BlogTurtle Wealth

Answering the million-dollar question: When to sell?

In a market reaching all-time highs, with the NIFTY 500 showing a 10 per cent increase in the current quarter and a remarkable 22 per cent in the current calendar year, investors find themselves torn between excitement and apprehension. Despite robust GDP growth, stable inflation, and a bullish outlook for India, concerns linger about the unexpected market rally. As the CEO and Fund Manager of a USD 100 million PMS Fund, I observe a cautious sentiment prevailing in the market.

Contrary to expectations, there is no euphoria; instead, investors seem more fearful than excited about the market’s surprising ascent. A closer look at NIFTY 500 from 2017 to 2022 reveals a prolonged consolidation, with a significant doubling down only occurring post-2020.

Examining NIFTY 50, where the top 10 stocks contribute over 50 per cent of the weightage, reveals that eight out of these ten have been underperformers. Interestingly, it’s the broader markets that have exhibited more robust performance than the major indices.

However, the market does not seem to be in an oversold zone, considering three crucial parameters: 

* Price
* Emotion
* Valuation

In all three aspects, the market does not show signs of being overbought. As the saying goes, “There are decades when nothing happens, and there are months when decades happen,” and this holds true for the stock market. Understanding that the market operates on an 80-20 principle—80 per cent of the time providing 20 per cent returns and vice versa—investors must navigate the unpredictable nature of market movements.

A case in point is PFC, a top performer in NIFTY 500 this calendar year, showcasing a 400-per cent increase. However, over the last 15 years, it remained at the same price despite consistent YoY profits. Timing the market is challenging, and deciding when to exit poses a million-dollar question. To address this, we propose two quantifiable approaches.

  1. 200 EMA Indicator: Utilizing the simple yet effective 200 EMA indicator, which is available for free on various platforms, can guide decision-making. Any stock trading above the 200 EMA is considered a hold, irrespective of the reasons for selling. The 200 EMA acts as a powerful tool in gauging a stock’s potential and works consistently across various assets worldwide.
  2. Outperformance Assessment: The primary reason for investing in stocks is to outperform the market index. Regularly evaluating a stock’s performance relative to NIFTY 500 over a one-year horizon provides insights. If a stock consistently outperforms, it indicates its potential to continue delivering positive results.

A strategic approach involves identifying stocks that both underperform NIFTY 500 and fall below the 200 EMA for potential exits. Swapping such stocks with outperformers can optimize portfolio performance, akin to building a winning cricket team with top-performing players.

Understanding the simplicity and precision of these approaches, investors can make informed decisions about trimming, exiting, or holding their investments. It’s a strategic move toward sustainable wealth creation in the ever-evolving landscape of the stock market.

I hope this will create excellent value for your further wealth-creation journey.

Rohan Mehta,
CEO and Fund Manager at Turtle Wealth Management Pvt Ltd.

BlogTurtle Wealth

The Aluminium Buzz

Aluminum prices have been rising steadily since the beginning of 2021 but in the past three weeks, the metal has become about 14 percent more costly, and touched $3,000 per tonne, the highest since 2008.

The behavior of a company’s stock usually reflects the performance of the underlying company. When a company performs well and generates earnings, its stock price rises, which further increases the stock’s demand, which further increases the stock price. This positive loop continues until the stock price reaches a point where it may correct for two primary reasons: the valuation or earnings peaks.

Short-Term vs. Long-Term Corrections

When the valuation peaks but earnings are still strong, the stock might enter a correction period lasting a few years. After this period, it can bounce back. These are short-term corrections, and one should not exit the company during this time. The resilience and strength of the underlying business often lead to a recovery, making patience a valuable trait for investors.

However, when earnings peak, the correction phase tends to be much longer. This extended correction indicates that the company needs time to restructure, innovate, or find new growth avenues. When a company’s stock price then again reaches and surpasses its previous high, it signifies that the company has entered a new era and is now more capable of generating higher profits.

The Indian Market’s Emergence from Prolonged Correction

Consider if the entire Indian market has emerged from a prolonged correction. By observing the price trends of major listed companies, many have reached new highs, surpassing their previous multi-year highs, and entered a structural bull run in the last two to three years. The indices also reflect this trend, signifying a broader market movement.

What Does This Signify?

It shows that we are in a structural bull market. Companies from various sectors are demonstrating growth. Examining earnings reveals that, in just three and a half years, the corporate profit-to-GDP ratio has almost doubled. In the Nifty 500, nearly 170 companies have entered a structural bull market after long periods of consolidation (five or more years where the price went nowhere). This suggests that one-third of the Nifty 500 companies have experienced a turnaround.

What to Do in a Structural Bull Market?

