Abhinav Mishra’s Investing Journey
- 7 January 2023 | 1277 Views | By Abhinav Mishra
Several people have invested and made money as well as lost their wealth in the stock market. In this article, we share one such journey of Abhinav Mishra, content writer for our website. In this piece, Abhinav explores his backstory, and weaves some priceless lessons he learnt through his investments, patience, and how he has reaped the results.
My investing journey – How have I performed so far?
“I have made 10X returns in the stock market in the last five years”.
Are you looking for something magical in this article? Sorry to disappoint you – I am not one of those investors who multiplied wealth 10X from the market. However, I can promise you if you stay till the end (it is a long article), the learning shared will be a better investor, especially, if you are new to investing.
The biggest problem with money is GREED – we are always looking to do new things so to earn more. In a way, it is good. Money is like a fire – if you only know to lit a fire but cannot control it, it can burn the whole jungle.
Advisors always talk about financial planning. It is crucial for me because it tells you where you need to stop. If you don’t know that – you will be a wanderer without a destination. At the start of the journey, it feels fun. But after a while, it becomes trouble.
May 2017. I was tired of listening to everyone’s story of making money in the stock market. For those who were not tracking the market back then – it was similar to the 2020-21 market, you put your money anywhere, and it turns into gold.
I planned to enter the market with a friend – opened a Zerodha (you too can open it if you have not done so far). I just wanted to invest in the IPOs, as every IPO had a bumper listing.
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Let me admit – I HAD NO UNDERSTANDING OF THE MARKET. When I look back today, I think I have come a really long way in my investment journey.
Learning 1 – Never invest a single penny in direct equity before you have a decent understanding of the market. We only learn when we are in the market. If you plan to do the same, ensure you invest only a small amount.
The first IPO I subscribed to was Central Depository Services Limited (CDSL). The offer price was Rs 150 (numbers everywhere in the article will be approx). It got listed at Rs 250 per share, 80% over the issue price. Needless to say, I did not get the shares. For the next few days, the stock was hitting a 20% circuit every day. For me, it seems it will continue to do forever!!
When you have such thoughts in mind – what do you do? You buy the stocks. I bought shares worth Rs 6,000, hoping to make 10% gains in a day (the price was already up 10% when the market opened at 9.15). At 11.10, the stock was up 17.5% and was trading around Rs 390. I waited to book my 10% profit – a cakewalk – making money has never been so easy.
At 11.30 am, the price started to fall. No panic – the thought of losing money never occurred. I have seen the stock hitting the 20% circuit for the last three to four days. I was super confident.
At 1.45 pm, the stock was trading flat. I had already lost 10%. The stock finally settled 13% lower for the day, and I lost 23%, nearly one-fourth of my capital – Rs 1500. I have never felt that bad. I decided to stay away from the market (I am glad, we don’t do what we want to do). The stock continued to fall and came to Rs 280 levels in the next few days (this story does not end here).
Learning 2 – There is no easy money in the market. If you have made easy money in the market, you have been lucky and nothing else. Don’t come to the market to make easy money. You can only make money with patience (trading and investing both) in the market. You need to follow the basics and stay disciplined.
My second investment
For the next few months, my friend and I only applied for IPOs. Out of all the IPOs, we applied for, I only got HUDCO.
In October 2022, on one rainy morning, as I completed my Yoga, ToI flashed that Infosys’ CEO, Vishal Sikka resigned. The stock price crashed, and I made my second investment – bought Infosys I share – if I remember correctly, it hit a 10% lower circuit.
After two months, the company announced its succession plan, and the stock recovered – I made around 20% returns in two to three months.
Learning 3 – The market will present such opportunities to you. Make use of them – don’t invest everything you have, but if you have capital sitting idle, it can be invested in such situations. Apply this only if you have incorporated the first two learning.
The worst – investing based on tips
Towards the end of 2017, I started investing in the market. I was still naive and learning the ratios and balance sheet. I had no way to pick stocks but to go with tips.
I invested in stocks based on tips – 80% of whatever money I have lost in the market to date, where because of the investment I made on the tips. Sadly, in some companies, I have lost 90% of the capital. If you are feeling bad reading it – luckily, I did not invest large capital in any of these companies. However, they were bad investments.
Learning 4 and 5 – Never invest in any company based on tips. If you cannot pick companies on your own, invest in mutual funds. Second, never average out if the fall is sharp. This is what I have learned – if you believe the stock is good and want to average out, wait for the reversal. If the stocks do not bounce back, hold it – use it for tax harvesting (more on this later).
