Start with the negative

There's an old joke/quote about sculpting, which is sometimes attributed to Michelangelo. That's a beautiful statue, an admirer said to the great sculptor. It must be so difficult to make such a beautiful statue.

"It's very easy," said the sculptor, "You just take a block of marble and chip away the parts that are not the statue."

Let's look at our Value Research Stock Advisor. What do we do? We publish a list of stocks which we think you should invest in. However, we take the entire universe of stocks and remove those you should not invest in. I'm not just adapting the old joke to what my team does. This is a good description of our methodology and has played a strong role in our success. Just as Michelangelo saw the statue within the marble, waiting to be revealed by removing everything that was not the statue, we applied a similar philosophy to selecting stocks. In a vast ocean of investment opportunities, our task is akin to identifying the true masterpieces hidden within.

However, to start with, we systematically eliminate the stocks that don't meet our stringent criteria. This exclusion process not only simplifies the decision-making process for our subscribers but also minimises their exposure to unnecessary risk. It's a method that requires patience, precision and a deep understanding of what makes a stock truly valuable.

Throughout the years, Value Research has refined this unique method for assessing and selecting high-quality stocks. Our approach starts with the broad spectrum of publicly traded companies and progressively applies various criteria, filters and assessments. From our vantage point, we've come to recognise that creating a strategy for choosing the right stocks inherently involves identifying and excluding the wrong ones. We've established specific criteria that serve as definitive red flags for any stock. Regardless of its appealing attributes, if a stock exhibits any of these negative indicators, we categorically exclude it from consideration. We then employ a mix of qualitative and quantitative evaluations to whittle down our list to a curated selection of companies we recommend for investment.

This ruthless elimination of stocks with any kind of problem is what has made our recommendations list so stable. In more than eight years of operation, we have recommended 99 stocks, 56 of which are still on the buy list. Eleven are on hold, and only 32 had to be removed from the recommended list.

Interestingly, this 'positive-through-negative' approach mirrors our advice to mutual fund investors regarding our widely respected star rating system. Investors always overthink the difference between, say, four and five stars. However, your job is done if you steer clear of the one- and two-star funds. The rest will fall into place. It's very similar to stocks. Eliminating questionable investments is a huge first step.

In a time like this, when the markets have been rising sharply and are thought by many (including SEBI!) to be hiding overvalued stocks, this approach serves investors very well. When the markets are booming, you may buy some overvalued stocks.

In fact, you may have no alternative. However, if the basic quality is ensured, it will work out fine.

Of course, this is an extensive research task and requires a team that follows a rigorous process. That's where Value Research Stock Advisor comes in.

Let me recap what you get when you become a member:

• Three ready-to-invest portfolios—Long-term Growth, Aggressive Growth and All-Weather—so you can pick the one that fits your temperament and start the day you join, or build your own from our full recommendation list.
• The complete research behind every recommendation: the business and its competitive strengths, the financial track record, the management, the risks, and the price we think is sensible. If you can't see why we recommend a stock, we haven't done our job.
• Clear buy, hold and sell guidance, with the reasoning behind every call, so you're guided through the entire holding period, not just the moment you buy.
• New recommendations the moment our analysts are ready. And a Stock Advisor Note within hours of anything that matters, whether it's a sharp market fall, an acquisition or a change in regulation, telling you what happened and whether to act or sit tight.
• An Investment Planner that spreads your capital across the recommended stocks, whether you're investing Rs 5,000 a month or a lumpsum, so you know exactly how much goes where, and when.
• A Portfolio Tracker, Screener and Alerts: your family's entire wealth, stocks, funds, bonds, NPS, PPF, in one place, screens across 4,500+ listed companies, and alerts on anything you choose to follow.
• Stock Advisor Live, once a month: the analysts behind your recommendations on camera, walking through where every pick stands, presenting any new thesis first-hand, and taking your questions live and unscripted.

The entirety of the service is especially useful in the booming yet volatile market we have had for some time now. What we do is to give you the selection and all the input you need to maintain the strength of your convictions. So come and become a member, invest in our choices and be secure in the knowledge that not investing in what we have rejected is an integral part of your investing strategy.