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Anil Poonia

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Investment Philosophies

What investors can learn from Kobe Bryant

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What investors can learn from Kobe Bryant

On 26 January 2020, the whole world was grieving, mourning over the loss of Kobe Bryant, aka “The Mamba”.

Who was Kobe Bryant?

Kobe was an American Professional Basketball Player. He played his entire 20-year career in the National Basketball Association (NBA) with Los Angeles Lakers and won 5 NBA championships.

He was an 18-time All-Star, 15-time member of the All-NBA Team, 12-time member of the All-Defensive team, and the 2008 NBA Most Valuable Player (MVP).  Apart from this, he is also known to the business world as a brand-builder, an investor and a coach to other athletes and company founders.

But most importantly he was famous for his attitude, and his so-called “Mamba Mentality”

What is the Mamba Mentality?

According to Kobe, the Mamba Mentality is a mindset that extends way beyond basketball or sports.

“We don’t quit,

We don’t cower,

We don’t run,

We endure & conquer

That’s Mamba Mentality”

It’s simple, if you have a goal or a dream, you need to apply the Mamba Mentality to achieve it. Everything worth achieving needs total focus and dedication.

Did you know: Kobe Bryant once said that he wanted to be remembered more for investing than basketball.

What investors can learn from him?

Mamba Mentality is all about focusing on the process, trusting in the hard work and perseverance when it comes to wealth creation in the Stock Market, the same thing is expected from every investor. 

Investment Mentality & Mamba Mentality goes in parallel. If you really want to create wealth you must invest in top stocks and hold them for the long term with the magic of compounding coming in and helping you build a huge corpus. As Paul Samuelson said “Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

One such investment platform that follows similar way is StockBasket– India’s first long term buy and hold investment platform. These are expert-curated ready-made baskets of stocks. All you need to do is to invest your hard-earned money & persevere the ever-changing market trends in long-term investment & trust in the process of StockBasket for your financial gains! StockBasket always urges its investors to stay invested for a minimum period of 5 years (Max – Forever) so that they can get the benefit of compounding and grow their wealth in the long term.

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Educating Investors

Types of Stock Market Analysis

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Types of Stock Analysis

If you are a person who is new to the Stock Market and is looking to go through the right way to explore the types of stock market analysis, then this blog is for you.

Stock Markets are highly unpredictable, and they can only be mere a gambling game unless you don’t study and invest in the right manner. Stock Markets would always be unpredictable, but with good research and knowledge, we can make some right decisions that can help us to create wealth.

There are various methodologies through which we can analyze the movement of the market. These methods are purely scientific and involve multiple factors like stock price movements, economy and the industry, chart patterns, company balance sheets and profit and loss statements.

Types of Stock Market Analysis:

  1. Fundamental Analysis
  2. Technical Analysis 
  3. Quantitative Analysis 

Fundamental analysis

Fundamental analysis is the study of a company’s stock prices in relation to the factors affecting the organization such as its financials, revenue sources, profitability, expenses etc. Fundamental analysis of the stock markets is to predict the movement of the stock prices in the long term. 

Three essential steps of fundamental research on any stock that needs to be followed are: 

  1. Analyze the company 
  2. Analyze the industry 
  3. Analyze the economy 

The above steps can be followed in a top-down approach or a bottom-up approach. 

Refer article: How to manage your own investment portfolio

Fundamental analysis involves assessing the ‘fair value’ of a company and then evaluate whether the stock prices are undervalued or overvalued.

‍Technical Analysis

Analyzing the stock prices on the basis of statistical data such as volume, moving average, price movements, chart patterns etc. is called the Technical analysis. These analysts believe that stocks follow certain patterns on the chart which have occurred previously and will again repeat causing an upward or downward movement in the stock price. Technical analysis can be considered more on predicting the direction of the stocks, unlike fundamental analysis.

Quantitative Analysis

The third type of analysis is the Qualitative analysis which uses a mathematical formula to predict the price movement of a stock based on certain conditions, if this formula satisify those conditions then a call of buy/sell is given. Quantitative trading analysts (also known quants) use a variety of data including historical investments and stock market data to develop trading algorithms and computer models. 

Conclusion

All the three types of stock market analaysis have thier own pros and cons and none of them can be said as the only perfect way to analyze the stocks. In many cases it has been seen that for a particular stock a technical analyst mai suggest an upward movement and at the same time a fundamental analyst may suggest a potential downward movement. It is always recommended that investors do thier own research and then invest in the stock market.

For beginners as well as seasoned who wish to invest can start their wealth creation journey with StockBasket 

What is StockBasket?

