7 tips for investors in 2024: Best PMS managers spill the beans

As we step into 2024, markets are full of optimism, the Nifty50 and Sensex are at all-time highs, while midcaps and smallcaps are on an upswing as India’s growth story remains intact.

How should investors look at next year though? We spoke to the top three PMS (Portfolio Management Services) managers for their advice for the New Year who are Siddhartha Bhaiya of Aequitas, Rishi Gupta of Shepherd’s Hill, and Ashish Goel of InvestSavvy.

Here are seven tips they sounded out.

Numbers over narratives

Making money in markets this year has been like monkeys throwing darts. At such times, investors start focusing on the narratives rather than fundamentals, says Siddhartha Bhaiya, managing director and chief investment officer of Aequitas. “Our advice to investors for sustained long-term returns is to focus on the numbers rather than the narratives and invest with a high margin of safety,” he said.

Stay focused

With so many stocks hitting new highs every day, the temptation for investors will always be to identify the next multi-bagger. But that is easier said than done. “Instead of buying unknown names that are touted as the next multi-baggers, it is better to focus on fundamentally sound companies – the ones with strong balance sheets and strong earnings growth,” says Rishi Gupta, managing partner at Shepherd’s Hill. He recommends creating a portfolio of 15 to 20 stocks that are fundamentally strong and holding them for a three to five year period could be a rewarding strategy, according to Gupta.

Simplicity over complexity

Another handy tip comes from Ashish Goel, managing partner and chief executive officer at InvestSavvy: pick simplicity over complexity. There are all kinds of narratives floating around. Not all businesses are simple to understand. There might be risks that are not spoken about, for example, how a company is exposed to global markets and risks stemming from there. “Invest in simple business models where one can understand why the profits would grow and where the growth is coming from.” Charlie Munger, Buffett’s partner eloquently articulated this thought: “We have three baskets for investing: yes, no, too tough to understand.”

Also Read Top 5 PMS of 2023: Aequitas, Shepherd’s Hill, others gained the most this year

Steer clear of noise, don’t waste volatility

Next year will be dominated by conversations around elections. Plus, geopolitical uncertainty may also hit headlines all too often. It’s a bad idea to speculate on stocks based on macro outcomes like the elections or geopolitical events. “Ignore the noise and stay invested during times of high volatility,” says Gupta. Stay alert only to news that affects hard numbers. For example, ask how will an event impact the earnings growth or business model of the companies you hold. If there is a material impact, then consider selling. If not, you might want to buy more of the stocks you believe in at attractive prices.

Avoid leverage

Many investors mistake bull markets with their own brilliance, says Bhaiya. Consequently, taking leveraged bets on markets seems to provide a huge opportunity to earn disproportionate gains in markets. Leveraged bets on any company do not necessarily guarantee gains on the investment but they certainly amplify your losses should the tide turn out of favour. He quotes Buffett: ‘Borrowed money has no place in the investor’s tool kit: Anything can happen anytime in markets. And no advisor, economist, or TV commentator – and definitely not Charlie nor I – can tell you when chaos will occur’. If one of the greatest investors of our times thinks leverage is a risky affair, other investors could certainly avoid this, says Bhaiya.

Avoid trading tips; it’s not durable

The idea of trading tips looks alluring but never ends well. “Don’t go for quick money or gambling, if you lose money then don’t blame the markets,” says Bhaiya. Goel said, “Don’t go by tips and guys who promise 10 percent monthly returns because if they could offer that in the long term they wouldn’t be selling it to you. They would be super rich themselves.” It’s as simple as that. If it’s too good to be true, it probably is.

Also Read: Top 5 AIFs of 2023: Aequitas and First Water tops the Category III list

Invest in stocks, not sectors:

While often investors chase sectors and themes, in the end you are investing in a particular company. Some companies may not do well even if the sector does well. This is especially true in the mid-cap and small-cap space where all managements may not be able to execute well and clock growth in tough times. Generally, it is good to pick the best stock in the best performing sector but keep track of the company and its stronghold on a business. For example, Gupta said, “IT is not a monolithic sector; select tech companies that have good unit economics, a runway for growth and have an advantage in their chosen verticals, be it services or products.” Similarly, the banking sector has cleaned up its balance sheets, but it’s the well run banks which will lead the pack, going forward, he said.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.