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Inculcate A Disciplined And Opportunistic Investment Approach

Monday, May 16, 2016

Siddharth Oberoi, Founder, Prudent Equity

Siddharth Oberoi is the Founder at Prudent Equity, an independent investment advisory website. His company Dess Equity Advisors is an independent investment advisory firm, focusing on providing investment advice, portfolio structuring and research services for retail investors as well as institutional clients. It also runs a stock advisory portal PrudentEquity.com. A full time investor right from his graduation, Oberoi has extensive investment experience in the stock market for over twenty years and has successfully managed portfolios. Starting with just a few lakh Rupees, the portfolio has compounded at a 35% CAGR over the last 20 years. In 2012, he started the Investment Advisory business with the launch of Prudent Equity website. Currently, it has crossed 700 paid members from across the globe. An MBA in Finance, this Market Wizard in conversation with Dominic Rebello describes his method and advises investors to have a disciplined and opportunistic investment approach, because that is the most sensible and rational approach to building wealth


A little background about your company?
I’ve been involved in the investment sector since 1996 as a fulltime business. In 2012, I started by official website with the name ‘prudentequity.com’ an investment advisory and stock recommendation website, focusing on providing investment and stock advice, portfolio structuring and research services for retail investors as well as institutional clients. The website focuses on providing valuable stock and investment advices, portfolio structuring and research services for retail investors as well as institutional clients. Since its inception, our subscription services have generated over 60% compound annual returns.

At what point had you given a thought to making a career in the stock markets?
Since college, investment and stock market always attracted me. The first time I tried my hands in investment was during my days in graduation. There was no looking back since then. I thoroughly enjoyed the tricks of the trade and loved the rush of the industry. It was then I decided to pursue it as a full time career.

How do you pick your investments? Do you use technical analysis, or do you employ fundamental data?
I take investment as a field that cannot rely much on technical metrics. Market analysis according to me requires a personal gaze. I only follow fundamental analysis in my investment approach. Reading and researching annual reports, balance sheet, revenue, growth projection, earnings, etc. are part of the process I follow to analyse the market and make investment decisions.

How would you describe your methodology?
I select those stocks that meet my strict investment criteria and those that have a significant margin of safety. Some of the important traits we look for in an investment are: Size of the opportunity; Companies that generate high returns on capital; has reasonable debt levels and is available at a significant discount to  its estimated intrinsic value.

What appeals to you about trading... the short side or the long side?
The long side...the Buy side.

What differentiates you from other Investors?
I believe I have a disciplined and opportunistic investment approach that offers the most sensible and rational approach to building wealth.

What gives you that edge?
My 20 years experience as a full time investor

Is there any applicable lesson to trading/ investing?
Controlling ones greed and fear is important. Staying disciplined while investing ensures capital protection.

How much of what you do is gut felt?
At times, the collective experience is nothing but gut felt. In that sense, sometimes investments are made with the gut feeling.

Do you try to anticipate or follow market trends? What is the basis?
I buy and sell irrespective of market levels; my focus is always on individual stocks.

When you put money on a trade and it goes against you, how do you decide when you're wrong? What do you do next?
If I realize that I have made a mistake in the first place by buying that stock, I usually accept the mistake, cut my losses and move on.

Any positions you ever lost sleep over? What happened...?
There was a stock that I had bought with a wrong premise. By the time I realized it, the stock was on a lower circuit with no buyers. I was eventually able to sell it later.

What would make you wary about an Investment?
Bad corporate governance in a company is something I am wary about.

Where do you see the Indian markets five years down the road? Any number for the Sensex in 2017?
Equities will outperform most asset classes in India. The bull market has many decades to go before a saturation is reached. Obviously, it will be with its peaks, crashes and troughs in between. I see the market higher than today in five years. The Indian economy is slowly picking up pace and the second half is likely to be even better.

Of the tens of thousands of investments that you have done, which was your best investment?
My best investment was in a stock Revathi Equipment. I had a large part of my portfolio in this stock. The stock went up 11 times when I sold it.

What was the story there?
The company was taken over by a new management. It had a large market share in its space. The company generated substantial free cash. Most of all, the stock was cheap when I had bought it.

Your success mantra?
Being disciplined and always sticking to one's own investment principles are the qualities of a successful investor. I have been able to avoid repeating the mistakes made in the past, which have put me in good stead.

Any final words?
An investor must understand his/her own investing style and stick to it.

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