Annualised (includes dividend)
Since 25th April 2014
Focus: Small caps and / or low-priced stocksKnow More
Annualised (includes dividend)
Since January 2012
Focus: More mid-caps, some large caps
Direct investment in stocks is rewarding but risky. A portfolio of stocks as a whole may do well over the long term but individual stocks may inflict losses from time to time. Most importantly, there are prolonged periods when the portfolio too will suffer losses. It could happen because we have made a mistake or you have started to invest at the wrong time. Even those with experience in investing in stocks are unable to handle the losing periods or losses in specific stocks. Do understand that you may have to give a portfolio as a whole, several years to show results and that during this time, many stocks will be bought and sold at losses. If you don’t understand this, this service is not for you.
What is the approach behind the stocks selected?
What we generally look for are these 3 features:
1. Growth: A higher sales and profit in 4 out of last 6 quarters
2. Value: market cap/ cash flow. It shows how the market is valuing the case flows. Lower the better.
3. Return: Cash flow / capital employed. Its shows how much cash the invested capital is making. Higher the better.
This DOES NOT MEAN that stocks that meet these criteria WILL go up. It also DOES NOT MEAN that other stocks which do not share these criteria WILL NOT go up.
It's a game of probability where we try to get the odds in our favour.
Having shortlisted stocks on this basis, we then apply our knowledge of managements, including corporate governance. We don't suggest a short-selling opportunity. Our understanding of the management quality and integrity comes from a careful study of financials. For instance, we avoid companies with debt or those that are not earning high returns on capital or paying low taxes. We do not meet the management of companies that we shortlist. The research team is headed by Mr Debashis Basu.
How do we know when to delete a stock from the stocks?
Deletions from the shortlist are spelt out clearly as and when they occur.
Will I get one new stock name every week?
No. There is a difference between stocks and vegetables. Vegetables are good when they are fresh. Not stocks. The best stocks have been around for a very long time like Nestle or Hindustan Lever or Asian Paints.
How are these stocks different from the stocks given in Moneylife magazine?
Moneylife magazine does not offer shortlist of high quality stocks. It discusses general prospects of particular stocks / industry.
If a recommended stock has fallen a lot, should I buy more and average my purchase?
You should never average smaller stocks or commodity-type stocks. You can only average stocks that have proven themselves as ‘long-term compounders’, those that have recorded high compounded annual returns. There are a small number of such compounders that suddenly become available cheap, usually because of an external shock. It could be Nestlé getting hit by Maggi or consumption stocks getting hit by demonetisation or drought.
How Much to Invest?
Our approach is to invest an equal amount in every stock suggested, to the extent possible. For instance, if we have selected 16 stocks, and you wish to invest Rs80,000 a month, you must aim to invest Rs5,000 in each stock, to the extent possible. So, if X is valued at 2200, you would buy 2 shares. If Y is valued at Rs 690, you would buy 7 shares. The key is to have an equal exposure per stock. The stock tool will do this automatically for you.
Once you enter the monthly amount, it will tell you how much to invest in which stocks, starting from the lowest in rupee terms to the highest. However, this may mean that you may have some cash left, shown as "Excess Cash" at the bottom of the table. You can use this to buy more of the lowest-priced stocks.
How to Handle New Entries and Exits?
At any time, we may have active stocks, empty slots and several stocks on hold. Our recommendation is to take equal proportionate exposure to active stocks and keep the exposure relating to empty slots and stocks on hold, in cash. Here is what we mean:
Maximum slots: 16. Investible amount : 80,000. Per stock investment : Rs5000.
Recommended stocks: 10, On hold: 3, No recommendation: 3.
Use the tool only to divide for Rs50,000 (for 10 stocks) and keep the balance cash (Rs 30,000) for new recommendations.
New Entry: If we make a new recommendation, recommended stocks become 11. So, invest Rs30,000 (surplus cash)/6 (empty slots) or approximate Rs5000 in the new stock and keep the balance cash (Rs25,000) for new recommendations.
Exit & New Entry: Subsequently, if we sell a stock say for 6000 (now we are invested in 10) and also make a new recommendation (we go back to 11), how much to invest in the new stock? We have Rs25000+6000 in cash or Rs31,000 for six slots. So, we invest Rs31,000/6 or Rs5167 in the new stock and keep the rest in cash.
As we have mentioned, different subscribers come and go at different points over which we have no control and so, we cannot attempt to ensure high returns for all. While starting your investments you must remember the following about exits:
1. We have recommended many stocks at a much lower levels, creating huge returns. We are very mindful of the fact that stocks don’t keep going up in future, no matter what kind of returns they have recorded in the past. We need to keep an eye on the exit door.
2. In fact, the higher and more solid the past returns, the greater is the complacency among investors. Our objective is to sell stocks the moment their earnings cycle starts to weaken. In the past when we haven’t done this, we have paid a price.
3. We don’t know when the earnings cycle of the some of these stocks will weaken but they will at some point. It is usually sooner than what investors think. We will recommend a sell when we think earnings are weakening.
4. You should be in a mental frame to sell at that time, whether you have bought recently or not and sitting on gains or not.
How long should one stay invest for best results?
An equity portfolio must be held for the long term, which we define as at least 5-7 years, depending on the stock valuations at the start of your investing period. However, this does not mean we will hold the same stocks for 5-7 years. The performance of the shortlisted stocks should be judged on the basis of the overall portfolio over 5 years at least, not on the basis of short-term price movement of individual stocks.
