It's hard being an equity investor, and perhaps harder still to advise others on equity investment. But I'm not complaining, because it's incredibly rewarding. I don't just mean financially, but in the sense of doing something that builds a community of people who will learn a lot, earn a lot and learn to earn a lot.
Of course, there are no certainties. In equity investing, on any given day, there never are. That's what makes it hard being an equity investor. The everyday situation is terrible on so many days, and yet the total experience is fabulous. I see so many equity investors who are constantly stressed. There's the stress of choosing companies, and the fear of having made the wrong choices. There's stress when the markets are rising because they may fall soon. There's stress when your stocks are doing something different compared to the rest. For some people, there's additional stress when one's own stocks are doing well but others' are doing even better. And yet, after some years of such daily stress, investors who stay focused start noticing how well their money has grown on the whole! Somehow, the days and weeks of worry and stress add up to years of happiness.
Knowledge and confidence
And yet, it's not as if the stress is compulsory. This reminds me of something I read about - a technique for reducing passenger stress that some airlines in Europe are trying. A lot of people have a deep fear of flying and are always hyper-stressed when they are in a flight. The aircraft manufacturer Airbus has discovered that if such passengers can listen in on the conversation between the pilots and the air traffic control, then they don't feel scared. Why is that? Simply because they know what is going on. They can hear that the pilots and the ATC are carrying on their work in a calm and routine manner and whatever the passengers are imagining in their fear is not justifiable. Information and understanding are the key to managing what tends to be a stressful situation.
I think there's an equivalent in equity investing as well, and that's the same. If we are confident about our investments and we know and understand the logic of why we chose each stock, and we are keeping an eye on how business is progressing for each of them, then why would there be any stress? That's the equity-investment equivalent of listening to the pilot and the ATC.
Funds, stocks, and something more
However, what many investors struggle with is that they don't get involved in any way of actually acquiring this information and knowledge and thus never get confidence. The simplest thing to do - and that's something Value Research has been involved in for decades - is to invest in an equity mutual fund. That way, you can offset the research and the knowledge part to someone else (the fund manager) and change your task to a relatively easier one of choosing and tracking mutual funds. There are still a lot of mutual funds, but with the help of Value Research, it's not that difficult to choose some good funds and then keep track of your investments.
However, for some people, it makes sense to take the next step, which is to study, understand and choose stocks themselves. That's the goal that Wealth Insight serves, and has been serving for 12 years now. During these years, we have had tremendous success in terms of the ideas that we have promoted for choosing stocks as well as the actual stock choices that we have made. In fact, the actual stock performance for the stocks we have selected as investment-worthy in the magazine has been about 23 per cent CAGR over the years.
An advisor of your own
Still, a certain subset of our readers wanted a different deal, a different kind of product. They wanted a more direct and focused set of stock recommendations that we actively maintain, detailed research about these, as well as a set of digital tools that would enable them to research any other company and move forward as informed investors themselves. Eight months ago, after years of conceptualisation and many months of active development, we launched a premium service that provided just that. Along the way, we evolved - and tested - a research team and a research methodology that built upon our experience with the magazine and developed the whole approach further.
The months, since the launch of the service in early November 2017, have been quite interesting. The equity markets did fine till the end of the January but have been quite circumspect since then. This has become a huge opportunity for the many thousands of subscribers that the service has by now. In November 2017, when we launched our premium Value Research Stock Advisor service, our research team had a large list of companies that would be great investments on the basis of management quality and financials. And yet, so many of them were too expensive. Therefore, by the principles of value investing that are the basis of a profitable investment, we had to hold back from recommending some great ones to our customers. However, since February, many of our A-listers have become available at great value. As we continue to release two new recommendations every month in Value Research Stock Advisor, our subscribers' portfolios are building up at low valuations that bode well for the future returns that they will generate. Higher potential returns, with transparency of research and deep knowledge - this is the core service that the Stock Advisor provides. But there's much more that our subscribers are taking advantage of.
A lot more than just a list
Our team has designed and implemented a Stock Screener system (check the gif below) that is by far the best you will find. This is a unique tool and nothing like it has been available for the Indian equity investor till now. It enables you to screen stocks based on any kind of a financial criteria that can be applied to a company's financial and market data. But that's not all.
We also have something even more interesting - a set of predefined screens that are based on different types of criteria. In this, there are the financial screens that are familiar to the readers of our magazine, like 'attractive blue chips', 'discount to book value', 'growth at reasonable price', etc. However, we also have what we call the 'Value Guru' screens. These are stocks that are automatically filtered and screened according to the investment methodology followed by the five gurus we have chosen, namely, Benjamin Graham, Joel Greenblatt, John Neff, Peter Lynch and Walter Schloss. While we have started covering these in Wealth Insight, having an interactive version, on top of which you can apply any other criteria makes a big difference.
Value Research Stock Advisor has been a long time coming. However, like all our products and services, we have created something that matches our standards and something that all of us ourselves use for our own investments.