X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 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.

What They Forgot to Tell You About Sensex at One Lakh (Profit Hunter)

Nov 29, 2017

Stocks that could beat Sensex returns in the long term.

Overthrow Your Financial Evils This Dussehra (Outside View)

Oct 17, 2018

PersonalFN explains the key things to do to overthrow financial evils and make a new beginning and march ahead to live a healthy financial future this Dussehra.

Why LIC Will Continue to Bailout the Govt This Year as Well (Vivek Kaul's Diary)

Oct 17, 2018

With central GST collections unlikely to meet the target, the government will be desperate for money during the second half of the year.

Work Timings Prevent You From Investing? An Efficient Robo-Advisor Can Help (Outside View)

Oct 17, 2018

PersonalFN explains a robo-advisory platform can save time and can help you manage your investments on-the-go.

More Views on News

Most Popular

Don't Panic in This Falling Market... Do This Instead(The 5 Minute Wrapup)

Oct 5, 2018

Find companies with long term durable moats, which are correcting with the current broader market sell-off.

Taxpayers to pay salaries of CEOs/CIOs of Mutual Funds(The Honest Truth)

Oct 5, 2018

Ajit Dayal on the crisis in the market and in the mutual fund industry.

This Market Crash could be the Biggest Wealth Creating Opportunity Since 2008(Profit Hunter)

Oct 8, 2018

While widespread fear is the friend of a value investor, serving up bargain purchases; personal fear is an investor's biggest enemy.

IPO Market Feels the Heat of the Market Crash(Sector Info)

Oct 12, 2018

The sentiments in primary market have also deteriorated amid the stock market correction. Most listed IPOs of 2018 are trading below their issue price.

Are These Deep Corrections a Buying Signal?(Chart Of The Day)

Oct 5, 2018

The correction has bought many good companies to reasonable valuations. Go against the wisdom of crowd and Buy.

More

Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Oct 17, 2018 (Close)

MARKET STATS