Trader and investor Atul Suri, while addressing an Investor Camp, explained the thumb rules while investing. He focussed his talk on how momentum-based trading sometimes leads to having a large portfolio with loss-making stocks.
Renowned trader Atul Suri focussed on the importance of sticking to fundamentals and knowing valuations before making investment decisions at CNBC-TV18's biggest investor initiative service -- Investor Camp. He shared his lessons on investment and trading learnt from Rakesh Jhunjhunwala; for whom he works with and trades for.
He also focused on sticking to the basics which becomes the thumb rule while investing. He cited the investment decision examples from Jhunjhunwala for whom he works with and trades for.
Suri said that he learnt that the important part of investment strategy was to live and work with the rules of investment and do adequate research before any such decision. "Using price to earnings (PE), discounted cash flow (DCF) are all semantics. The important part is the valuations”, he added.
He called trading as a very momentum-based activity. On one evening, a trader might be bullish on the market and then sell of everything the next morning. That is the mind of the trader; an ability to turn on a dime based on price, he said.
Speaking on portfolio management, he said that the common mistake done by everyone was to get confused with advices and speculations. He cited examples on how portfolios are influenced by rumours, insider information.
Once the price of such stocks comes down, then one goes back to valuations and basics and it (the stock) becomes a part of the long-term portfolio, he said. That keeps on adding to the portfolio and eventually ends up being one which is down 70-90 percent, he added.
Very few people really work that hard or are that oriented towards investment. Most people just try to play momentum based on what somebody has told you and it becomes a long term portfolio.
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