In a bull market, at every point, you may not believe that prices can go up from here, and the market continuously proves you wrong by going higher. As proud price followers at Turtle, we follow the price without any bias. This approach has led us to be part of some of the best-performing multi-bagger stories, which we have experienced with public money.

  1. Always Be in the Game: In every market condition, stay invested because you don’t know when and where a big move will come. According to RJ’s sayings, when you are less confident, be 100% invested in the market, and when you are confident, be more than 100% in the market.
  2. Don’t Miss the Best Days: Missing some of the best days can significantly change your returns. Data supports that missing these days can drastically affect your overall returns.
  3. Don’t Focus on Downside, Embrace the Uncertainty of Unlimited Upside: To participate in the market, you need cash, courage, and conviction. Cash and conviction you can get easily, but courage is something that comes from practice. If you only see how much you are going to lose, you can never enjoy the upside. Loss aversion makes you cut your profits and stay in loss. Instead, when you realize that the upside is unlimited and if you are right, you win by multifold. Focusing on unlimited upside gives you the courage to participate in the market.
Conclusion

Navigating a bull market requires understanding how stock prices reflect company performance and broader market trends. Companies entering a bull phase demonstrate strong performance, creating a positive cycle of rising stock prices and increasing demand. While corrections are inevitable, resilient businesses often recover and reach new highs. The recent emergence of the Indian market from prolonged correction highlights significant growth potential, with many companies reaching new highs. Staying invested, embracing market uncertainty, and focusing on potential upside rather than downside can lead to substantial returns. By following market trends without bias, investors can capitalize on the continuous opportunities presented by a structural bull market.

– Jaymin Shahukar
Quant Research Analyst

Investments in securities are subject to market risk and there is no assurance Or guarantee of the objectives of the Portfolio being achieved or the safety of the corpus. Past performance does not guarantee future performance. Investors must keep in mind that the mentioned statements/presentation cannot disclose all the risks and characteristics. Investors are requested to read and understand the investment strategy, and take into consideration all the risk factors including their financial condition, suitability to risk return profile, & the like, and take professional advice before investing. Opinions expressed are our current opinions as of the date appearing on this material only.

Our Client, PMS, may hold the following discussed securities, this blog is not stock investment advice this is just for educational Purposes for more details visit https://turtlewealth.in

BlogTurtle Wealth

Becoming a Bull in a Bull Market

When we talk about a bull market, it’s essential to understand how stock prices work. Let’s explore how stocks typically enter a bull phase.

The behavior of a company’s stock usually reflects the performance of the underlying company. When a company performs well and generates earnings, its stock price rises, which further increases the stock’s demand, which further increases the stock price. This positive loop continues until the stock price reaches a point where it may correct for two primary reasons: the valuation or earnings peaks.

Short-Term vs. Long-Term Corrections

When the valuation peaks but earnings are still strong, the stock might enter a correction period lasting a few years. After this period, it can bounce back. These are short-term corrections, and one should not exit the company during this time. The resilience and strength of the underlying business often lead to a recovery, making patience a valuable trait for investors.

However, when earnings peak, the correction phase tends to be much longer. This extended correction indicates that the company needs time to restructure, innovate, or find new growth avenues. When a company’s stock price then again reaches and surpasses its previous high, it signifies that the company has entered a new era and is now more capable of generating higher profits.

The Indian Market’s Emergence from Prolonged Correction

Consider if the entire Indian market has emerged from a prolonged correction. By observing the price trends of major listed companies, many have reached new highs, surpassing their previous multi-year highs, and entered a structural bull run in the last two to three years. The indices also reflect this trend, signifying a broader market movement.

What Does This Signify?

It shows that we are in a structural bull market. Companies from various sectors are demonstrating growth. Examining earnings reveals that, in just three and a half years, the corporate profit-to-GDP ratio has almost doubled. In the Nifty 500, nearly 170 companies have entered a structural bull market after long periods of consolidation (five or more years where the price went nowhere). This suggests that one-third of the Nifty 500 companies have experienced a turnaround.

What to Do in a Structural Bull Market?

In a bull market, at every point, you may not believe that prices can go up from here, and the market continuously proves you wrong by going higher. As proud price followers at Turtle, we follow the price without any bias. This approach has led us to be part of some of the best-performing multi-bagger stories, which we have experienced with public money.

