8 SIMPLE STRATEGIES used by great investors | How to invest in the stock markets?

if you follow these eight specific rules you are going to make more money than index I can assure you hi everyone so take a look at this chart and this shows the entire stock market journey of Mr ramdev Agarwal who is considered to be a legendary investor in India what you would notice is something very very interesting that on three occasions his portfolio has been crushed by 50 or more so let me point that out and there is a very important lesson here you can see it that during the 92-93 crisis his stock portfolio went down by 66 percent here in 2000 crisis when it was the.com bubble bust his portfolio got crushed by roughly 70 then came the 2008 crisis his portfolio got crushed by 50 here we are not talking about individual stocks here we are talking about the portfolio of one of the legendary investors in India so what is the lesson here the lesson is fairly simple that as normal retail investors all of us want to become like Mr Warren Buffett etc etc but we do not have the stomach or patience to handle the volatility this is one of the basic things that we miss about the stock market so as I'm shooting this video on 10th of November the stock market fell by one percent I started getting a lot of panic messages that should I sell all my stocks now should I re-enter later please listen to this video I will explain the entire story in eight really simple points if you go and execute these eight simple points you are going to make better returns than index and also if you're a viewer of this Channel and getting value out of it do press the like button and subscribe to this channel it will help with the Channel's growth and let us kick start the video so the first key point that you must understand about the stock market is that these stocks do not give returns in a straight line fashion many a times we imagine that hey we are purchasing ITC today or Hindustan Unilever today and from tomorrow it will start going up wrong it doesn't happen that way similarly when we purchase index then what do we imagine we simply imagine that you know what index has been given roughly 12 and a half percent return on yearly basis for the last 20 years so I have purchased this in 2022 by 2023 I should be able to see 12 and a half percent profit on whatever I am buying today it again does not work in that way here is a very important data point that you should look more closely and what you would see is that if we track the last 20 year performance of nifty 50 you will see that is that there have been some years when there has been negative returns for example in 2000 2001 negative 15 then again next year negative 16 you will lose Faith or at most you will just say that okay what so much loss has already happened let me just stay put so you would have made 3.25 gain so three are gone you are setting a negative you will lose faith and you will move on to other asset classes but what would happen you would miss this massive gain that happened afterwards so the point is that whether it is Nifty the entire Market or individual stocks they will never go up in straight line they will never go down in straight lines there will be years when you will make three years worth of gain and there will be years when you will lose three or four years worth of gain so now there is reason why we can't predict which ears will be good or which ears will be bad or which months will be good which months will be bad is fairly simple because the market gives asymmetric gains on certain investment days for example again here is a quick data for you which is a very interesting data piece that the 10 best days in the stock market from 2000 to 2022 have been these 10 days you can go through the list and look at the gains that the market has given on singularities now this data point is very important to understand because as per a research if you would have invested ten thousand dollars in S P 500 and you would have held that position it would have become sixty one thousand dollars but if you would have missed these best 10 days then your gain would have been crushed by half so the half of the return for the entire stock market in the last 20 years has come from just 10 trading days you can't guess what those trading days would be there is absolutely zero way you could predict that advanced users or Advanced investors in the stock market they do not predict what the stock market is going to do they stay mostly invested because by staying mostly invested they are able to take advantage of asymmetric gains that the market gives on certain days that you and I or anyone else can't predict now in case you are looking to make some sensible investments in the Indian market right now I have created a series of small cases these are absolutely free you can check those links in the description box and on the pin comments so go check it out it's absolutely free of cost now the second key bad habit that we cultivate as retail investors is that we keep on looking for multi-wagger stocks there are telegram groups at your join you will pay paid services for that there are advisors you will seek help from who will say that you know what pay me like 200 rupees then I will tell you five multibaggers all that is nonsense please unsubscribe from all those type of groups you can't predict multivaggers no one can one of the most talked about multi-wagger story is that of Mr Rakesh engine Wala and Titan Mr Rakesh rinjunjanwala purchased that stock somewhere around 2002 for 30 35 odd rupees and he continued to hold that stock year on year but here is a quick data point for you that during this entire course from 2002 to up until 2022 there were periods when he sold Titan II so it's not as if that he just purchased and forgot about the stock yes net net he continued to hold his position on Titan but it was not as if that Mr zunjanwala knew that Titan is going to become multi-wagger if that were the case then why would he sell even one unit of Titan so what you need to understand about Titan are these few critical points so first and foremost point is that no one can predict what a multi-bagger is what people or good investors typically do is that they pick a small company they continue to evaluate re-evaluate it and that's it that it goes from this size to the sides we will continue to hold it they might book a little bit of profits the way Mr rakeshunjanwala did with Titan then they will keep on analyzing this business on periodic basis and the size of this company keeps going up up and up and it one day becomes multibagger but sitting in 2022 estimating that hey that by 2042 this company will become multibagger that company will become Multiverse let me purchase 200 rupee membership from this Falana person he will tell me about multibagger stock pick no please don't do that