Blog Details

Most investors spend their time asking one question: “Which stock will give the highest return?”

But seasoned investors know a more powerful truth: Returns improve dramatically when losses are reduced.

Protecting capital is often more important than chasing the next multibagger. Here’s a simple, disciplined framework to help you clean up your portfolio and improve long-term returns.

1. Re-evaluate Non-Dividend Paying Companies

Non-dividend paying companies are not bad by default—but they must justify why they retain earnings.
If profits are not coming back to shareholders either through growth or dividends, it’s time to question their relevance in your portfolio.

Ask yourself:
Is the retained capital truly creating value?

2. Be Extra Careful with Low-Priced Stocks (Below ₹50)

A low share price often creates a false sense of cheapness.
Many such stocks remain low-priced for years due to weak fundamentals, poor governance, or lack of growth visibility.

If a stock is cheap only because the business is weak, it doesn’t deserve a place in a serious investor’s portfolio.

3. Review Stocks That Have Underperformed the Sensex

If a stock has underperformed the Sensex over the last two years, it’s sending a signal.
Markets may fluctuate, but sustained underperformance often reflects deeper business issues.

Underperformance doesn’t always mean “buy the dip.”
Sometimes, it means listen to the message.

4. The Most Powerful Question: Would You Buy It Again Today?

Imagine you sold your entire portfolio today.
Now ask: Which of these stocks would I confidently buy again at current prices?

If the answer is “no” or even “maybe,” that stock deserves serious review. Capital is precious—allocate it only to your highest-conviction ideas.

5. Revisit the Story Behind Every Stock

Every stock in your portfolio should have a clear, compelling story:

• Why does this business exist?
• What is driving its future growth?
• Is management capable of navigating challenges?

If the story is no longer strong, relevant, or believable—don’t hesitate to exit. Hope is not an investment strategy.

The Big Takeaway

Improving returns isn’t always about finding new stocks.Often, it’s about removing the weak links.

By cutting laggards, questionable stories, and low-conviction holdings, you free capital, reduce stress, and improve portfolio quality.

In investing, winning starts with not losing unnecessarily.

For your success!

Dr Anil Kumar Asnani

SEBI Reg. Research Analyst

WhatsApp: 9755920780

Mobile: 9131361959

Website: https://www.smartverc.com

In the world of stock investing, experience is the greatest teacher. But the wisest investors know that there are two kinds of experience — your own, and that of others.

The best way to learn stock investing is not only by participating in the market but also by learning from the successes and failures of others. Every great investor has walked a path filled with mistakes, insights, and turning points. Fortunately, they’ve documented much of that journey for us.

When we read books authored by the great investors themselves, we gain access to decades of wisdom distilled into a few hundred pages. We get to see how they thought, what they avoided, and how they made decisions when the market tested their patience. That kind of learning saves us years of costly trial and error.

The best way to overcome struggle, too, is with the help and perspective of others. Being around thoughtful investors — through communities, clubs, or even mentorship — allows us to see the market through calmer eyes when volatility strikes.

And last but not least, our own successes and failures eventually become our finest mentors. Each mistake teaches humility; each success builds conviction. Over time, they shape not only our investment returns but also our temperament — the true edge in long-term investing.

“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.”

— Warren Buffett

If you wish to start this journey of learning, begin with The Intelligent Investor by Benjamin Graham — a timeless classic that continues to guide generations of investors on how to think, not just what to buy.

For your success!

Dr Anil Kumar Asnani

SEBI Reg. Research Analyst

WhatsApp: 9755920780

Mobile: 9131361959

Website: https://www.smartverc.com

“In the short run, the market is a voting machine, but in the long run, it is a weighing machine.” — Benjamin Graham

Many investors get confused or anxious when a company with strong fundamentals shows sharp movements in its share price. But volatility in the market is normal — even for excellent businesses. A great company does not guarantee a smooth share price journey.

Why Share Prices Move Even When the Business Is Stable

A company may have strong earnings visibility, capable management, and a solid balance sheet. Yet, the share price may still fluctuate sharply due to several external factors:

1. Overall Market Volatility

When markets correct sharply, even high-quality stocks decline because sentiment affects everything.

2. Sector-specific Volatility

If an entire sector faces headwinds — regulations, demand slowdown, etc. — individual stocks also react.

3. Raw Material Price Changes

If input costs rise (like crude oil, metals, chemicals), margins get temporarily affected, pulling down the stock price.

4. Interest Rate Changes

A rise in interest rates reduces the present value of future earnings, impacting valuations, especially of growth stocks.

5. Currency Movements

Exporters benefit from a weak rupee; import-heavy companies suffer. The reverse is also true.

These factors operate independently of the company’s long-term fundamentals.
That’s why understanding volatility is essential — and why long-term investors must not confuse price movement with business movement.

Why Growth Stocks Are More Volatile

Growth stocks often appear more volatile because of the way the market values future earnings.

When investors expect high growth, the stock price discounts future earnings far into the future. This means:

·  If optimism increases → the discounting period stretches → stock price rises more.

·  If fear increases → the discounting period contracts → stock price falls more.

The fundamentals might be unchanged, but sentiment shifts and valuation math cause large price swings.

A Hypothetical Example That Makes It Clear

Consider a company, FastGrow Ltd, which is expected to grow earnings at 25% per year for many years.

Case 1: Market is optimistic

Investors are willing to discount 10 years of future earnings.
The stock trades at a high P/E of 50.

If EPS is ₹10
Share Price ≈ 10 × 50 = ₹500

Case 2: Market becomes cautious

There is global volatility — interest rates rise.
Investors now discount only 6 years of future earnings.
P/E compresses to 30.

The business is unchanged.
EPS is still ₹10.
But Price becomes: 10 × 30 = ₹300

What changed?

Not the company.
Not the earnings.
Not management.

Only market perception of the time horizon changed.

This is why growth stocks rise faster when times are good and fall faster when sentiment weakens — even without any fundamental change.

The Takeaway for Serious Investors

·  Strong companies can show weak share price performance temporarily.

·  Volatility is a feature of markets, not a flaw of the company.

·  Growth stocks amplify both excitement and fear.

·  What matters is the long-term trajectory of earnings, not short-term noise.

When fundamentals grow steadily, the share price eventually follows — even if the path is not straight.

For your success!

Dr. Anil Kumar Asnani

SEBI Reg. Research Analyst

Whatsapp: 9755920780

Mobile: 9131361959

Website: https://www.smartverc.com