The lockdown has inspired many people around the world to experiment with new stuff. It has also made me discover new, digital ways of staying in touch with readers of Value Research publications and members of our websites. One new way that we have just begun is a live weekly Q&A between me and our website members. We have started doing this on the Value Research channel on YouTube, on our Facebook page and on Twitter. You can watch the earlier videos there as well as get information about upcoming ones. The discussions are wide-ranging, from mutual funds to stocks to the pandemic's likely impact on businesses.
As it happened, the very first question of the very first Q&A was one that is of the greatest relevance to new members of our premium stock-recommendation service Value Research Stock Advisor. A member asked me, "Can we go with Value Research stock recommendations in this market?" In a sense, the answer can be just a short (and accurate) 'yes' because if I didn't think that one could invest in this market, then I would have paused the whole service, told members that there was nothing to do for the time being.
Except that it's not. In fact, it's quite the opposite - this is an appropriate time to invest, whether you are a seasoned investor or a newcomer or (and this is the most difficult of all) a punter/day trader trying to convert to real, sensible investing.
However, just the 'yes' won't suffice, I must explain things a little more. You can buy the stocks, but we have almost 40 and it's not a great idea to start in bulk. So, let's understand what you should do. We launched this service more than two-and-a- half years ago, in November 2017. At that time, we launched with 10 recommended stocks. As the months and years went by, we added a lot of stocks and removed some and now have close to 40.
Additionally, last month we created a 'Best Buys Now' list. This is not additional to the recommendations but a selected subset. So, the basic idea is that if 40 stocks are too much for you to invest in, then at this point of time, you can concentrate on building positions in the 'Best Buys'. Best Buys solve the problem of plenty, which some of our members cannot cope with. They do not reflect any problem in those stocks that are not in the Best Buys list.
Of course, there are some additional ground rules for starting off. One is that one must be willing to invest for many, many years. That means that the money that you put into these stocks should not be needed for that kind of time frame. Another basic rule is that you must not rush in with a large amount of money at one go. Of course, this is always true, but more so now when we are clearly in an unpredictable time. Whatever amount you have set aside for stocks, invest it in monthly or fortnightly tranches. This is the same principle as SIPs in mutual funds and gives you an average cost of entry that is well-suited to future gains.
Remember, regardless of how long the COVID pandemic lasts and what shape the economy recovers in, the basic principles still stand. In any case, the basic principles of equity investing, which should be followed by every Stock Advisor member, still stand:
One, don't have a narrow portfolio: you should own at least 10 to 20 of the recommendations of Value Research Stock Advisor.
Two, you should stay invested for at least five to seven years, regardless of what is happening in the equity markets at any given point in time. Shorter than that, you will likely not realise any significant returns.
Three, the COVID episode looks like a calamity, and it is, but market declines are a great time to invest in these fundamentally strong stocks. This principle never changes. Do not run scared by crashes.
Four, keep in cash (or rather, fixed-income assets) perhaps 10 to 20 per cent of the total amount you have mentally assigned to equities. This will enable you to exploit declines ahead and thus raise your eventual returns. However, never forget that what makes stocks great is their long-term business prospects, not the short-term price gyrations.
Eventually, beyond the 'Best Buys Now', you will be investing in a larger set of our recommendations. How many, and to what extent, depends more on your investment size than on these companies.
Value Research Stock Advisor is a premium service where you get promising stocks along with their full analyses. We also actively track the underlying companies for you and keep you posted on the major developments in them, including when to sell a stock. Additionally, members get exclusive access to a range of tools and data which they can use to study any other stock. You can subscribe to the service here.