nonsense you can't pick multi-baggers via that strategy all you can simply do is that you can continue to monitor businesses at every stage of growth and then make a call whether you would want to stay invested in that stock or not I present fundamental analysis business analysis of different different stocks on my paid member Community I'm not selling any multibaggers I'm helping you understand businesses fundamentally that is the utility of that membership in case you think that that is useful you could consider taking it but yes please do do business analysis please do fundamental analysis and please periodically revise your thesis or investment thesis in specific stocks now the third thing that novice investors continue to do is that they keep on tracking the price movement and they determine whether the stock price is good or bad as per the price sentiment you can't identify anything just by the price of an asset ITC is a classic case in point I have been an investor in ITC I have booked very good profits in ITC and are completely exited the stock does it mean that you should also do it I don't know but I'm very happy with my ITC investment because I made a lot of money on it now if you go back six eight months back there were people giving a lot of yarn that you know what ITC has stopped this person has sold ITC this fund has sold IDC ITC is a dead stock there is no growth left taxation implication will be there no nothing happened ITC gave a run up why because ITC was a fundamentally good stock there was nothing fundamentally off about ITC and in the last six months it has given 40 gain I can at least give you 20 such examples from my videos where these type of theories have played out it's not as if that I know more than what other people know it is just that I am willing to hold good assets till the time they start giving Returns the reason or fundamental reason behind that is that even if you are the biggest investor in the world you will not be able to time the market or figure out anything from the prices one of the key examples there is of Mr Warren Buffett so for example here is Mr Warren Buffett's entire portfolio and what you would notice is that this range has almost stayed consistent what does it show you that Mr Warren Buffett does not keep pulling out money every now and then trying to time the market that okay now the market is going to go up I'm going to pour an insane amount of money now the market is going to come down let me pour in less money he does not do that you can see how stable his portfolio has been over the last few years so my theory around this is that when it comes to Big investors it's not as if they keep on withdrawing adding more money etc etc what they typically do is that they create a portfolio they keep it intact if they are getting additional money then they figure out whether to deploy that more money at that stage in time or not and second is that they rotate their capital for example in the previous graph where I showed you Mr Warren Buffett's portfolio he has rotated it but hardly ever he would pull out insane amount of money out of the market so this brings me to the fourth point that when it comes to good investors they always have more money to invest so name four or five biggest investors that you know of for example Mr redalio Mr Warren Buffett Mr rakes etc etc all of them are entrepreneurs for example Mr Radha Krishna dhamani is a stock market investor but he's an entrepreneur first who runs dmart he has money to invest whatever money is making from business he invested in the stock market same goes for Mr ramdev Agarwal he manages a mutual fund house same goes for Mr Warren Buffett he is managing an Investment Portfolio in many of the companies that he buys he takes a controlling state so he controls that company one way or the other by using money so the point I'm trying to drive home is fairly simple that all these legendary investors they have some other source of income or some major source of income which they then pour into the stock market one of the core goals of my channel is to help you create multiple income streams and I keep on speaking that please learn how to create multiple income stream experiment with new ideas learn how to build businesses precisely because of this point there are zero legendary investors who depend entirely on the stock market the fifth trade that good investors have is that they acknowledge their fault and change it fairly quickly for example here is a snippet from Mr ramdev Agarwal on his investment going wrong with somato now if you read the commentary you will get a sense that Mr ramdev Agarwal purchased zomato at a fairly high price and he said that you know what I was wrong about purchasing it at an incorrect price same goes for legendary investors like Mr Warren Buffett if he is incorrect about certain things he will say it out loud he was incorrect holding a lot of cash during the 2020 end and he made a mistake of not investing in the stock market when the stock markets gave massive return I'm not trying to confuse you as per my previous Point Mr Buffett maintained his possessions on the stocks he did not cut it but whatever additional money he was bringing on the table he decided not to invest in the stock market because he felt that the markets are overvalued then after a while he realized that he is making a mistake and he started taking more positions in the market so it is fairly normal for your Viewpoint to change if the business world is changing you need to understand the basic fact that whenever you are purchasing a stock you are buying a business the nature of that business would change the price of that business would change and so should your commentary if the prices have fallen for any business quite aggressively but you think that that stock is good then you would consider building some positions in it for example I was not very Pro TCS when it was trading at its all-time high I started aggregating TCS when it fell to roughly 3000 levels similarly I was very Pro ITC when it was trading at roughly 200 rupees I purchased it at somewhere around 190 200 rupees and I kept it and sold it off at somewhere around 270 to 80. have I missed the complete gains on IDC yes but have I made decent amount of money on ITC yes there are times when I get greedy for example when these steel stocks were doing fairly badly and purchased some of it held to my position did not sell it on time then I had to sell some of it on loss so I've exited my possessions in those stocks and I vowed that hey I made a mistake by investing in these public sector Metals company and I'm not going to build any more positions in similarly if you are confused about some Industries for example right now I'm confused about the EV space I had built little bit of position in a stock like umrah Raja batteries I have