How to Make Money in Stocks by Investing Smartly?

5 Feb 2021by Pradeep U

How to Make Money in Stocks by Investing Smartly?

With Indian benchmark indices the BSE Sensex and the NSE Nifty hitting new historic highs in the last few days many stocks have generated good returns for patient investors.

In a span of fewer than 11 months stocks like Bajaj Finance, Tata Motors, Maruti Suzuki, Larsen & Toubro have generated anywhere between 2-5 times returns.

Stock name

Price on 23rd Mar 2020 (Rs.)

Price on 04th Feb 2021 (Rs.)

Gains in Rs.

Bajaj Finance

2266

5504

3238

Tata Motors

66

326

260

Maruti Suzuki

4220

7640

3420

Larsen & Toubro

724

1530

806

Ashok Leyland

36

136

100

Avenue Supermarts

1820

2960

1140

Infosys

526

1279

753

ITC

154

230

76

L&T Infotech

1293

4297

3004

 

The stocks listed in the above table don’t belong to just one or two sectors but from different sectors.  Tata Motors, Ashok Leyland and Maruti Suzuki belong to the auto sector whereas Infosys and L&T Infotech are from the IT sector. Avenue Supermarts is from the FMCG sector and Bajaj Finance from the NBFC sector.

These are not just numbers. It is a testimony to how smart investing can help one make money in stocks.

However, as always, many investors who waited on the sidelines in the hope of the right time to invest lost out on these phenomenal gains.

The perfect recipe to make money from stocks is to 'buy low and sell high'. However, in reality,  is just the opposite. When stocks are on sale due to a market correction or a crash, investors panic and sell their holdings. On the other hand, when markets are on the rise, investors jump in hordes to ride the wave.

Let's take a look at some of the biggest reasons why most investors are unable to make money in stocks.

Waiting for the market correction to end

When markets are on a correction mode, many investors wait on the sidelines hoping for the markets to bottom out.

"Let the market correction end."

"By waiting we will get this stock for a lower price after few days."

These are some of the excuses quoted by investors as they wait for a further correction before investing. However, such investors are caught unaware when the cycle suddenly changes and thus miss out on investment opportunities when stocks are available at discounted prices. On the other hand, smart investors who know how to make money in the stocks, accumulate stocks during market corrections in a staggered manner and hold them over time.

Investing blindly during a bull market phase

When markets are going through a bullish phase, investors blindly rush in to ride the wave. In the greed to make money from stocks, fundamental investing often goes for a toss.

As a result, investors invest in stocks that are highly overvalued or have no real value associated with them but are just riding on the euphoria generated by the bullishness in the market.

Not seeing instant results in their stock portfolio

Smart investing is boring. Many successful investors have compared it with watching the paint dry or grass grow. Both of these activities are very slow in nature. Despite investing in good stocks, when some investors see no visible price moments on a day-to-day basis, they feel that they have invested in the wrong stocks and end up selling it.

The desire for excitement drives such investors. In the process, they end up making wrong investment decisions without realizing that real money is made over time when the power of compounding kicks in.

Now that you have discovered the top reasons why most investors are unable to make money in the stock market let's look at the solution.

How to make money in stocks with smart investing?

Volatility is a regular part of the stock market. Accept it or not, there are many factors beyond investors' control, which cause stock market volatility. It could be anything ranging from domestic, global, economic or political factors which cause market volatility.

While market ups and downs can cause variations in prices of stocks, it does not alter the fundamentals of quality stocks in any way. Fundamentally sound stocks which have a very high potential can quickly bounce back in 6-12 months, thus delivering potential returns of 25-50%.

By investing in quality stocks trading below their intrinsic value, investors can make money smartly by capitalizing on the price difference from their real value.

Research & Ranking’s Mispriced Opportunities Strategy is one such powerful strategy which allows investors to capitalize on the price variations caused by the market volatility by investing in stocks which are trading below their intrinsic value due to temporary hiccups in the market or the industry where it belongs to.

Success stories of past recommendations made under the Research & Ranking’s Mispriced Opportunities Strategy

Hero MotoCorp

Hero MotoCorp is the world’s largest two-wheeler manufacturer with a market share of over 46% in India. Recommended on 19th April 2020 under the Mispriced Opportunities Strategy, this stock generated a return of 31% in just 40 days.

