“When money realizes that it is in good hands, it wants to stay and multiply in those hands.”
- Idowu Koyenikan
OUR SECRET SAUCE
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Fusion of Fundamental Analysis & Technical Analysis
We use Fundamental Analysis to analyse a company’s business models, financial statements, competitive landscape, management efficiency, etc and thereby ascertain its intrinsic value. Simultaneously we also use Technical Analysis to analyse market trend, momentum, volatility and sentiment and correctly time the entry and exit of our transaction so that it is aligned with the over-arching market conditions. The fusion of these two disciplines improves our selection of stocks, minimizes our losses and confirms that our capital is always actively and efficiently employed.
Short-selling trades that generate profits even when the market is down!
In addition to traditional long-buying trades, we undertake short-selling trades. Using the same tools that help us identify an intrinsically valuable company, we identify companies that do not have good business models and are deteriorating in value. Then using F&O instruments, we capitalize on the decline rather than the rise of these businesses. The main advantage of these dealings is that they ensure that even if the overall market is down and there is a limited scope of profit generation by way of buying securities, we are not sitting idle and waiting for better times. Instead, we can take control of the downtrend and make profits just as we did in the uptrend.
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Futures & Options product coverage; Simplification of complex structures
The derivative securities market has abundant profit-making opportunities but is often ignored by the average retail trader/ investor. This is partly due to ignorance regarding the complex structure of the products and partly due to fear of greater risk. We have developed easy strategies that breakdown these complex instruments into simpler formats and give us the opportunity to harness their profit-making potential. Moreover, we structure all transactions conservatively and maintain strict stop loss to limit the downside.
Short-term trades that generate ~3-5% monthly Income
Unlike traditional investors, we do not restrict ourselves to only long-term investments. We take swing trading positions, including index and stock-specific F&O positions, which are re-balanced every month and on average generate 3-5% monthly returns. The short-term Trading Portfolio is riskier as compared to the long-term Investment Portfolio, but the potential for reward is also higher. This method is ideal if one wants to participate in the markets but has capital restrictions or has a need for regular cashflows.
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Long-term investments that grow wealth at ~ 20% Avg. Annual Return
We make long-term investments that have a gestation period of 3-5 years. This portfolio typically comprises of ethically managed businesses with a significant competitive advantage and promising futures. From a Technical point-of-view, these companies are in a long-term uptrend with limited volatility. This method is ideal if one wants to “invest and forget” with minimal risk.
Process that caters to different capital capacities, risk appetites, and investment horizons
Our strategies are designed to cater to different capital capacities, different risk appetites and different investment horizons. This is to ensure that no matter what the circumstances are, even if we are unable to raise large amount of capital or if we have capital free for only a short period of time, we can always access the Equity Markets and try to earn profits.
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Risk Management through research, diversification and capital allocation
We do thorough due diligence on all investments and trades and stay away from and companies with questionable finances, corporate governance issues, and fad business models. Our portfolio is diversified across companies that have different market capital, companies that belong to different sectors and companies that provide varied products and services. Thus, the portfolio in totality is protected against any unforeseen failure in any particular fraction. These principles helped our portfolio remain relatively unscathed through unfavorable events like the GST implementation in 2017 and the NBFC crisis in 2019. Moreover, we also derive optimum capital allocations in order to protect the portfolio from the “all eggs in one basket” blunder
Systematic execution, no emotional trading, limited drawdowns
The trading plan is our holy text. We religiously follow pre-determined entry-level, exit levels and stop-loss for every trade. Thus all our dealings are corroborated by data and research and there is no room for ‘gut-feeling’ or ‘ego’ based trading. Since we don’t have any attachment to any stock or transaction, we can cut losses and exit when we see the price go against us. We believe that losses are inevitable so the only thing we can do is to keep the losses and drawdowns small and let winners run.