As the name suggests, it is an expert-curated ready-made basket of stocks or mini portfolios. The baskets are curated after considering 60 Intelligent stock rating parameters and evaluating over 2 crore data points. StockBaskets are categorised as per an individual’s financial goals, long term themes, risk appetite and time horizon. So for all those who want to invest in stocks but don’t have the adequate knowledge can invest in these expert-curated baskets, by opening a free account on StockBasket

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Educating Investors

6 tenets of The Dow theory

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The Dow Theory

Any investor, expert or novice, who has been in the market must have heard a term used by many, which signals what trend the market is in, that popular term is the “The Dow Theory”. While the term baffles many, it makes perfect sense to some.

The theory was derived from 255 Wall Street Journal editorials written by Charles H. Dow (1851–1902), journalist, founder and first editor of the Wall Street Journal and co-founder of Dow Jones and Company. The popular Dow Jones Industrial Average (DJIA) also has its roots from the same.

Following Charles Dow’s death, William Peter Hamilton, Robert Rhea and E. George Schaefer organized and collectively represented “Dow Theory,” based on Dow’s editorials. It is amusing that Charles Dow never used the term Dow Theory nor did he use it as a trading system.

Watch our video to learn about dow theory

Dow Theory, put in the simplest form states that all the stocks in the market move in a trend. It could be an upward trend or a downward trend. There are some basic tenets of Dow Theory which help us understand the system better and use it to our advantage.

The Six basic tenets of Dow Theory can be understood as given:

  1. The three movements: Dow stated that the market action can be represented by the movement the stock price makes on the charts. He compared the stock movement to waves in the ocean. Any stock would move in 3 types of ways viz. Primary movement, Secondary movement and Tertiary movement. The primary movement or wave is the overall trend the stock or the market is in. It can be compared to a Tide in the ocean. The primary trend may last from several months to several years. The primary wave consists of a number of secondary waves just as the tide consists of small waves. The secondary trend may last from 3 weeks to 3 months. The final and the most insignificant trend is the tertiary which is the daily movement in the stock price much like the ripples in the sea.
  2. Accumulation and Distribution phases: Each stock can be in the accumulation phase, frenzy phase and distribution phase. Astute investors accumulate the stock when the rest of the market is quiet. As the rest of the market participates, we see heavy buying and a lot of frenzies. Smart investors distribute it at the top as the stock later heads for frenzy selling.
  3. The average discounts everything: It is assumed that any news pertaining to stock is already factored into the stock price. The average or the index discounts every such news.
  4. The averages must conform each other. The US stock market had the Industrials index and the Railroad index. Dow Theory states that sooner or later, both the indices move in sync. The averages must conform each other or else, the trend is not confirmed.
  5. Volume moves with price: Any change in the stock price must be confirmed with the change in volume. Any divergence in the price and volume action must be looked at with suspicion. The price must move with the volume.
  6. Trend exists until we see reversal: The trend in stock continues to exist until and unless we see clear indications of a trend reversal. The intermediate movement is just the market noise and must be ignored.

Although the Dow Theory was formed almost a century ago, the principals still hold. We may see a lot of critics of the Dow Theory disregarding its validity. But an astute investor must have an open mind and try to analyse what investing pattern suits them the best.

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StockBasket decoded

How to change the password of you StockBasket app

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How to change the password of you StockBasket app

To change the password of your StockBasket app all you need to do is to follow this simple process:

Step 1: Login to your StockBasket app.

Step 2: From Home screen go to My Account.

Step 3: Click on Settings and Profile sections, then click on Change Password.

Step 4: You will be asked to enter your Old Password, after filling the old password you need to enter your new password two times to avoid any errors, click on submit and pat your back for a job well done.

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StockBasket decoded

How to Rebalance/Repair order on StockBasket app

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How to Rebalance/Repair and order of StockBasket

To Rebalance/Repair order on StockBasket app, all you need to follow is this simple process:

Step 1: Login to your StockBasket app.

Step 2: From Home screen go to My Account.

Step 3: In Your Orders section, you will see the Pending Rebalances and Orders option, click on:

Rebalance – In case of pending rebalances, click on rebalance to rebalance you basket

Click on Apply Update

An that’s it your job is done!

Note: What is a Rebalance? We at StockBasket continuously monitor every basket. Our research team takes corrective action of removing under-performing stocks and adding better stocks that increase the overall performance of the basket bought to you.

In case of Broken order click on Broken order to check your order is broken.

Click on Fix This Order

Click on Fix This Order, and your job is done.

Note: What is a Broken Order: An order is categorised as broken when it is not executed partially or fully. There are multiple reasons for the order to be broken including rejections, circuit limits etc. In order to fix a broken order, you might need to add funds to your account or reconfirm a change in order fields.

Additional Links

To Add funds you can refer our article on How to Add Funds to your account.