not built up my position after that why because I don't know how soon the adoption of Eva is going to become mainstream I still don't see that happening very fast so I'm not taking any position in it once I am confident that you know what okay EV space is going to blow up in India I'm okay purchasing stuff at slightly higher prices also important thing that you need to do as an investor is that you need to be honest with yourself if you made a mistake somewhere it's fine just change that if you are unsure about things watch it from the sidelines you don't need to take positions in it you don't need to defend the purchases that you have made and you also need to understand that out of 10 bits that you are going to make in the stock markets at least four or five will get wrong the sixth trait of a good investor is that they don't buy and forget they buy and monitor so please take a look at this chart for Reliance and what you would notice is that from a time period 2009 to almost 2018 Reliance gave zero percent returns Reliance being one of the biggest companies on Earth you would have said that you know what okay one of the biggest companies in India I'm going to put my money in 2008 buy and forget good company this that you would have lost a lot of money because theoretically in 10 years as per Rule of 72 where you take 72 divided by the return that you are making even fds would roughly double your money but people lost insane amount of money why because you know what people tell us that buy and forget so please don't buy and forget please buy and monitor that stock it's not as if that you need to analyze it on every single day but wherever you see opportunities coming you must rotate your Capital towards that if you see something going wrong with that stock it's okay to sell that stock and come out of it so please be sensible so here is a commentary by Mr Ray dalio initially he was very averse to cryptos he considered the entire idea to be toxic then he started investing a little bit of money now his firm is bringing in institutional money in cryptos now is it a push from my side that you should also go and follow Mr Ray dalio no I am just explaining you whatever the facts are there and it's not as if that Mr dalio is going to buy cryptos and forget about it he's going to continue to monitor it if you are buying any stock beat hindustani will never be it zomato etc etc you need to monitor it or at least have a perspective as to why you are getting into that asset if you join some random telegram group the day we'll tell you multivaggers and you listen to that multibagger buy it now you don't know what to do with it so please don't get into these type of traps so this brings us to the next related point that people panic in the stock market because they don't understand what we are buying and why are they buying it I keep on getting so many messages that accept you know what you were wrong about like this asset class or you were wrong about like UI path etc etc do you know how uipath stock is supposed to function it is a highly volatile company it is a zero to one type of a venture it is almost like investing in a startup now if you don't know these basic facts that hey when you're investing in a startup or when you are investing in a highly volatile Tech asset or a tech company it is supposed to fluctuate it can go down in value by roughly 95 and it can come back up I keep on talking about that example of Amazon that in 2002 Amazon lost roughly 95 of its value then it went back up by roughly 560 times I'm not talking about percent I am saying 560 times so if you're looking to identify a company that could have Amazon like potential then you need to take that volatility also into the mix so if you don't understand that you know what that investing in zomato is going to be volatile from this point or investing in XYZ company is going to be volatile don't invest in it invest in things that you understand let me give you another example so seven eight months back I spoke about Punjab National Bank that I have started building a lot of position in it a lot of people that you know what you're buying like public sector Bank it is never going to come up this that the HDFC bank is going to crush it this that will pnb and HDFC are not competing against each other they are not even competing for the same set of customers now look at the performance of Punjab National Bank in the last one month here's the chart for you so I'm not trying to prove the point that I'm right or I'm wrong all I'm simply trying to tell you is that you should only buy assets that you have a sense of and you understand how that asset is likely to behave I would have been completely okay if Punjab National Bank did not move even from one more year from this point no one literally no one on earth can predict these stock prices this brings us to the last point that the reason why people panic people just buy on other people's recommendation people start fretting whenever anything goes down in value is simply because of the fact that they are over exposed to assets or they don't know how to hedge their risks so smart investors always hedge their risk they use the Futures and options Market to do something called as hedging I have taken Hedges on HDFC Bank can I teach you Futures an option the answer is no it is a more elaborate thing which would require a lot more time so no I would not go there maybe I'll make some video someday but just to help you understand the basic hedging strategy please remember this that whenever you are investing one rupee in an aggressive company an aggressive company would be something like uipath zomato etc etc buy two rupees of defensive stocks something like IDC Hindustan unit level Etc this is the easiest hedging strategy you can build as a retail investor and once you have that hedging strategy in place and you are not over exposed to a particular stuff over exposure means that you're 100 rupees to invest but you have invested all that money in one single company so that is over exposure so please split your money invest in different different companies as per your risk appetite if you follow these eight specific rules you are going to make more money than index I can assure you I hope you enjoyed the video do press the like button and I will see you soon

Channel: Akshat Shrivastava

Views: 310,601

Keywords: akshat shrivastava, us stocks, investing for beginners, invest in stock market, diversification, nifty 50, meta stock, us tech stocks, tech stocks in india, nifty run up, nifty breakout, how to invest in nifty 50, stock market crash, learn stock market, akshat shrivastava stock market courses, zomato, raamdeo aggarwal, vijay kedia, warren buffet, ray dalio, how to invest in stock market, investing strategies

Id: WWr_K0kfrz0

Length: 17min 40sec (1060 seconds)

Published: Fri Nov 11 2022