Most of us feel that the stock market is not that difficult, and we can manage our portfolio/investments all by ourselves without the help of a professional. But let me tell you it is not that easy.
In the current scenario, there are many newcomers in the market who have started giving tips on daily trading and without having any certifications they are actually guiding people to double their money by investing a little amount every morning and withdrawing the doubled amount by evening. Yes, that does sound fascinating but is it actually happening? Is studying and buying stocks this easy?
Well well well… This is not how it is, had this been the case then unlike doctors, compounders would have been treating the world. Let’s have a look at why and how Portfolio Managers (Professionals) are required for this job. The teachers in kindergarten these days use the storytelling method to teach kids which works wonders, maybe we can use the same way to make it easier for all of us to understand.
Here it begins,
I hope most of us must have seen the movie named, “Taare Zameen Par”. A movie about a boy named Ishaan Awasthi who was suffering from Dyslexia. The movie is based on what problems Ishaan was going through and how he got cured. The movie is full of emotions, lessons for life, parental lessons, and whatnot. Let’s now look at our Investment Portfolio from the perspective of Taare Zameen Par.
Do you remember the main character of the movie “Ishaan Awasthi”, let’s consider Ishaan as our Investment Portfolio, his mother, “Maya Awasthi” as an Investor, his father “Nandkishore Awasthi” as a dealer, and his Teacher “Ram Shankar Nikumbh” as a Portfolio Manager.
The Movie:
After Ishaan grew up from a small baby to a toddler, Maya (The Mother) started to take care of Ishaan on her own just like any other mother. She did a lot of hard work in making Ishaan learn things easily which was very normal to learn for kids of his age, she focused on Ishaan, and taught him using different techniques, playing, and doing whatnot. But despite doing every possible thing she realized that nothing is working for Ishaan. Maya thought to take Ishaan’s Father’s help assuming he would know how to help her. Instead of having a clear understanding of why Ishaan wasn’t able to perform wisely and without giving him time to recover, Nandkishore (The Father) couldn’t help Maya and they decided to send Ishaan to Boarding School. The poor boy suffered with no idea of what was going on with him until he met a teacher in his boarding school “Mr. Ram Shankar Nikumbh”.
He was a trained and experienced teacher who was particularized in managing special kids. Nikumbh noticed that there is something wrong with Ishaan, so he started digging for information and took a sneak peek into his past, and figured out what he was suffering through. Being a professional, he tried to communicate with Ishaan first to understand how he feels, second what problems is he going through, and lastly how he can fix them. Nikumbh gave his full attention to Ishaan and being an experienced teacher, it was easier for him to identify the root cause of the problem. After identifying, Nikumbh made a road map to be followed by Ishaan which made learnings fun and interesting for him. With proper time and guidance, Ishaan started to learn things and showed an improved performance in his academics. To Ishaan’s parents, it was like a miracle. Maya was very happy to see Ishaan’s performance and she was glad that she trusted Nikumbh for it. While Ishaan’s father learned a lesson. With the correct solution, time and love Nikumbh was able to treat Ishaan’s problem, and the boy did WONDERS.
Now let’s understand how it relates to our Investment Portfolio:
Investment in Ishaan and managing that investment by herself seemed easy to Maya initially but while watching the volatile nature of the market Maya panicked and took the help of a dealer (NandKishore) whom she thought of having a good understanding of the stock market because the general audience feels that dealers have in and out information on the stock market, but the dealer didn’t have the right set of knowledge which made the investment even fluctuate. Watching the investment getting doomed Maya had a fear of losing everything she had.
Had there not been Nikumbh (a certified Portfolio Manager), Maya’s investment had gone to zero. The Portfolio Manager identified the requirements and studied Maya’s portfolio in terms of how it performed in past and identified the cause of low performance. Being a certified Portfolio Manager, he knew how to study stocks and the stock market, he was able to see the flaws in the stock selection and he knew the tips and tricks which can still make a portfolio work. Nikumbh’s experience helped Maya in studying and choosing the right set of stocks with giving them enough time to perform made Maya’s portfolio show good results. With the right expertise and devotion, Maya gained good returns out of her Investments which wasn’t possible for her to achieve.
This is exactly why we need Portfolio Managers. Because they have given their time to learn and understand investment strategies and managing trading activities. Portfolio Managers are professionals who help the general public in managing their investments and compounding wealth with the right set of knowledge.
Happy Investing!
Yash Joshi is a Certified Financial Planner (CFP) from FPSB, USA. He is VP – Private Wealth at UpperCrust Wealth Pvt. Ltd. and has been associated with the Financial sector for more than 5 years.