Kansai Nerolac

A subsidiary of Japanese paint company Kansai Paints, Kansai Nerolac Paints is India’s largest industrial paint and third-largest decorative paint company. Recommended on 22nd May 2020 by our research experts, the stock generated an impressive return of 29% in just 41 days.

Varun Beverages

Varun Beverages, a significant player in India's beverage industry, is the 2nd largest franchisee globally for PepsiCo’s carbonated soft drinks and non-carbonated beverages outside America. Recommended on 28th July 2020 under the Mispriced Opportunities Strategy, this stock generated a whopping return of 42% in just five months.

Endurance Technologies

Endurance Technologies is India’s largest aluminium die-casting company and the largest 2 & 3-wheeler auto component manufacturer in India. Recommended on 23rd Oct 2020 under the Mispriced Opportunities, the stock of Endurance Technologies delivered an impressive return of 41% in 75 days.

For complete details of performances of past recommendations made under the Mispriced Opportunities Strategy check out the below table:

 

Date of recommendation

Date of Exit

Buying price

Exit price

Duration

Gains in %

Hero MotoCorp

 

19th April

2020

 

28th May

2020

 

Rs. 1806

 

Rs. 2361

 

40

Days

 

31%

 

Kansai Nerolac

 

22nd May

2020

 

2nd July

2020

 

Rs. 360

 

Rs. 463

 

41

Days

 

29%

 

Emami

12th Dec

2019

 

26th Aug

2020

 

Rs. 310

 

Rs. 360

 

8

Months

 

16%

 

Varun Beverages

28th July

2020

 

16th Dec

2020

 

Rs. 688

 

Rs. 974

 

5 Months

 

42%

 

Page Industries

18th Aug

2020

 

17th Dec

2020

 

Rs. 19101

 

Rs. 27247

 

4 Months

 

43 %

SBI Cards

28th Feb

2020

 

2nd June

2020

 

Rs. 700

 

Rs. 611

 

96 Days

 

-13%

Endurance

23rd Oct

2020

 

5th Jan

2021

 

Rs. 1009

 

Rs. 1418

 

75 Days

 

41%

 

Research & Ranking’s Mispriced Opportunities Strategy offers investors a unique strategy to make money from stocks by investing systematically in 10-12 tranches that too for as low Rs. 10,000 each month.

Key Features of Mispriced Opportunities Strategy

  • Recommendations of 10-12 fundamentally sound stocks over the year, i.e., one recommendation every month. However, at times there could also be two opportunities in a month.
  • A research report will be provided for every recommended stock, highlighting our analysis and prognosis and the upside potential.
  • Information on the price range for purchase and exit of recommended.
  • To track earnings growth/major events in the stock/industry, investors will receive a short update every six months until the recommendation to exit.
  • To capture open and closed positions, profit booked/accrued of the portfolio stocks, and a quarterly fact sheet will be provided.
  • Alerts via SMS, email and dashboard for significant news/events affecting the recommended companies.
  • Dedicated support via live chat, phone and emails.
  • This strategy is ideal for fundamental medium-term investors looking for yearly returns.

Key takeaways

The world of equity investing is very complex and it is very difficult for the ordinary investor to make money from stocks without detailed research.

On top of this, there are many other noises in the market which can distract an investor and mislead him. These include stock tips and rumors floated either intentionally or unintentionally by friends, relatives, social media, Whatsapp groups and business news channels. It is very easy for an investor to fall into this vicious trap and invest in bad quality stocks.

Despite spending several years investing, most investors are clueless about the best way to make money from stocks. Many investors end up learning the hard way after losing their money.

Research & Ranking’s Mispriced Opportunities Strategy is designed to help investors make money from stocks, the smart way by leveraging on market imperfections. Stocks recommended under this strategy are chosen based on various quantitative and qualitative tests to determine their fundamental strengths and fall under one or more of the ten pre-defined categories of events.

These categories of events could be categorized as company specific/bottom up opportunities based on price variations due to sector specific events, macro-economic factors, global events, company specific developments & market fluctuations.

Invest smartly with Research & Ranking’s Mispriced Opportunities Strategy to make money in stocks the expert way. For more details click here

 

 

 

 

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