X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2019 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
This Behaviour is Injurious to Wealth Building - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

This Behaviour is Injurious to Wealth Building

Jun 13, 2018

Madhu Gupta

I have an unconventional stock market investor in my neighbourhood.

After retiring from a well-paid government job, this septuagenarian devotes all his time to manage his equity investments.

But neither is he glued to business channels nor does he obsess with tips given by so-called experts.

In fact, he doesn't even track stock prices daily.

My neighbour has made a small fortune from his investments. I once asked him the secret of his investment success.

The gentleman attributed his success to only two things. One, the extensive study of a company's business strength and second, the patience to remain invested for the long-term.

However, in the digital era, the explosion of data can easily sway the impatient mind and erase the gains compounded over the years.

Recently, one of the biggest multibaggers of the last decade came crashing down after news started doing rounds of falling demand in its largest market.

The meteoric rise of shrimp feed producer, Avanti Feeds, has come on the back of its strategic decision to shift feed manufacture for a new type of disease resistant shrimp in 2009 in line with the country's new policies for sea food cultivation.

--- Advertisement ---
A Couple of Good Small Cap Stocks Could Transform Your Life

Small caps are capable of giving BIG returns in the long run. And you need just a couple of them to take off to completely transform your life.

But for that, you need to invest in the 'right' small cap stocks.

To know how you could find the right small cap stocks, just click here…
------------------------------

For this the company not only strived to convince its customers, the farming community, to start breeding the new shrimp variety but also entered in to a foreign collaboration to acquire technical know-how. Apart from this, the company also shifted to cash-based sales that helped improve its working capital position.

This business restructuring yielded results in 2011 when the disease outbreak in traditional shrimps fortified India's position in the shrimp export market, thereby greatly benefiting Avanti Feeds.

Avanti Feeds today is not only the largest feed manufacturer in the country but its profitable operations and strong balance sheet entail it with a powerful moat.

But despite these competitive strengths, the stock fell prey to collective fear on news of falling demand from the largest shrimp consuming country, the US.

The herd instinct became so overpowering that rationality took a back seat and Avanti's moat was completely forgotten in the wake of a temporary slide in demand.

It is only after the management intervened and cleared the air that the stock has rebounded. Clearly the Fear of Missing Out (FOMO) is stronger than ever.

For building long term wealth, this is the behaviour that needs to be overcome.

Warm regards,
Madhu Gupta
Madhu Gupta
Research Analyst, ValuePro

Madhu Gupta

Madhu Gupta (Research Analyst), ValuePro has a post graduate degree in both physics and finance. Having worked with India's leading economic research agency, she has a natural flair for numbers and analytics. She brings with her a near-decade long rich experience in the field of finance. A firm believer of the principles of value investing, she looks for robust businesses with durable competitive advantages.


Equitymaster requests your view! Post a comment on "This Behaviour is Injurious to Wealth Building". Click here!

  

More Views on News

Two Meetings That Nailed the Idea of Owning Brilliant Smallcaps Without Buying Them (The 5 Minute Wrapup)

Mar 22, 2018

Certain blue chips hold the potential of delivering returns comparable to small-cap stocks. With these stocks, you can get the best of both worlds.

Why Starting Young To Plan Your Retirement Works! (Outside View)

Mar 18, 2019

Personalfn illustrates the benefit of starting to plan for your retirement when you are young.

Poor Performance Of SIPs Can Cost You Your Financial Goals (Outside View)

Mar 18, 2019

Those who started SIPs about a year ago are perhaps yet to break even. SIPs have generated disappointing returns for many investors over 3 and 5 years as well.

HSBC Large and Mid Cap Equity Fund - Should You Invest? (Outside View)

Mar 18, 2019

Personalfn analysis about the newly launched NFO: HSBC Large and Mid Cap Equity Fund based on its investment objective, asset allocation, investment strategy and the outlook.

Get Ready to Make Big Profits in India's Defense Sector (The 5 Minute Wrapup)

Mar 18, 2019

India's defence sector is suddenly under the spotlight. Can this sector ride along India's long-term growth story?

More Views on News

Most Popular

Are You Ready for the Big Nifty Move in the March Expiry?(Profit Hunter)

Mar 8, 2019

History suggests the Nifty could make a big move in March. Are you prepared to benefit from this opportunity?

Smallcaps Are Rallying and You Need to Make the Most of It Now(Profit Hunter)

Mar 7, 2019

Did you just miss the smallcap rally? Or is there still time to catch up? Read on for answers and more...

The One Sector to Bet on Today as India Grows into a 10 Trillion Dollar Economy(The 5 Minute Wrapup)

Mar 7, 2019

India's defence sector is suddenly under the spotlight. Can this sector ride along India's long-term growth story?

Is it the Right Time to Buy Mid and Small Caps Now?(The 5 Minute Wrapup)

Mar 6, 2019

Mid and Small Caps have underperformed large caps in the past year. Is the tide about to turn?

The Jet Airways Crisis in 6 Charts(Sector Info)

Mar 5, 2019

What happened to Jet Airways, once among top 3 airlines in India? Is it another Kingfisher in the making? Read on...

More

Get the Indian Stock Market's
Most Profitable Ideas

How To Beat Sensex Guide 2019
Get our special report, How to Beat Sensex Nearly 3X Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Mar 18, 2019 (Close)

MARKET STATS