Avengers: Endgame: 5 stock investing lessons you can learn from this Marvel epic
Avengers: Endgame is a movie that has taken the box office by storm and is creating history in India as well as across the wider world on a daily basis. However, did you know, the storyline can also help you to learn vital lessons regarding stock market investments? Well, yes and here we explain 5:.
No matter how much we talk about Marvel’s marvelous movie Avengers: Endgame movie, it is still not enough to describe the phenomena that it has become. It stars a mix of every superhero that we have adored in the past facing and fighting, a common enemy together. Make no mistake, Avengers: Endgame is definitely the biggest hit for Marvel production and also in Hollywood, as the movie already surpassed collections of Titanic and is racing to overtake Avatar as well. Box office Collection of Avengers has now rocketed to $2.2 billion in less than two weeks since release. Avengers: Endgame is a movie that has taken the box office by storm and is creating history in India as well as across the wider world on a daily basis. However, did you know, the storyline can also help you to learn vital lessons regarding stock market investments? Well, yes and here we explain 5:
A little preview of Avengers: Endgame:
The story revolves around superheroes Thor, Captain America, Ant-Man, Hulk, Black Widow, Rocket Raccoon, Nebula and Clint Barton who are determined to do some damage control on Mother Earth by going back in time - the mission is to kill villain Thanos who has created havoc there. The showstopper is the spectacular killing of Thanos. The show is extraordinary and in other words it is quite a ‘paisa vasool’ film.
Now that you remember what the movie is all about. Let’s understand 5 stock market lessons from Avengers Endgame!
1] Plan your investment
This would be the very first step for any kind of investment. After being defeated by Thanos, and losing so many lives on earth in the first part of the movie, the Avengers had to rework their plans. The return of Ant-Man aka Scott Lang brought a ray of hope, and a new plan was put in motion.
Lesson: Hence, if you think by just making an investment in stock market by opening an account and adding your money on any stock will bring good returns, then you have got it all wrong.
Planning and backups is key to everything and stock market is definitely that one place where you will need it. Few things you need to chalk down is why are you investing, how should you identify worthy stock, how much is your risk appetite, what are your goals and finally how much you should invest.
Take a leaf out of Dalal Street king Rakesh Jhunjhunwala's formula for success - he says, “Invest in a business not a company. Always know what to stake and when to take a loss.”
Before you start worrying on where to begin with your plan. Start by deciding how much you are willing to invest in stock market. Once decided, then understand which company is a good stock.
To identify a better stock, you can always analyze few ratios. These are - P/E Ratio which shows how much you are paying for every penny you gain. Also, it helps you in understanding whether a company is overvalued or undervalued. Secondly Price-To-Book value which portrays the market price over a book value. Thirdly debt-to-equity ratio which highlights how much a company is leveraged. Apart from this, take not of past earnings like EBITDA, EBITDA margins, revenue, earnings per share, CAGR and PAT. Finally, keep a note of the overall business aka sector performances.
Once you have invested, the final step is to decide your risk, pros and cons. All decided then you are set to go.
2] Time is key
Avengers Endgame has also shown the importance of time. The heroes had to go back in time before even Thanos entered earth to retrieve the 6 infinity stones. Choosing the right time to invest in stock market tells everything about your investment. It is like grabbing an opportunity. For instance, the Oracle of Omaha Warren Buffett says, it is better to invest in a wonderful company at a fair price then investing in a fair company at wonderful price. However, timing the market can be rough and therefore, you should invest in sound companies.
Invest in mid caps or small caps which are worth becoming a large cap in future. Remember every stock had to start from scratch to achieve the undefeatable status. Also, if a company is already overvalued, it would not be a wise choice to invest in that stock. Hence, cash the opportunity of price correction of a company whose business portfolio is strong. Also not every penny stock is appealing. Hence, remember the above mentioned ratios to analyze.
3] Trust your instincts, do not be disheartened
Avengers Endgame teaches on two occasions to how much important it is to trust your investment. Firstly, when Iron Man returned to earth at the start of the movie, he was shown giving up and just relaxing with family. Planning is key and instincts should be thought about, put under scanner, and thereafter, if found viable, acted upon.
Among many inspirational quotes on the stock market, Jhunjhunwala also says, “Prepare for losses. Losses are part and parcel of stock market investor life.”
Remember that trading in equities comes with its own shocks and risks that is because they are volatile and change every second. It is in their nature. Many things decide a course of trading such as global performances, India’s economic stances, political, a company’s development, festivals and seasons among others. If there is bad news, you will definitely see the impact on your stock and vice versa. Hence, buy right and hold tight. Do not be disheartened when your stock is plunging, be focused and determined. Do not let your emotions change your persistence in stocks.
4] Long term planning is best!
Avengers only long term goal was making earth free of Thanos and his wrath once for all. Investors like Buffett and Jhunjhunwala have shown a great example to what exactly long term investment can do in their kitty. No doubt, you can make profit booking in short term for financial assistance, but the greater good is that in the long term you become rich. For example, if you look at MRF shares they were trading near Rs 500 back in 2000, and now they have even touched an all-time high of Rs 81,097 last year. Currently the price has corrected to near Rs 54,000. Similar goes for stocks like Page Industries, Infosys, TCS, Maruti Suzuki, Bosch, Titan and much more.
Not only that, equities have given the highest return compared to any traditional investment like fixed deposits, savings account, small saving schemes and much more. But of course, the right stock is the key!
5] Diversify your portfolio
Last but not least! Your stock investment has to be diversified for gaining hefty returns. Remember, it did not take Thor, Iron Man, Captain Marvel and Captain America alone to fight Thanos, they needed an army of superheroes with different powers and skills.
Diversification in stock market, helps you a lot. One can always minimise the risk by having a bucket of different stocks. Currently, there are midcap, small caps, large caps, BSE 500, mutual funds, commodities and futures available on exchanges for investment. Also, you can shop your stocks from sectors like telecom, banking, NBFCs, real estate, technology, automobile, consumer durables, FMCG, metal, oil & gas and health care.
For example, your investment includes a mixture of banking, FMCG and technology stocks. If let’s suppose banking stocks are not going well, your risk will be minimised from the gains arising from FMCG or technology. Similar goes with mutual funds and other investments on exchanges.
Having said, if you are beginner in stock markets then refer to the above-mentioned pointers. It is always better to learn from examples, than to make mistakes.