Tag Archives: Investment Advisor Chennai

PenguWIN’s 3rd Anniversary

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Dear Friends,

Today, 4th July 2017, PenguWIN steps into 4th year of successful operations. It has been an exciting journey so far with ups and some downs. Our humble and sincere thanks to all our clients, well-wishers and partners for imposing faith and supporting us. There have been many instances where some of our existing clients have referred their friends/colleagues/relatives to benefit from our services and follow up with them on a regular basis, until they become our clients. I presume that only delighted clients would go so far.  

Personally, the learning have been immense and the confidence that we are able to build among our clients has increased significantly with magnitude of returns their portfolios have achieved. We have struck to our original objective of maximizing the value delivered over revenues. In this profession, if your focus is always on revenues and profits, then you tend to compromise on the kind of products and services that you offer to the clients. I believe that certain professions are to be run in this fashion or otherwise the person should not have chosen this. Professions including Doctors, Civil services have to be run in this fashion and not purely for the sake of money. We do keep hearing that doctors are given targets on performing surgeries and ‘Bureaucrats have become more corrupt than politicians’.  It’s not that these professionals should not make money, (and for the hard work that goes into their profession) but have to draw a clear line between what is ethics and what is not.

When we started 3 years back, the business has to be built from scratch with less than half a dozen investors who were very close friends of mine. A significant proportion of our clients that we work with today are new to financial investments, especially equities. However much historic data and facts are presented, unless the investors experience it personally in their portfolios, the conviction will not be there. Now, after 3 years of operation, I can confidently say that clients with whom we have worked for 2 years and above have made excellent returns in their portfolio. Though the market valuations (slightly on the higher side) is one of the reasons, the discipline of investing systematically and the pedigree of funds invested also play a key role.

Sensex from 4 July 14 to 4 Jul 17

 

From 25,962 on 4th July 2014, Sensex has moved to 31,321 (today’s opening) which is annualized return of 6.88%. But all our clients have made significant alpha (Fund returns over Sensex) over this period. The markets are almost at all-time high. But people who think that it is probably a time to sell need to understand that 12k, 16k, 22k and even 25,962 when we commenced operation (4-Jul-14) was an all-time high at that point in time. There is no doubt that Sensex will continue to grow further as long as the companies make profits (earnings) and the macro environment is good in India. While we don’t recommend lump-sum investments at this point in time, continuing your systematic investing (SIPs and SWPs) is a discipline that you have to adhere to. Selling should be done only based on our goals, when we have planned commitments and the fund managers are in a better position on judging the market. 

Equity as an asset class provides the best returns over longer time frames (3 to 5 years, minimum, depending on the product type). Investors who aspire to create wealth, should have conviction on Equity. Yes, it would not be a smooth journey and have minor and major jerks. But, this is the risk premium for fantastic returns that it provides, way above the other Asset classes. Don’t panic (investors typically get worried when the markets tank and at the same time the market touches new highs), remain cool and you will definitely make good returns and we are there to handhold you in this long journey. Please remember that “time” is a very important factor for success in Equity investment and allocation of short term funds to equity is one of the key issues that creates dissonance among people.

I want to repeat the following once again and ‘n’ number of times:  Our sincere thanks to all our esteemed clients for their support and encouragement without which we would not be where we are today. We strongly believe that references and word of mouth of delighted customers is what helps us grow rather than marketing gimmicks which are ephemeral.

 ‘The only place where success comes before work is in dictionary’ – Vidal Sasoon.

 

<Blog # PenguWIN 1054 – PenguWIN’s 3rd Anniversary>

For the benefit of Senior Citizens and Good to Know for others

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Dear Friends,
There were constant complaints from Senior Citizens to RBI about the interest rate cuts that resulted in the lowering of Bank FD rates from over 9% to about 7%. Dr. Rajan explicitly mentioned this in one of his speeches and the famous “Dosa Economics” is linked to this (http://penguwin.com/rbi-governor-dr-rajans-dosa-economics/). 
In the Budget 2017, the government announced a scheme which will provide guaranteed returns to Senior Citizens for 10 years and the rate would be a fixed without any changes, thereby giving some solace. 
LIC of India was handed over this initiative and they have executed this (read the attachment). It is referred as single premium pension plan offering 8.3% on a annualized basis and 8% monthly. 
The plan has a 10 year lock-in and the pension will be taxed at the hands of investor. Currently Senior Citizen Savings Scheme(SCSS)  provides a better proposition with Investment of upto 15 lakhs, 5 Years lock-in at a interest rate of 8.4%. While the SCSS interest rates are variable in nature and linked to Government Security Yields (GSec), the probability of this rate going down further is limited.
So, the recommendation would be to exhaust the 15 Lakhs limit in SCSS before investing in this LIC Pension Scheme

<Blog # PenguWIN 1053 – For the benefit of Senior Citizens>

Welcoming New Year 2017-18

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Dear Friends,

                  A very Happy New Year to you!

For the Finance world in India the New Year starts on 1st April XXXX and ends on 31st March XXX(X+1). However, this is not a standard practice across the globe and some companies use Calendar Year as the financial accounting period i.e. 1 Jan XXXX to 31 Dec XXXX. While these 2 are the predominant periods, companies do follow other timelines for financial accounting. Ex. Oracle follows 1 June XXXX to 31 May XXX(X+1) as the accounting period.

We should feel extremely happy at this juncture, when the returns from the Equity Markets (and Debt too) have been wonderful for the period ending 31 Mar 2017. Rewind it by 1 year, 31 Mar 2016, the portfolio of most of our investors were in Red. Though none of our customers exited in fear, I was definitely worried as most of them are first time equity investors and typical investor reaction is to salvage whatever they have and exit the market. Here, I must say that the level of Composure and Maturity demonstrated by our investors was really great.

Equity Returns are never linear and the risk of equity is the volatility and not that we will lose everything like the fund scams (Sharda, EMU birds, Ponzi schemes and Gold houses in Chennai). The volatility decreases over time and that is the reason why Equities are referred as long term growth products.

A simple approach that I follow for equity investing is

  • Do not look at Equity for short term goals. It might happen that investors who started investing a year back would have made handsome returns in just 1 year, but I would say that luck was in their favour as predicting the market is impossible.
  • Never lose your conviction on Equity to deliver. Whenever there is a blood bath in the markets, eroding significant value, people tend to question their conviction and negative thoughts arise as whether they made a mistake.
  • Don’t invest in Lump-sum mode when the markets are highly valued and stagger the investments over a period of time. Valuation can be figured out through Price to Earnings Ratio (P/E) and Price to Book Value (P/BV) which is easily available.
  • Leave the investment management part to experts through MFs (I would be publishing a separate note on this)
  • The advantage of Equity investment is not just the returns that it can generate but also the taxation aspect of the instrument – currently not taxed if the investment duration crosses a year. Let’s make hay while the sun shines and before Finance Minister brings a twist.

I am enclosing some interesting data on the returns delivered by Equity in the last decade i.e. 31 Mar 2008 to 31 Mar 2017

I cannot predict if the year 2017-18 will continue to be a fantastic year for equity but the drivers are in position today, unlike the past. Investments from Domestic Institutions (DIIs), EPF, NPS and Mutual Funds have significantly improved countering the FII flows. Real Estate and Gold are not expected to improve which helps money flow into Equity

I propose to conduct year end portfolio reviews starting the week of 10th April 2017 and will reach out to you.

<Blog # PenguWIN 1052 – Welcoming New Year 2017-18>