Zerodha founder Nithin Kamath tips: Since the beginning of the COVID epidemic in March, 2020 till now the participation of new investors in the stock market has increased significantly. Zerodha, the country’s top online brokerage firm with 8 million users, has become an attractive investment platform for retail investors. In an interaction with Livemint, Nitin Kamat, Founder and CEO, Zerodha shares his thoughts on investors’ approach to stock selection, diversifying portfolio, common mistakes to avoid.
value vs growth
Ease of access to information has increased investment in capital markets. The effect of any future event is immediately visible on the stock. However, finding a value stock is a difficult task. Investing does not mean just value or growth, but it is about diversifying the portfolio and not investing too much in any one stock or sector or country.
stock selection
Today value growth is hidden in companies and everyone’s investment base should be how a company can grow. And the strategy of selecting growth companies is very risky and investors should be cautious about risk and diversification. Investors should look for stocks of such companies which have attractive price today and can be invested for long term.
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Keep in mind, a cheap stock does not necessarily mean that it is a good buy, which is a common strategy of retail investors as they expect a return. This is a bad strategy. In the stock market, if the price of a stock is falling and the decline is high, it means that there is negative news about that stock.
If the returns are high, then interest is generated.
This is for each asset class, whenever the return is high, it generates more interest. Same in the case of crypto, it made a lot of money for people and that’s why people are interested in it. The market has performed well in the last two years, so people’s participation has increased. The market has outperformed real estate, fixed deposits and others.
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IPO market in 2022
Don’t think that the IPO market will be good this year. If the market is good then everyone is trying. If the performance of the IPO market is not significant, people will try to keep the price as high as possible and leave good earning potential for retail investors.
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