If I was to sum up what Value Research Stock Advisor does for you, I would say that it makes the hardest parts of your job easier. As an equity investor, getting hold of new ideas is not just easy but also fun. All of us equity investors like the thrill of getting to know about a company that we have not invested in and then investing in it and making money out of it.
However, in between these enjoyable activities come other stages which involve a lot of dull, boring, painstaking and careful work. That is what our team does for you - the vetting of dozens of ideas down to a few, the incessant checking and double-checking of the data, the months and years of constant monitoring. In short, the non-fun parts of investing, delivered at a modest fee!
Nominally, Value Research Stock Advisor is focused on quality stocks which are available at a reasonable valuation with a long-term perspective. But I'm merely stating the obvious here. Everyone in the investing world says this or something like this.
At Value Research, we break down these goals into many steps and a matrix of checks and balances that ensure that the individual elements - quality, value and the long-term perspective - all stay intact. It's a process that combines data as well as subjective judgement, both in a perfect balance.
This balance was beautifully brought out in a most interesting book I read recently. This was Narrative and Numbers: The Value of Stories in Business' by Aswath Damodaran, who is a well-known professor at the Stern School of Business, New York University. Damodaran teaches equity valuation and has a tremendous reputation in the field. Conventionally, equity valuation has been seen as a purely (or mostly) numbers driven activity. In Narrative and Numbers, Damodaran argues that the numbers-only approach is quite inadequate. Valuing investments by numbers alone, without understanding the story, leads investors to a position where they don't really understand anything meaningful. Or rather, they may understand the what but will have no perception of the why and the where.
Conversely, there are many businesses, including most of the 'startup' type, where the narrative is great, but the numbers don't match up to the narrative. In fact, the narrative is all there is and a reliance on the narrative alone leads to misunderstanding and mistakes in valuing the business.
In the process we follow at Value Research Stock Advisor, the numbers validate the story and the story validates the numbers. We make sure that the validation works in both directions and point to the same conclusion. The temptation we never fall for is to let one of them compensate for a weakness in the other. That's always a mistake in equity investing.
The other important element that we deliver to investors is the continuous evaluation and revaluation of what we have recommended. The numbers and the narrative must stay intact and must keep moving forward. At no stage can an investor afford to get ahead of the reality or to fall behind it. This second part is just as important. Investors make mistakes when stocks decline as well as when they rise fast.
I remember paying `40 a share buying a stock many years ago. The stock eventually became one of India's greatest bluechips. When it crossed `80, the broker started chasing me to sell because as far as he was concerned, the job was done and it was time to churn my holdings and earn some commission. I didn't listen and the stock eventually became an 345-bagger, for an extremely large value of 27.6 lakh. It's still going strong and selling it at `80 because the money had doubled would have been a colossal mistake. We not only plan to point our members to such stocks but prevent them from making this kind of mistake. That would be far more valuable.
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