Managing Your Money - How Professional Management Can Help To Void Pitfalls Of Investing
Mr Janak Jhaveri is a busy man. Being a commodity trader he actively managed his business’ demands like warehousing, transportation, taking care of taxation and insurance, and not to mention fulfilling customer’s demand through efficient management of demand and supply.
Mr Jhaveri considers himself as an average investor. He loves to dabble in stocks especially "hot" stocks or rumor based stocks. His favorites were midcap and small-cap stocks which were cheaply priced but offered a tremendous opportunity for multi-fold appreciation. His friends used to boast how these stocks doubled or tripled their money in no time.
In the year 2017, Mr Jhaveri, aged 63, sold one of his properties in Mira road. He wanted to gift a nice flat to his daughter in Malad. He was willing to shell an extra Rs 45 lakhs for the purchase of the flat. But the stock market was in frenzy. The midcaps and small caps were on the roll. Mr Jhaveri could not resist the temptation of quick money. He believed his broker that there was plenty of steam left in Midcaps and Smallcaps. Hence, at slight correction, he continued to add the basket of stocks in his portfolio.
Mr Jhaveri ruefully remembers how he got carried away in Midcap and Small cap euphoria. Like Mr Jhaveri, a whole class of retail investors is trapped in a market frenzy. It has become difficult to sell the shares in their portfolio.
Why do people get carried away by Midcaps and Small caps?
Small investors are attracted to cheap stocks because they believe in the turn-around story of the small companies that are sold to them by brokers. A stock trading at Rs 5 is more attractive than Rs 1400 a share that is fundamentally sound. An investor forgets that not every company has the capability to become the next Infosys or Eicher. Cheap stocks are like a lottery. It is possible to strike gold once in a while. But when the markets hit back brutally, there is little chance of salvage of capital.
The modern investment world is highly complex. Today’s investor faces the most daunting task of processing the bombardment of information that arrives with tremendous speed. The volume of information can be intimidating. Two decades ago information about publicly traded companies was hard to come by outside of annual reports. Now even a relatively unknown company can produce a continuous stream of information which can impact its stock price wildly. The small investor is unable to process and understand the information thereby increasing his chances of error and misjudgment.
Even if the investor has the right information, he can still become the casualty of the market due to the extreme nature of the markets. Markets can react in an hour or sometimes even in minutes thus making it difficult for an average investor to make an informed decision.
Several investors echo the above sentiments. While even bad news is good news in the bull market, the opposite is true in bear markets. During bear markets, many investors find themselves on the wrong foot. Investors should remember that being contrarian does’t always pay-off. One has to look at several factors while investing their hard-earned money.
In the case of Mr Jhaveri, if he had invested his money with the Portfolio Management Services (PMS), he would not only saved his precious capital but would also have generated decent returns.
Companies like Abchlor Portfolio Management Services (PMS) make investing decisions after considerable due diligence. They have qualified research analysts who track the companies in their portfolio. The reason PMS fares better, in the long run, is its investment philosophy. A PMS invests in the basket of securities like stocks, fixed income, debt, cash, structured products, and other individual securities which is managed by a professional money manager. The PMS seeks long-term capital appreciation by investing substantially in the equity securities of companies that are leaders in their industries, and which the managers believe are suitable for a buy-and-hold strategy.
The above figure clearly illustrates that Abchlor Classic Equity Fund has outperformed the index by a wide margin in the long term. Professional portfolio managers, unlike individual investors, do not panic when there are sharp falls at regular intervals. They consider bear markets as investor’s best friend.
What Makes Portfolio Management Services Unique? They have: Expertise and a special skill set to generate above-average returns Dedication to creating a portfolio of such companies Gain in-depth sector knowledge and access to market intelligence/channel checks and gauge behavioral attributes Dispassionate decision making i.e. Buy/Sell decisions are taken purely basis fundamentals and not by sentiments
Abchlor Classic Equity Fund Performance -
The beauty of professional money management is that they offer customized wealth management solutions which are ideal for people who do not have time to track the markets on a daily basis. What makes PMS an ideal product is the accountability factor. The fund manager is accountable for his client’s profile. T;hus, every decision a fund manager makes is influenced by the client’s short and long-term financial goals.
The focused approach of PMS enables it to offer unmatched service along with customized solutions for its clients. The clients get regular updates about their portfolio hence they can enjoy stress-free investments.
While investing, a wrong decision can mean incurring notional losses that one could probably have earned if the money was incorrect hands.
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