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Smart Money: Market mantras and investment mistakes to avoid

In an exclusive interview to Sonia Shenoy, Sunil Singhania, Founder of Abakkus Asset Management and Devina Mehra, Chairperson of First Global shared their investment mantras and the dos and don'ts in the stock market.

In an exclusive interview to Sonia Shenoy, Sunil Singhania, Founder of Abakkus Asset Management and Devina Mehra, Chairperson of First Global shared their investment mantras and the dos and don'ts in the stock market.
There are 3 investment mantras that an investor should follow, according to Mehra. The first is risk control.
"Last year in February-March this came through very starkly when not just individual investors but a number of funds went down 35-40 percent. Once you are down 35-40 percent, it takes 50-60 percent of an up move to get you back up there. So avoid the big losses, that is number one," he said.
The second mantra is: be the house not the gambler.
"It means if you or your fund manager has an advantage, let's say they are right 60 percent of the times then you have to make sure that 60 percent is spread out over a large number of bets. If you only buy 10 stocks you might be right only in 2 of them and not in 6 of them but if you buy 50 stocks and you control the risk on the 20 stocks you are wrong on then in 30 stocks you will be right on." he explained further.
Third mantra for investors is play everything, believe nothing.
"It means don't go for high conviction, don't start believing your own investment thesis", she said.
Meanwhile, Singhania said that investors need to be positive to be an equity investor.
"If you feel that tomorrow is going to be better then only be an equity investor otherwise you are better off having some other asset class. Secondly, you need to have conviction in what you do and you have to give time to that conviction. Thirdly, investors need to be open and flexible. You cannot get fixated with a particular way of doing things. Fourth, if you take 10 decisions, 2 or 3 decisions may go wrong but that should not instil fear of not taking any decisions because that would be the worst decision you would have taken. Lastly, stay away from momentum and fashion based investing. These 5 mantras are very difficult but if implemented will ensure that investors become good and successful investors," he said.
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