The Period of Pain
I mentioned at the start that 2017 was the year when every stock was rallying. The next year, 2018, was a tough year for investors. The market continued to slide lower from the highs of Jan 2018 and never recovered in 2018. However, it was the best year for me in terms of earnings. The market was down 10 to 12%, but my portfolio was down 40%. I am unable to understand the reason. After spending time reading and learning, I got to know the reason. I was not making a new mistake. Most new investors make the same mistake. Can you guess??
Learning 6 – Asset allocation is very essential. If you are new to investing and have created a portfolio based on tips, I am 100% confident that you must be having only small and mid-cap stocks in your portfolio. No one gives tips to invest in large-cap companies. The same was true with my small-size portfolio – I had only small-cap companies in my portfolio.
To all those new to investing – please start with large-cap stocks. Even if you are an aggressive investor, at the start of a financial journey, no one enjoys the red portfolio. With small and midcap, the volatility is evitable. In fact, it can be demotivating to the extent to make you exit the market forever.
The Learning Phase
I continued to learn about the market and continued to invest in the market – more through mutual funds and only a small percentage in direct equity. I studied not only the fundamentals but also the stock market history. I studied all the market crashes, and what happened during the fall and after the crash. There was a clear pattern.
I also put in some effort to understand the investors’ psychology. Since I used to read 40 to 50 books every year back then, most of the books I read in 2018 were about investing.
Update – CDSL was still trading around 320 levels after one year. I was buying in small quantities.
Learning 7 – The biggest learning: YOU NEED TO TRUST THE MARKET LIKE YOU TRUST YOUR PARTNER. Unless you have developed the same level of trust with the market as you have with your partner (or parents), you will not make money in the market. Why?
Without trust, you cannot deploy large capital in the market. Secondly, without trust, you cannot stay invested in the market for long.
It is exactly like being in a relationship. If there is no trust, the relationship won’t last for long.
If I give you Rs 1 crore today, you must have the trust to deploy it in the market. If you don’t have that level of trust in the market, you need to work on it – if you are serious about creating wealth. I have that confidence in the market. GIVE ME RS 1 CR TODAY, and I WILL DEPLOY EVERYTHING IN THE MARKET.
The pandemic was a game-changer for me. Most people were selling during the March 2020 crash, but I was buying. I broke a couple of my FDs and other debt investment and deployed everything in the market. I was aware that it could take years for the market to recover. However, all the research I have put into the market crashes and effort into understanding the market paid off.
Learning 8: Buy when others are selling and hold on when others are buying.
Reaping the Benefits
I continue to invest in direct stocks and mutual funds today. 95% of my investment is automated today as I don’t want human emotions in my investments.
CDSL, my first investment, was also the first stock that gave me 500% returns (it touched 1600 at one point this year). I still have some stocks that have delivered poor returns. But that is part of the journey – no one can have only good stocks in a portfolio if taking a certain risk.
Learning 9 & 10: Hold on to your good stocks. Stay invested in quality stocks – SABKA TIME AAYEGA. Check CDSL charts – it stayed between 300 and 350 for four years, before giving me 500% returns.
Hold on to your good loser stocks. I bought Titagarh at Rs 125 per share. The stock fell to Rs 40 levels, but I did not average as the business was not doing great – it was average. The price increased finally in 2022 (Q1). The price jumped to 120 levels, and I sold it, thinking at least I recovered my capital. Check the stock price in recent times. If the company is giving decent results, hold to your investments. Sooner or later, the rally will happen. It only takes a few months for a 50% jump. I have so many stocks around this learning.
Since 2020, I invest with only one goal – Not to lose money. If I have even 10% doubt about the company’s fundamentals or its growth prospect, I stay away from such investments. The reason is simple – If I lose 50% of my investment – the stock needs to rise 100% so I can recover my capital. It does not happen so frequently. Ensure you are not losing capital in the stock market.
How much have I made from the market?
If you have this far with me, I think it would be unfair not to tell you how much I have made from the equity market after giving so much GYAN.
My goal from the equity market is to earn between 13 and 15 percent CAGR. I would be able to achieve all my goals with these returns. All my investments are for 10 years and more.
My returns: XIRR for my direct equity and mutual fund investment combined is around 16%. This is when the market is at an all-time high.
Thank you for reading the article. Here is another learning – have realistic expectations from the market as you have from your partner – the journey will be smooth.
If you have any questions – please connect with me on Instagram