  1. Always Be in the Game: In every market condition, stay invested because you don’t know when and where a big move will come. According to RJ’s sayings, when you are less confident, be 100% invested in the market, and when you are confident, be more than 100% in the market.
  2. Don’t Miss the Best Days: Missing some of the best days can significantly change your returns. Data supports that missing these days can drastically affect your overall returns.
  3. Don’t Focus on Downside, Embrace the Uncertainty of Unlimited Upside: To participate in the market, you need cash, courage, and conviction. Cash and conviction you can get easily, but courage is something that comes from practice. If you only see how much you are going to lose, you can never enjoy the upside. Loss aversion makes you cut your profits and stay in loss. Instead, when you realize that the upside is unlimited and if you are right, you win by multifold. Focusing on unlimited upside gives you the courage to participate in the market.
Conclusion

Navigating a bull market requires understanding how stock prices reflect company performance and broader market trends. Companies entering a bull phase demonstrate strong performance, creating a positive cycle of rising stock prices and increasing demand. While corrections are inevitable, resilient businesses often recover and reach new highs. The recent emergence of the Indian market from prolonged correction highlights significant growth potential, with many companies reaching new highs. Staying invested, embracing market uncertainty, and focusing on potential upside rather than downside can lead to substantial returns. By following market trends without bias, investors can capitalize on the continuous opportunities presented by a structural bull market.

– Jaymin Shahukar
Quant Research Analyst

Investments in securities are subject to market risk and there is no assurance Or guarantee of the objectives of the Portfolio being achieved or the safety of the corpus. Past performance does not guarantee future performance. Investors must keep in mind that the mentioned statements/presentation cannot disclose all the risks and characteristics. Investors are requested to read and understand the investment strategy, and take into consideration all the risk factors including their financial condition, suitability to risk return profile, & the like, and take professional advice before investing. Opinions expressed are our current opinions as of the date appearing on this material only.

Our Client, PMS, may hold the following discussed securities, this blog is not stock investment advice this is just for educational Purposes for more details visit https://turtlewealth.in

InvestingTurtle Wealth

The Best Investing option for GOLD!

Human loves Gold, Especially Women and Govt. it’s one of the most liquid assets in the world, Gold has been one of the most favorite investments by Indians from centuries, we are also in top 10 Countries holding Gold Reserves.

As the Interest rates have seen the south side in Indian Markets, retail investors have found Gold to be one of the safest and easiest investment, that has a probability to beat the Interest Returns, with Safety and Liquidity in the Game, also Gold has always seen as a sense of prosperity and an emotional connect in Indian Families,

Interest rate going down, Gold Going up, and the economy in a tough time has yielded a great demand in Gold.

This day as gold has started inching up in the extreme North Direction and doing it all-time high, a lot of investors do call us asking 2 questions:

  1. Is this the right price to enter in Gold?
  2. Which is the best instrument to invest in Gold?

Let us understand what GOLD has done for us over past Decade

Source: YEARLY GOLD CHART OF MCX

Gold has generated 2.70 time return in last 10 years, but the catch here is that from 2012 to 2018, good 6 years gold was at the same price, and there was nearly 0 Return (off course nobody would have hold equities if there is no return in 6 years, but gold we hold, right?)

We have many Gold investment options like:

  1. Buying Physical Gold – Jewelry
  2. Buy GOLD ETF/MF
  3. Buy Gold in MCX
  4. Buy Gold Sovereign Bonds
  5. Surprise!

Our whole approach when investing in other options than buying physical gold is where we can find security and more returns and that’s what is more imp.

Source: SPIDER ACE Data

As you see above 10 years data for Gold which is in White which has generated 273% returns, but the companies who do the business of Gold has given much more superior returns than Gold, Titan being one of the Undisputed brands in Gold business  PAN India with the highest market share has given 921%, outperforming 3.30 times vs Gold and  Muthoot holding the highest market of Gold Loan (which has practically near to 0 NPA Possibility) has generated 740% returns, outperforming by 2.70 times vs Gold.

Now why this has happened?

The simple reason is that Business Gets Valuation and that is the reason the Organized Leaders in the Gold business always will fetch higher valuations as the business of gold is bigger than the Business of Investing in Gold and they will, therefore, do much better in comparison to Investing in Gold.

So Next time when you or your family Questions should we invest in Gold? You know where you should contact

Investments in securities are subject to market risk and there is no assurance Or guarantee of the objectives of the Portfolio being achieved or safety of corpus. Past performance does not guarantee future performance. Investors must keep in mind that the mentioned statements/presentation cannot disclose all the risks and characteristics. Investors are requested to read and understand the investment strategy, and take into consideration all the risk factors including them financial condition, suitability to risk return profile, & the like and take professional advice before investing. Opinions expressed are our current opinions as of the date appearing on this material only.

Our Client, PMS, may hold the followed discussed securities, this blog is not an stock investment advise this is just for educational Purpose for more details visit https://turtlewealth.in

InvestingTurtle Wealth

1,00,000% Returns!

Amazon Just Completed its 23 Years of listing, undoubtedly one of the best wealth creation stock by the most popular company, used by millions of population has created 1000 Times returns, and that too in a country like USA.

