In times of crisis, revisiting the investing thesis can be reassuring. What if there is none?
13-Dec-2021 •Dhirendra Kumar
A few days ago, we witnessed the latest cryptocurrency crash when the government announced its plan to legislate a 'prohibition of private cryptocurrencies' in the winter session of parliament. The ensuing panic was a sight to behold.
Of course, panic among investors is not an unusual thing. On social media, less than one week earlier, the listing of the Paytm IPO had produced a panic amongst those who had been allotted any significant amount of stock. Even as I write this page, the Indian equity markets have had a fairly volatile month. Coming on the heels of a relentless bull run that started soon after the initial virus crash had settled, investors are a little nervous. Moreover, since this period has seen a large influx of new investors, the nervousness is a little more palpable.
Even so, what do equity investors do when their investments get shaky? At least, what should they do? During this month, a number of stocks in which I have personally invested have had this high volatility, obviously. What I did was simple. I went back and examined the original investment thesis that I had, on the basis of which I invested in the stock and am holding it. In each case, it has been pretty obvious to me that the original logic for buying that stock still held. In fact, in most cases, the occasionally lower price meant that it made sense to acquire some more of the stock.
Incidentally, going back to the Bitcoin panic of November 23, why don't the crypto people do the same? When the prices fall, why don't they go back and re-examine the thesis, the logic on the basis of which they bought? The answer is pretty obvious. There is no thesis. There is no logic. Or rather, the thesis is that prices are going up, so they'll continue to go up. Even in the case of Paytm, no matter how panicky, investors have some logic, even though it might be faulty.
What this means is that in equity investing, since volatility is a way of life, the investment thesis and the confidence in it is of the utmost importance. Without that, an investor will be prone to cut and run every time something happens. This will eventually result in repeated buy-high-sell-low episodes and result in negative returns.
This is exactly what Value Research Stock Advisor does. It supplies not just a list of stocks to buy but the investment thesis as well. Not just that, our team keeps re-examining the thesis and keeps it updated and fresh, so to speak. Members get not just the 'what', but the 'why'. Since I practise what I preach, my stock portfolio has a near-complete overlap with what Value Research Stock Advisor recommends and I personally experience this every time that these stocks have some ups and downs.
This is a long game and one in which you need all the help that you can get. That's the role of Value Research Stock Advisor. We don't pretend to take all the decisions for you - we are your research-assistant team but our goal is to make you the investor.
Let me just recap what you get when you become a member:
To emphasise, what you get out of all this is what you make of it, the most important parts being empowerment and confidence. Many investors make good choices but in the ups and downs of the markets, they lose confidence and bail out too early. What we do is give you all the inputs you need for you to maintain the strength of your convictions. A major part of our job is to keep in touch and support you during the times when things are looking shaky.
Finally, recommendations are just that - something that we recommend you do. The real achievement of Value Research Stock Advisor is that all those members are becoming real investors themselves and not just consumers of investment information. It's time for you to join their ranks.