Are you investing for Long term? Think again.

Hello Investor,

Alert – Simple Algebra required for understanding

It has been said that “Change is constant in life.” It is evident in our lifecycle. Life starts as an infant, to a school going kid, than to a college going teenager, to a family person and lastly to phase of retirement.

All phases comes with a change which we accept as human being.

When it comes to hard earned money, we question the rule of change. One must understand the importance of outperformance and underperformance. Let me explain the simple criteria considering current market situation.

  

Why Portfolio Reshuffling is important?

•      Imagine a situation of index value at 100 before Covid situation.

•      Due to Covid, Index falls from 100 to 80 (-20%)

•      At the same time, a performing scheme is outperforming index and falls only -15%

•      While an underperforming scheme is underperforming index and falls -25%

•      In an hypothetical situation, Index recovers from 80 to 100 which is 25% growth.

•      As the performing scheme fell less to 85 will become 106.

•      And the underperforming scheme fell more to 75 will become 94.

Case here to prove is loss can be recovered by patience but underperformance cannot be recovered.

Mutual fund investors must review and reshuffle portfolios at different time horizons.

Nishit Siddharth Shah

Two Months and Two stories.

Dear Patrons

Two Months and Two stories.

September 2018 – India’s GDP has grown by 8.2%. Highest in entire world. We are living in a country which is fastest growing economy in the world. Reasons,

• Increase in I.T. filling (More Direct Tax Revenue) and Consistent GST collection (More Indirect tax Revenue)
• Highest young generation among world population. Urbanization and Growth across sectors in tier II and tire III cities.

October 2018 – Stock Market in India has nosedived more than 4500 points (Apprx 12% down) in almost 1 month and investors have started to panic. Reasons,

• Crude price going up and reports that it will reach to 100$
• Depreciating rupee which is reaching almost Rs.75 now

What to do now?

• Currently Marketcap of Indian Stockmarket is 23% in discount with the corresponding GDP. As the GDP is higher, it means that economy is strong and sentiments are bad.
• Indexes have beaten down heavily. Largecap, Midcap, Smallcap are down 11%, 23% and 31% respectively. For Long term investor, Investing now is like buying Platinum at price of Silver.

Remember: There is “Regret of commissions” and also “Regret of Omissions”.

Should one not look at times of 2008 and 2013 where market bounced back at Rocket speed?

At Shalibhadra, we believe that ‘Regret of Omissions” is much greater. We don’t want any investor to be left behind in the growth story. We are actively calling investor to allocate some part of their surplus funds to allocate for Equities.

Nishit Siddharth Shah

How to save yourself from Mis-Selling?

Cobra Post Video disclosing Anti Money Laundering Activity by some leading banks has put a question mark in my mind “Growth at cost of Goodwill”.

When “Growth” bypasses “Values”, customer’s unrest arises.  Shareholder (Owner) asks for Growth in earning. Earning comes from customers. More earning is a result of aggression in Selling means more charging or find new ways of earning. So some “Not to do” (mis-selling) is being done to achieve the target growth.

Let us discussion this mis-selling first, then we will show you the way to overcome the hurdle.

Firstly, in last ten years we have seen various new investment opportunities have been introduced in the market. Investors now have experience that more the complicated product, more the chances of wrong investment decision. Initially investors should try to buy pure vanilla product. Jumping in to market to chase returns may be dangerous.

Secondly, Investor is not serious about his/her future goals. Some survey reveals that the young generation investors are investing just to save the tax. So the basic of future financial planning is not known to even highly educate young persons. They are more aware on new ways of spending.

Thirdly, the seller is not investor centric. Either he is loyal to his employer or his sales targets. Sometimes he tries to sell the well accepted products of the market and saves himself from blame game.

SEBI, RBI and IRDA have introduced various systems for consumer complaints redressal. However we always find news on mis-selling though intermediaries whether it is a bank or even individual advisor.

The introduction of Complaint Channel is welcome move. But can we dream the world of educated investors who understand at least basics of products? Before the seller makes any selling statement the investor should learn to understand the untold facts which seller intentionally or unintentionally hides. This can be possible by education. Investors should attend “investors Awareness Program” known as IAP. IAP is an initiative of SEBI and AMFI to educate investors to understand Inflation, Risk, Diversification, Benefits of Long term investing, Goal Setting, Asset Allocation, Taxation implication, liquidity etc. By attending IAP seminars, investors can avoid wrong investment decisions. The important part of such seminar is Question and Answers session. Sometimes question of other persons gives lot of knowledge as learning from experience of others will reduce wrong investing.

We find need of such IAP seminars and have decided to arrange sequence of Seminars throughout the month of August, September and October at the various locations of Ahmedabad city.

Such Seminars will be held on “No Sales Talk” basis. Talks will be in Gujarati, Hindi, and Easy English as per convenience of participants. Industry experts will deliver lectures and It will cover all aspects where mis-selling happens. Focus will be given on wrong talks, double talks and hidden facts by seller. Important discussion point is to understand Risk, Features of various Asset class and Importance of diversification through Asset Allocation as per risk appetite for optimum return.

At the end of every IAP, We are happy to invite you to join us for dinner so that individual questions can also be handled during one to one interaction. We will be happy to see you to attend the seminar with your spouse. You have to register with us to attend the seminar. We will offer you different dates and Locations. You have to select a suitable date for you.

So friends, join us in this educative IAP seminar. You can spread this message to your friends too and let us move forward from mis-selling to smart investing.