“INVESTMENT MECHANISM” · CA.RUDRAMURTHY MOB#9845620530 10 . Investment Decisions: CA.RUDRAMURTHY MOB#9845620530 11 ... Fundamental Approach. 2. Technical Approach. 3. Insider

CA.RUDRAMURTHY.B.V ACA, CFTe, MCOM, MFM, M-PHIL, PGDBA, PGDMM

Research Head – Vachana Securities Pvt Ltd

CA.RUDRAMURTHY 1

“INVESTMENT MECHANISM”

What is Investment?

Investment in economic terms relate to Savings and Postponed consumption.

In finance it is considered as purchase of a financial or real asset which involves a certain cash outflow in anticipation of an uncertain future cash inflow.

Intelligent act of Risk-Return Trade off.

CA.RUDRAMURTHY 2

Investment Mechanism:

Open Demat and Trading a/c.

Select the Right Broker.

Understand the Risks involved in Capital market investment.

Start with Long term Investments.

Stay within your circle of competence.

Monitor the performance of your investment. CA.RUDRAMURTHY 3

Documentation for Opening Demat and Trading A/c:

Identity Proof.

Address Proof.

6 Months recent bank statement.

3 Passport Size Photos.

Cancelled Cheque and Investment

Cheque. CA.RUDRAMURTHY 4

ONLINE AND OFFLINE TRADING

• Offline trading: Transacting

the shares through a broker by

means of phone.

• Online trading: Transacting

the shares through Web-based or

pre-installed trading platform on

your own.

Differences:

• Time- Saves time in placing the orders

• Money – Avoids all miscellaneous costs as in case of offline trading, broking firms charge extra for the service they provide.

• Minimizing losses – Trader can square off his positions immediately when markets turn against his positions

• Place Constraints – Trade from almost anywhere.

Investment Process:

1. Investment Planning.

2. Asset Allocation.

3. Sector Allocation.

4. Stock Picking.

5. Monitor Performance on expected lines.

6. Rebalaning and Re-Allocation.

Who is an Intelligent Investor ??? “To invest successfully over a lifetime does not

require a stratospheric IQ, Unusual business Insights, or Inside Information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.”

Warren E.Buffett

CA.RUDRAMURTHY MOB#9845620530 8

Who is an Intelligent Investor ??? “The market is a pendulum that forever

swings between unsustainable optimism and unjustified pessimism. The Intelligent Investor is a realistic who Sells to Optimists and Buys from Pessimists.”

Benjamin Graham


Who is an Intelligent Investor ??? “No one can give you more insights into the

market than market itself. An average investor looks for reasons why markets are behaving like this? Whereas an Intelligent Investor acts according to the markets behavior”

CA.Rudramurthy


Investment Decisions:


Investment Decisions: 1. Fundamental Approach.

2. Technical Approach.

3. Insider Information Approach.

4. Pump and Dump Schemes.

5. Random Approach.

6. Value Investing.

Common Mistakes in Investing???


Common Mistakes in Investing???

1. Know the Company

Better in terms of its

Top management,

Nature of Business,

Financial Health, etc---


2. “Invest with a Plan

and Have an

Investment Theme”.

3. If everyone has

already bought the

stock, who else will

further buy the

stock to take it up???

4. Investing is a Business

and manage

it like a Business!!!


5. Do not base an

investment decision just

on tax concerns. After tax

return of an another

alternative may be higher

than a tax free security.

6. Keep an eye on Real

returns and not just on

Nominal returns.


7. Understand the costs of

your investments like

Brokerage, Annual

maintenance fee, PMS

Fees etc.

8. Stay away from

businesses what you

cannot understand.


Investment Rules: ”RUDRALOGY”


1. “Price is What you Pay and

Value is What you Get”. MARGIN OF SAFETY


2. “Getting Rich and Creating Wealth are two different concepts”

INVEST SYSTEMATICALLY


3. “Have a Well Diversified Portfolio and

Rebalance the same based on market

movements”. PORTFOLIO DIVERSIFICATION & REVISION


4. “Never Ignore the Macro Economic & Industry Factors”

SYSTEMATIC RISK


5. “Study the Financial Variables” FUNDAMENTAL AL ANALYSIS

• 52Week High/Low.

• Market Capitalization.

• Price to Book Ratio.

• Price Earning Ratio.

• Industrial PE.

• EPS.

• Dividend Yield %.

• Face Value.

• Shareholding Pattern.

• Operating Profit %.

• Net Operating Profit%.

• Return on Capital.

• Return on Networth.

• Total Debt to owner.

• Dividend Payout ratio.

• Current Ratio.


6. “Study the Market Psychology” TECHNICAL ANALYSIS


7. “Remove atleast 50% of your Profits off the table and allocate it else where”

MONEY MANAGEMENT SKILLS CA.RUDRAMURTHY MOB#9845620530 25

7. Once You lose 95% of Your money, You have to gain 1900% just to get back

where you started !!! Control Risk orelse, Risk will Control YOU


“Sir Isaac Newton” The most Intelligent Person who ever lived “I could calculate the motions of the Heavenly

bodies, but not the madness of the people”

He made 100% return (£7,000) on South Sea Shares and just months later got swept up in the wild enthusiasm of the market, and lost (£20,000). For the rest of his life he forbade anyone to speak the word “South Sea” in his presence.


What made Newton Lose ???

In the words of Graham,

“Newton was far from an Intelligent Investor. By letting the roar of the crowd override his own judgement, the world’s greatest Intelligent person acted as a foolish Investor”.

In the words of CA.Rudramurthy,

“Being an Intelligent Investor is more a matter of Character and Control of Human emotions than just Intelligence”


CA.RUDRAMURTHY.B.V ACA, CFTe, M.COM, MFM, M-PHIL, PGDBA, PGDMM

www.vachanasecurities.com

[email protected]


“INVESTMENT MECHANISM” · CA.RUDRAMURTHY MOB#9845620530 10 . Investment Decisions: CA.RUDRAMURTHY MOB#9845620530 11 ... Fundamental Approach. 2. Technical Approach. 3. Insider

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