Economic Moats: How to Identify Companies With Durable Competitive Advantages
Economic Moats: How to Identify Companies With Durable Competitive Advantages Some companies earn high profits for twenty years in a row. Others see their margins collapse the moment a new competitor shows up with a lower price. The difference usually comes down to one thing: an economic moat. If you invest in Indian stocks for […]
Enterprise Value vs Equity Value: Understanding the Difference in Company Valuation
Enterprise Value vs Equity Value: Understanding the Difference in Company Valuation Two companies can show the same market cap and still be priced very differently. One may carry a heavy loan book while the other sits on a pile of cash. If you only look at the share price, you will miss that difference completely. […]
DCF Valuation in Practice: How Small Assumption Changes Can Transform Fair Value
DCF Valuation in Practice: How Small Assumption Changes Can Transform Fair Value DCF valuation (discounted cash flow valuation) is a method of estimating the intrinsic value of a stock by projecting the free cash flow a company will produce in future and discounting it back to today’s money at a rate that reflects risk. The […]
How to Stress Test Your Investment Portfolio Against Inflation, Recession and Market Crashes
How to Stress Test Your Investment Portfolio Against Inflation, Recession and Market Crashes Most investors check their portfolio on the way up. Very few check it on the way down, and that is exactly when it matters. Stress testing an investment portfolio means asking one plain question: if a bad year arrives, how much will […]
Portfolio Turnover: The Hidden Cost of Active Investment Strategies
Portfolio Turnover: The Hidden Cost of Active Investment Strategies Most investors check two numbers before they pick a fund or a strategy: last year’s return and the expense ratio. Very few look at a third number, which is how often the portfolio is traded. That number is called portfolio turnover, and it quietly decides how […]
Benchmark Selection: Why Choosing the Right Benchmark Matters More Than Beating One in Investing
Benchmark Selection: Why Choosing the Right Benchmark Matters More Than Beating One in Investing Quick answer: A benchmark is the yardstick you use to judge an investment. If you pick the wrong one, every comparison after that is wrong too, whether your fund looks like a winner or a loser. In India, the right benchmark […]
Portfolio Drift: How Small Allocation Changes Can Transform Long-Term Risk
Portfolio Drift: How Small Allocation Changes Can Transform Long-Term Risk Quick answer: Portfolio drift is the slow shift of your investment mix away from your target asset allocation, caused by different assets growing at different speeds. Left alone, drift usually pushes an equity-heavy portfolio toward more risk than you planned for. The fix is portfolio […]
Portfolio Rebalancing: Calendar-Based vs Threshold-Based Strategies
Portfolio Rebalancing: Calendar-Based vs Threshold-Based Strategies Quick answer: Calendar-based rebalancing means you reset your portfolio to its target asset allocation on a fixed date, such as once a year. Threshold-based rebalancing means you act only when an asset class drifts past a set limit, such as 5 percentage points. Calendar is simpler. Threshold reacts better […]
Risk Parity vs Traditional Asset Allocation: Rethinking Portfolio Risk
Risk Parity vs Traditional Asset Allocation: Rethinking Portfolio Risk Most investors call a portfolio with 60% in stocks and 40% in bonds “balanced.” By rupees invested, it is. By risk, it is not even close. In a typical 60/40 portfolio, stocks produce roughly 85% to 90% of the ups and downs, and bonds add very […]
Factor Investing in India: Value, Quality, Momentum, Size and Low Volatility Explained
Factor Investing in India: Value, Quality, Momentum, Size and Low Volatility Explained Factor investing is a rules-based way of picking stocks using traits that have historically earned higher returns or lower risk than the broad market. In India, the five factors most investors hear about are Value, Quality, Momentum, Size and Low Volatility. You can […]