FINANCE & STOCK ADVICE: Diversification

The Problem

The major problem our people of the country facing is the concentration of there savings and hard earned money.Their investment is too concentrated in one option, exposing them to the risks from lack of diversification. If for some reason, the business faces a downturn, many businessmen could run the risk of losing all that they had earned so far and redeployed into the business. This is particularly true of small sized enterprises that are closely held, that do not have an investment portfolio or a professionally managed treasury. It is also true of a number of small businesses run by individuals. Many of these wealthy individuals, who run a successful business, may be running the risk of concentrated investments, without being aware of it.They increase the risk of losing money, if the chosen investment goes bad.

Segment Facing The Problem

1. Businessman tend to invest most of their money back into their successful business with a justification that why seek another investment, when your own business provides a high return on capital and is also in need of funds?

2. Many investor have highest stock holding is in the stocks of their own companies. In these days of stock options and preferential allotments, many people tend to have a big chunk of their own company shares in their portfolio.

3. Many young professionals today invest a large sum of money in buying themselves a house. They save tax, and also get a house of their dreams.

4. Investors who made money in one stock, tend to like it so much, that they shift a large chunk to invest more in the same stock. These are some of the known ways in which portfolios are concentrated. Studies show that many small investors who indeed have a large number of stocks, tend to have some "dead" investments – those that were picked up on poor advice, gone sour and languish in the portfolios. Otherwise they have on an average about 6 stocks in which they have their money – not a very diversified portfolio

Solution To The Problem

Diversification is the key to keeping risks balanced. Good for your portfolio. Make sure that you don’t have more than 10% of your saving in any one asset – your business, your favourite theme or your favourite stock and perhaps not over 20% in your home. It can be painful when markets move up, but your wisdom will see you through when the markets move down. Moral of the story – make sure you diversify. It is the simplest way to make sure your portfolio is protected from risks it can do without.

MULTI BAGGER STOCK GROUP

Some of my group's multi bagger picks during the rally were NMDC , MMTC , STC , Larsen ,Jindal Steel & Power , Unitech , BF Utilities , Jai Corporation , Walchand Nagar Industries, RNRL , Reliance Infra (Reliance Energy) etc.

I had been long associated with a corporate engaged in financial services , where with the assistance of specialized tools along with my special analysis as per some historical accepted theories of stock market like W. D. GANN's Theory , Elliot Wave Theory and others are used with reliable insider information of so called " operators" who play a major role to make a stock ,a Multi Bagger ,I do make my gem picks in this market.

I had been running my group , where the associated people get the reliable and most beneficial to get the unexpected return as seen in the above mentioned tips. Say for example the stock called MMTC had jumped from 2000 level to 56000 per share of historical price where the capital appreciated by 28 times in very short period with 2700% return on capital employed. Likewise in RNRL we started accumulating at RS 25 level from where we saw it moving at 250 level giving 10 times with 900% return.

These sort of return is helpful as ,

1. Handsome gain will make a jack to our capital.

2. Limited stocks trade , as daily trade could be avoided , which is more risky.

3. Long term capital gain , so no tax liability.

4. Whole income in white, which could be further deposited into fixed deposit to get assured monthly income later.

5. Strong income tax file without paying any taxes.

Our role here could be summarized as :

1. Giving tips to all registered member at proper time , when the stock is just about to take off, neither too early not too late.

2. Make sure investor do not gt stuck into it.

3. Recommend to exit when the operator is about to leave it.which is the most important work or else the whole accumulated and deemed profit will be washed away along with part of investment and will remain stuck for long - long period.


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Diversification