Confidence as a service

When I set out to think about what I would write on this page, the markets were riding a raging bull, with the Sensex at an all-time high. As I'm putting it down on the screen, it has had a sharp decline for a couple of days, which has dampened the smiles a bit.

Of course, nothing materially important has happened. The declines have been barely a couple per cent - it just looks big in absolute points because the base is so high now. Over the past year, the Sensex is up 11.3 per cent, the BSE MidCap index is up 24 per cent, and the much-maligned BSE SmallCap is up 26.6 per cent.

In short, there is nothing to panic about. Or is there? The thing is that whenever the markets are at a high or near a high, there is always a certain proportion of investors who are in a constant state of worry about when to cut and run.

There are actually three kinds of investor behaviours when stocks do fall. When stock prices decline, numerous investors hastily exit, fearing that their stocks may never rebound, solidifying their losses. On the other hand, some investors maintain their investments, believing the dip is momentary and expecting a recovery.

Meanwhile, waiting in the wings are the real champions - a select group seizes the opportunity of reduced prices to increase their holdings, fully understanding the stock's true value.

Somehow, it's the first group - the ones who are ready to cut and run - who get the maximum mindshare. However, their arguments are generally the least logical. I'm not saying that stocks that fall must necessarily rise again. As we know well, plenty of stocks do not ever rise again and essentially destroy all value for shareholders.

Instead, the moral of the story is that you need to know your stock, the business, and your investment case and have confidence in your knowledge. It's essential to have a clear and accurate understanding of your investment thesis.

This is precisely what Value Research Stock Advisor provides. Instead of just offering a roster of stocks to consider, we present the investment rationale. Moreover, our team of researchers and analysts continually revisit and refresh this rationale. Members receive not only the recommendations but also the reasoning behind them. Investing is a marathon, and having guidance can be invaluable.

While Value Research Stock Advisor doesn't claim to make every decision for you, we do act as your dedicated research support, aiming to empower you as an investor.

Of course, anyone can claim that, but there are some special features to our approach. In fact, some time back, a colleague of mine had the opportunity to lay down the basic principles on which we operate in response to a question someone asked on Quora. The context was the recent hiccup in small-cap stocks. An explanation was in order given that we have many small-cap stocks in our roster.

Here is what we will never do

• We will never ask you to invest your hard-earned and even more hard-saved money in unproven hidden gems, however promising they may appear.
  
• We will never ask you to invest in unproven small caps, no matter what the market says.
  
• We will never ask you to invest in hot, momentum stocks, irrespective of the lofty stories around them.

Why will we never do that?
Because, in our experience, such hidden gems, unproven small caps and hot stocks almost always lose their investor's money entirely when the markets eventually fall. Pick up the hottest small caps of any long bull market run and see how many survive several years later.

Here's what we will do for you
We will ask you to invest in:

• High-quality established companies that are leaders in either small niches or leaders by a wide margin.
  
• That is run by competent and trustworthy management, and,
  
• Earn significantly higher returns over their cost of capital.

At the end of the day, as our own experience shows, small caps are not significantly riskier than larger stocks and can earn higher returns. The principles of sensible, conservatively guided investments that we follow are applicable to all stocks.

The final package can satisfy all types of investors with a variety of goals. When you become a member of Value Research Stock Advisor, you get everything.

That's a lot of resources, but of course, no one can compel you to utilise them all. Ultimately, what you derive from these tools is up to you, but the primary benefits are the empowerment and assurance in the validity of your investment thesis, ensuring you remain steadfast.

Many investors start with sound choices, but amidst market fluctuations, they waver and exit prematurely. Our role is to equip you with the necessary insights to bolster your convictions, especially during uncertain times.

However, the true distinction of Value Research Stock Advisor lies in its members evolving into genuine investors rather than merely passive consumers of investment data. We invite you to be a part of this empowered community.