How many stocks are changed every year from the list?
We hope to change only 3-4 stocks every year. Additions are made as and when any stock meets our investment criteria. Our stocks come under review after the quarterly and yearly results are declared. At that stage we need to evaluate whether the stocks are still worth keeping in the list. Also, in very rare cases, we may shortlist a stock expecting a trigger; we have to get rid of it if the event does not happen.
Equity markets are dynamic and there are no guarantees. Losses are a part of equity investing. The returns you make will depend on:
1. Which stocks you pick up for investment
2. When you start the research and investing process
Different subscribers will get different results depending on these two factors. Also, anyone investing when the market is expensive will have to be patient about returns. After you buy a stock, it may fall. No one can take into account the timing for every individual and ensure that every stock in the list remain in the black. The shortlist should be judged by the performance over the long term and not by the short-term returns of specific names that you may choose to follow at a particular time.
What is the reason behind the strong historical performance of the shortlist and will it continue?
The reason behind this performance is partly favourable investment climate. Future returns will be lower.
How much should one invest in each stock?
You should invest equal amount in every single stock whatever your final shortlist may be. For instance, if we have selected 30 stocks, and you wish to invest Rs150,000 in all, you must invest Rs5,000 in each stock. To put it differently, if you are investing Rs 5000 per stock and TCS is valued at 2500, you would buy 2 shares. If Asian Paints is valued at Rs 500, you would buy 10 shares. The key point is exposure per stock is Rs5000, not the number of shares. We have facilitated the process by creating SIP tools for the purpose. This can also be used for one-time investment.
Panther stocks may not be the right for SIP. Please use your discretion.
Antelope Lion Panther
How should a new subscriber interpret the names given in the stockletter?
We identify stocks from the existing list that are still worth it. New subscribers can research these. We also identify the stocks that are not worth from the existing list because of fundamental or valuation reasons. New subscribers can ignore these. New subscribers can also invest in new stocks added to the list.
Some stocks have already run up sharply. What should one do?
Stocks may go down any time after your purchase, whether they have run up or not. That is the nature of stocks. This is why it is important to follow these two principles about stock investing 1. Investing only that money you will not need for 5 years 2. Not looking at the share price in the short term.
How will I know that the stocks in the shortlist are appropriate for me?
In such situation, we advice you to take the MAS premier membership so that we can advise you.
How risky are the stocks in the stockletters?
Stocks by nature are risky and volatile over the short-term and can lead to losses. But loss of capital in good quality stocks is not just a function of stock selection but also how long a stock is held and at what valuation they are bought.
What if the market is too expensive when I start subscribing to the stockletter?
High quality stocks decline along with the market only in severe bear markets. In normal market declines of 10-20%, many high quality stocks do not decline. They may fall a bit, move sideways and go up again. We shortlist high quality stocks available at reasonable valuation.
What else should I know about risk?
You should know the risks investors create for themselves. "Human nature" is inimical to smart investing. Studies in evolutionary biology have shown that our brain is hardwired for survival but not dealing with complex issues like risk and return. You may like to watch this video to set your mind right once for all and this about buying stocks
How much do the stockletters cost?
Annual Price of ANY ONE (Panther OR Lion OR Antelope) Rs. 4248
Annual Combo Price of ANY TWO ( from Panther, Lion , Antelope) Rs. 6797
Special Annual Price of ALL THREE ( Panther, Lion , Antelope) Rs. 10195
Can I share the stockletter?
The stockletters are meant for a single user and is backed by years of research. Hence, we urge you not to share them. If we come across such we will suspend your subscription.
How do subscribers get the stockletter?
You can access your stockletter from your MAS dashboard by logging in with your registered email id and password https://advisor.moneylife.in/profile.html#view
What is the frequency?
You will receive the link to view your chosen stockletter, every Saturday evening, via email.
What if I have any queries about specific stocks?
Well, we would rather let our overall performance do the talking. We have numerous subscribers and we will not be able to respond to individual requests/ additions / information for clarifications.
What if the price of stock I have bought has fallen sharply ?
1. Our suggestion is to invest in all the stocks or as many stocks as possible of a particular stockletter.
2. Since this is the advice, we wish to be judged by the overall performance of the portfolio, not individual stocks selectively chosen by subscribers.
3. If a stock has fallen, we will review the specific news or financial performance linked to it and if needed we will comment upon it in the weekly stockletter. We will not be able to reply to emails asking us what to do about individual stocks that have declined. Please remember that we are invested in almost all the stockletter stocks in our personal or organisational capacity and we are as much concerned as you are.
The stockletters are for informational purposes only and none of the stock information, data and company information presented constitutes a legally binding recommendation or a solicitation of any offer to buy or sell any securities. Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalised recommendation to you. Individual stocks presented may not be suitable for you. Moneylife Advisory Services P Ltd is a registered investment advisor. SEBI registration No: INA000003429
Cancel within two issues: You can cancel your subscription within two issues. We will return your money after deducting Rs150 on each stockletter for payment gateway and handling charges.
Switch within two issues: You can switch your subscription within two issues. This would be permitted only ONCE during your subscription period.
You can send us your request for Cancellation /Switching over email to [email protected]