimbledon team, maybe for certain years we have to pay that heavy premium that can be painful, but something irrational like this happens it may save us from the biggest financial blunder.

The same happens to us at Turtle Wealth after this fall in stock markets and seeing great companies which were great just 15 days back fall 40 – 50% in just a fortnight gave us a serious thought about the risk management system we should create in our portfolio, as it is told “we make the smartest decisions in bad times, and stupid moves in good times”, we created so superior risk management system for our PMS that PMS in adverse situation can’t go below 18% of the invested amount, that would be one of the biggest USP of our fund.

Wimbledon Pandemic insurance is one of the best stories we need to ask our-self that are we managing the unseen risk in our life or not?

Regards
RoMe.

Era of Wealth Creation!

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Every bear markets give an immense opportunity for a new era of Wealth Creation in Financial Markets, there will be new sectors, new entrepreneurs, new stocks which will create immense wealth, I heard a veteran of stock markets, and he fairly told that every decade comes with 10 stocks which grow more than 10x and you have to find 2 of them, but the fact here is that the stocks which were great wealth creators in last bull markets hardly some will be in the new markets, the stocks which did great in Harshad Mehtas era 1990’s didn’t do great in Y2k IT Bubble, the stock which did great in IT bubble were not immense wealth creator in Housing Bubble time of 2008, and the stocks which did great in 2008 were not great in last bull market like I still remember in 2008 when everything was going for a toss, stocks like HUL, PNG, Nestle, etc were showing up strength and the defensive stocks like this created 10x wealth in last 10 years, that’s just majestic!

In 2017 the commodity and the chemical stocks like RAIN, HEG, Gujarat Alkali did 5 to 10x upside, eventually came at the same price it started, I still remember we moved out of Rain at 300 and shifted our investments to Nestle, that time it was judged as a stupid decision but today one of the most brilliant moves of History of Turtle Wealth, so market may again inch up but the millionaire dollar question is will the stock selected will be a wealth creator or a profit creator, are you buying for 10x or 10%?

In this fall there are 4 types of companies:

  1. Great Company, TINA category (There is no alternative) near to 0 debt, superior leadership in markets this type of stocks has corrected average 20-25%
  2. Good Companies – decent companies doing fairly we which have corrected 35-40%
  3. Mediocre Companies – 50-60%
  4. Bad Companies – 70-80%

Now most of the human mindset will go forward for buying the 3rd and 4th type of companies to make the fast chunk, and nothing bad in that, but 90% of probability is that they will never be a wealth creator, because it will take them to average 700-800% to come back to its peak, which is merely impossible, I still remember in 2009-10 people were still betting on real estate, infra, power, which never created wealth in last decade, stocks like Bajaj Finance, Speciality Chemical, FMCG, etc were not wealth creators in 2008 rally, as we summarize that the wealth will be created in 2 categories:

  1. The 1st type of companies – Great Companies, these companies have shown character in the current markets.
  2. The new companies which are showing promises, by their Price and Profits showing stable growth and discounted by the mass, e.g. Stock like Bharat rasayan went 80x in 5 years.

So this article came to my mind is when a friend of mine called me to ask which stock I should buy, and my recommendation was some of TINA Companie (the 1st type of companies), but he was like rohan give some great companies, and I was like Jay this are great companies, as he told no give me companies like Bandhan Bank, or Tata Motors, that time I understood that he is not here for 10x but 10% and as usual, my answer to him was, I am not great at 10% profit trades I am great at 10x wealth calls.

So on Monday if you are going to buy anything think 10times before where your money is going to be allocated, in my latest podcast I had summarized the 6 biggest falls of financial history, and the most common thing is after every fall there has been an unbelievable recovery in the world, as such humans are meant to grow and grow sustainably, but the players will change, so kapil dev can be the best player but will you pick him or Virat Kohli in your current team is what we need to answer to ourself and take the call.

If you like this blog, do share, Subscribe and forward to you near and dear ones.

Regards
RoMe!

Disclaimer: This blog is only for Knowledge and education purpose, all stories are true and not fictional, should not be taken as a recommendation, please consult your Fund Manager for the same, the author is a Fund Manager of SEBI Registered Portfolio Management Services.

IS#2: “Promoter with Pistol”

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Back in 2011, I used to be a Research Head of a Regional broking House, we were a small team of 5 (from them we 3 still work together at turtle), over the period I have learned to be extremely honest and to the point rather than to be Diplomatic, so we used to research on Stocks, Commodity, Derivative, IPO’s, etc, IPO has been always one of the most attractive parts for a retail investor back that time and still today, we made research report on most of the IPO’s and people took our recommendation seriously.

In January 2011, came an IPO which was a local company IPO where I knew the person and the company (won’t name because of compliance reasons), as our normal routine team we made a research report on it, the company had the worst numbers I can ever witness and the worst was Debt to Equity Ratio for more than 5:1, and no way on the earth this stock could create wealth for my investors, as simple the rating went to “NEGATIVE” and the report was made with utter honesty and no bias of knowing that company, after the research was completed our team member Jigna Patel (who was part of Turtle core Team, now shifted to USA) asked, should she circulate it? and I without a single thought told YES, we flashed the Email, SMS, and Recommendation to nearly Thousands of investors and hundreds of trading terminals.

After 5 min, I got a call from my boss, what you have done? why I have done it, and he was sounding extremely worried and not happy, and after some minutes I was told that the promoter of the company may come to shoot me with a pistol, and I was like man, you must be kidding! But actually, he was coming, there was a small meet which happened and I was told to be underground, I was underground for 2 days.

After 2 days, things got settled, and the IPO got listed, the stock went doubled and most of the investors on the street thought I was wrong on my research but the stock got listed with erasing almost all profits!

source: screener.in

Moral of the Story:

As a Fund Manager or advisor, you have to be utterly honest with whats the fact than the emotions you carry while researching a stock

When everyone says it is good, but when the fact says it’s bad, it’s bad!

A bad company can give you profits, but a great company only can make you Wealthy!

Debt is something that cannot be ignored, it’s something to be worried about!

Disclaimer: This blog is only for Knowledge and education purpose, all stories are true and not fictional, should not be taken as a recommendation, please consult your Fund Manager for the same, the author is a Fund Manager of SEBI Registered Portfolio Management Services.