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StockBasket decoded

How to add funds to your StockBasket account

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Add Funds StockBasket

Adding funds to StockBasket account is a very simple process all you need to follow are these simple steps:

Step 1: Login to your StockBasket Account.

Step 2: Click on Add Funds button, you will be redirected to the Pay In page, select the segment (ex. CASH/FO/CUR), your preferred bank name, enter the account number, select the transfer type (either NetBanking or UPI) and enter the amount you want to add.

Step 3: Click on submit, an OTP will be sent on your mobile, enter the OTP and submit and your job is done 

In case you have started a StockBasket SIP you must always go for an auto-debit mandate or you need to keep sufficient funds in your account for smooth transactions.

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StockBasket decoded

How to withdraw funds from your StockBasket app a/c

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Withdraw funds StockBasket

To withdraw funds from your account all you need to follow is this simple process:

Step 1: Login to your StockBasket app.

Step 2: From Home screen go to My Account.

Step 3: In Your Funds section, you will see the Withdraw funds option, you will be redirected to Pay Out the page.

Step 4: Enter the amount that you want to withdraw (ex Rs. 1000), submit by clicking on Equity Payout and your job is done.

Note: Once the withdrawal request is processed, you should receive credits in your Primary Bank a/c within 24 hours, ( Fund withdrawals requests are not processed on Saturday’s and requests on the weekend will be processed on the following Monday).

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Educating Investors

Portfolio Strategy: Concentration vs Diversification

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Concentration vs Diversification

Any retail investors can get in doubt when asked about which among Concentration vs Diversification would be a good portfolio strategy for his portfolio.

Even some of the most excellent guru has some different approach to this problem. Some of them advocate spreading your portfolio, i.e. to invest in various asset classes to limit the risk related to it.

Warren Buffett, the famous investors say “Diversification may preserve wealth, but concentration builds wealth.” on the other hand Jack Bogle the founder of Vanguard quotes “Don’t look for the needle in the haystack. Just buy the haystack!”

 Let us analyze all the arguments and see which portfolio strategy works for you. 

Let us first discuss about Concentration strategy:

What is a Concentrated Portfolio?

A concentrated portfolio can be said a portfolio that holds a small number of different securities to have a level of diversification. It can consist of 10 stocks or even less than that. A concentrated portfolio may increase your risk but with higher risks comes higher reward. One of the worlds most successful investors Mr. Warren Buffett himself advocates this idea and he says that ‘‘An investor should act as though he had a lifetime decision card with 20 punches on it.” that means with every investment decision that he makes, his card will get punched, and he will be left with fewer cards for his rest of the life.

Let us also discuss the risks related to it, the first risk that comes with concentration portfolio strategy is Portfolio concentration risk, so 

What is Concentration Risk?

It is a banking term, which is used to describe the level of risk in a bank’s portfolio arising from the concentration to a single counterparty, sector or a country.

More concentration leads to less diverseness and therefore, the returns on the underlying assets are more correlated.

With Securities Concentration there is a risk of suffering losses that may occur as the investors have a large portion of their holdings in one particular investment class or market segment, in relation to their overall portfolio.

This was all about Concentration Portfolio strategy, let us now discuss about Diversification strategy

What is a Diversified Portfolio?

Diversified Portfolio means a portfolio in which the assets don’t correlate with each other. It lowers your risk, as no matter what the economy does, few of your asset classes will definitely perform. The main reason why risk will be reduced because it’s rare that the entire portfolio would be wiped out by any single black swan event. 

Benefits of Diversification: 

Diversification strategy reduces the overall level of volatility and risk. The simple reason is because of the simple reason that when investments in one area perform poorly for you, the other investments can offset its losses. 

While Diversification is a good strategy to reduce the risk, it can also be a disadvantage for you as over-diversification can lead to low returns. To know more about Diversification you can read our blog Power of Diversification 

Summary 

Investors who aim to beat the market can choose Concentration vs Diversification as per their risk appetite.

While Diversification strategy is a good way to preserve wealth, Concentration is often a better way to build a fortune.

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StockBasket decoded

How to Sell a basket through StockBasket app

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How to Sell a StockBasket

StockBasket’s investing philosophy says that you need to invest in good stocks and stay invested for the long term. This can help you to start your wealth creation journey and help you achieve all your financial goals early.

But even though you need your money due to some emergency or some other personal work you can sell your StockBasket.

To Sell a StockBasket all you need to do is to follow the below process:

Step 1: Login to the app.

Step 2: Go to your Investments, select the basket that you want to sell.

Step 3: Click on

Step 4: Click on Sell this Basket and your basket will be sold at that current price

We then too, would always recommend you to hold your StockBasket for superior returns in the long term


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