After reading this I am sure you would be gazing, wish I would have invested in this stock and would have turned my few dollars into millions, sure this is good in dreams, but would it be possible if you were the lucky early investor in amazon?

Most Probable answer is NO, there are certain reasons for it and the main is volatility:

1. The stock fell 15% over three days 107 times.

2. It has lost 6% in a single day 199 times

3. It fell 95% from December 1999 to October 2001. (It took 10 years for amazon to come back to its All-time High which was made in 2000)

Maximum Draw down of Amazon vs Dowjones

In Investing  “Magic is not when you buy or when you sell, the magic is in PIVOT”

RoMe.

Now looking at this data, ask yourself the following questions:

  1. Would you be able to handle this type of volatility in the stock?
  2. Would you be able to hold the idea about the company is great but seeing the volatility in price?
  3. If you would have Exited the stock, but still have the guts to buy when it was reversing up in Price, Profits or People?

As it is not easy to build a company like amazon, the same its not easy to hold on shares which creates immense wealth but suffers volatility, because of nature of business!

In India we have certain 1000 times wealth creator stocks like:

  • Infosys, Relaxo Footwear, Balkrishna Industry, Bajaj Finance, etc (not an investment advise)

So the whole point is investing is not easy, its not linear, it is going to be a rough journey, if you have a process, you have a probability to create wealth or else you need to depend on the luck factor!

Let us assume from 100 IPO Investors, how many would have holding amazon till today, do reply in the comment section!

Happy Investing!
RoMe!

For Disclaimer and Product details visit: https://turtlewealth.in

Join our Telegram Channel: https://t.me/turtlewm

InvestingTurtle Wealth

Mother of Black Swan!

In the Financial Markets we are much more aware with the term called “Black Swan” – an unpredictable or unforeseen event, typically one with extreme consequences, I have read almost all the Black Swans that has happened from the Tulipomania from 1600 till date, but what happened recently it has never happened in the History of Financial Markets.

The market does excesses, and all the previous Black Swan was the result of Excess Greed, Leverage and lack of Discipline, but this one is just different and something which was never in control.

So we all have this famous saying how much a stock or commodity can go down? 0 that’s it right? So many of the Retail investors buy penny stock as they think the worst it can do is to 0, nothing more than that, same in Options maximum premium can erode to 0, if 2 months back If i would have told you that a Commodity or a stock that can go below 0, you would have thought I am coming from a different planet all to gather right?

Crude Future Price closes as low as 1 Rs. on 20-04-2020

But that happened and I believe it was the “Mother of Black Swan”, due to privacy issue I am not naming the Client and the real quantity, but this has happened in real, I am sure we will learn the biggest lesson of our life from this blog!

Lets us name the Client Mr Jain, he bought 100 Contracts of Crude oil Futures at an average price of 1000 Rs. i.e. 10000 Crude (100*100) valued to 1 Cr. = Total Value of the Contract, as per our basic common sense the maximum loss of Mr. Jain would be 1 Cr. Only, but this time something happened where the whole Financial Industry was stunned, the exchange gave out the closing of the contract in Negative Value, which is unprecedented, so Mr Jain who had 1 Cr. Of Maximum approach had a loss of 1 Cr. + 2.8 Cr. (2884*10000) = 3.8 Cr., now no exchange nor any broker have a Risk Management of Negative Pricing, the broker would have maximum earned 1 Lac Rs. of Brokerage from the Trade that too Maximum, now it has ended up In a bad debt of 3 Cr., now the fight will go for years!

Most of the Investor/Trader bought Crude Futures on the logic of Catching the Falling knife, crude has decreased so much, and it may not go down more as it is the essential commodity of the world, as it will be a good short term trade for few bucks, also it is lock down so can make few quick money by trading on tho this, as the axiom says “Commodity prices cant go to Zero”, there are various reasons why Crude went in negative territory, but the fact is that buyer lost money that too below the gravity and that sums up for all!

  1. Never say Never, anything and anything is possible in the Financial World!
  2. Risk Management should be the most important virtue in the place of Return Management.
  3. Never hold stock on a  view that it is near to zero, what the maximum loss?
  4. Ask for the Maximum Risk In your portfolio vs. What’re the maximum Returns?
  5. Don’t catch the falling knife, most of the time you will be injured, this time some one was killed!

Regards
RoMe!

Disclaimer: This is just for Education and Knowledge purpose, for knowing more please visit https://turtlewealth.in
InvestingTurtle Wealth

When will this END?

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).
Source: Spider Software – NIFTY Daily chart from inception!

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
InvestingTurtle Wealth

Wimbledon’s Risk Management System

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.

InvestingTurtle Wealth

The new Era of Wealth Creation!

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.
InvestingTurtle Wealth

IS#2: “Promoter with Pistol”

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: Spider Software (Monthly Chart)
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.
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