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How to Invest for the Long Term

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When you are quite busy with your regular schedule and can devote limited time, say not even on a weekly basis, Your job then is to simply identify the right set of funds and fund managers, invest money regularly and track performance regularly. – PowerPoint PPT presentation

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Title: How to Invest for the Long Term


1
How to Invest for the Long Term
By Peeyoosh Chadda Executive Vice
President Edelweiss Financial Services
Limited Sandeep Raina Expert Research
2
Follow a disciplined approach
3
Follow a disciplined approach
  • Have an approach, if you are
  • Trading or
  • Investing
  • Each has a distinct need for a discipline which
    needs to be followed
  • We focus on long term investing here
  • Look at markets as a place for long term wealth
    creation
  • Markets are not a lottery
  • Do not panic when the markets correct or invest
    only in times of euphoria
  • Refrain from relying on tips do your homework

4
Understand your investment options
5
Understand your investment options
  • Understand the investment options to participate
    in equities
  • Two basic investment options are
  • Mutual funds Regular investing and SIPs
  • Direct investment through stocks
  • Lets have a look at the options

6
Understand your investment options
  • Investing through Mutual Funds Regular and SIPs
  • When you are quite busy with your regular
    schedule and can devote limited time, say not
    even on a weekly basis
  • Your job then is to simply identify the right set
    of funds and fund managers, invest money
    regularly and track performance regularly
  • The fund managers are the experts they devote a
    large part of their time towards stock research
    and analysis, and are trustworthy in terms of
    investing on your behalf
  • Good funds can add a lot of value, heres a look
    at some of them

7
Source Valueresearchonline
8
Understand your investment options
  • Direct investment in stocks
  • When you can devote enough time in your regular
    schedule towards analyzing and researching
    companies (at least five to seven hours per week)
  • You have sufficient knowledge of financial as
    well as other industry-related metrics
  • You have the ability to identify and track a
    particular sector where you can identify trends
    an edge
  • You can resist tips / other temptations

9
How to pick a stock
10
How to pick a stock
  • Identify your style of investing
  • Investing styles primarily fall under one of
    these
  • Value investingThis is when an investor looks at
    a bargain in terms of how a stock is valued,
    i.e., identifying stocks at deep discounts to
    their asset values, liquidation values or
    replacement values
  • Growth investingGrowth investors look for
    companies that are experiencing a rapid growth in
    their earnings, typically companies growing by
    upwards of 20 every year

11
How to pick a stock
  • Turnaround investingTurnaround specialists look
    at companies in a distress state currently, but
    which could be potential candidates for
    turnaround in operations. This could be triggered
    by change in business model, change in management
    or change in balance sheet structure

12
How to pick a stock
13
How to pick a stock
  • Large CapsTypically companies which are large
    and have a proven long-term performance track
    record. Market cap exceeds INR 5,000 crores
  • Mid CapsTypically companies at an expanding
    stage of product/service acceptance and
    witnessing steady growth in their business.
    Market cap in the range of INR 1,000 to 5,000
    crores
  • Small CapsTypically companies at an early stage
    of product/service acceptance and subject to
    change/competition/substitute products/
    technology. Market cap less than INR 1,000 crores

14
How to pick a stock
  • Key parameters to look at
  • Growth
  • Capital Efficiency
  • Leverage
  • Valuations

15
When to sell a stock
16
When to sell a stock
  • Deteriorating fundamentals (Slowdown in growth,
    increasing competition, reduction in profit
    margins, etc.)
  • The stock price has appreciated to such an extent
    that valuations are beginning to look expensive
    on multiple fronts
  • A better substitute is now available versus the
    current stock you are holding, and with capital
    being limited, you sell the current stock to buy
    the new one

17
Portfolio monitoring is not optional
18
Portfolio monitoring
  • Portfolio monitoring is an ongoing exercise that
    you need to conduct to be aware of the
    performance of your portfolio and take corrective
    actions as needed
  • This involves tracking day-to-day events / news
    in the sector/ stocks you hold
  • Once the monitoring activity is put in place, the
    next logical step is to take corrective action in
    terms of reducing exposure to current holding or
    adding exposure to a current / new holding based
    on the analysis
  • In the case of mutual funds as well, a similar
    monitoring activity has to be undertaken

19
Using your guide Edelweiss.in
20
Using your guide Edelweiss.in
  • In order to simplify and enrich your investment
    decision-making process, you can take full
    advantage of your guide, Edelweiss.in
  • At Edelweiss.in, you have full access to
    Edelweisss full range of coverage on macro
    economics, sectors and over 200 stocks.
  • Further, you get research reports daily, tracking
    Indian corporate news, market movements, thematic
    reports across sectors, economy and asset
    classes.

21
Stocks you should buy
22
Bajaj Auto
Second largest 2 wheeler manufacturer, set to
benefit from increasing two wheeler penetration.
23
ITC
Cigarettes business to remain robust, FMCG the
trump card, classic domestic consumption bet.
24
ICICI Bank
Banking revenue set to grow 5.3x to Rs 10.6 Trn
over the next 10 years, ICICI Bank is a
front-runner to capture this opportunity.
25
Thank You
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