1.
Learn what investing is - Ins and outs, how market movements work, what the
implications of the global markets are, and why a sector falls/rises?
What is Investing? https://www.investopedia.com/terms/i/investment.asp
Understand the basic rule, the price of Gold is inversely proportional to the stock market.
Why?
Because gold, for centuries, has been considered a safe haven investment. Before the USD
became the world currency, the Bretton Woods system existed that pegged gold to the USD,
and other countries pegged themselves to the USD.
So naturally, even now, when there is:
- The stock market is down (here)
- Global crises like the Israel-Palestine conflict (here)
- Crude oil issue (here)
- Terrorism
- Fear of recession (here) - To understand this better, you’ll have to deep dive into the US
economy. (I’ll cover this later)
- Global epidemic - like COVID-19, post that gold has been booming
- Fear of the new world order - Trump’s tariff policies, Yen interest rates increasing for the
first time, China relations with the world not being good enough, developing economies
being in a state of turmoil, etc, etc.
People resort to gold.
Is it as valuable to invest in gold as much as people think it is, though?
Not really.
If we look at returns of S&P 500 v/s Gold from 1990 onwards, S&P 500 has outperformed.
In the short run, however, post-2020, gold has been booming because of the issues highlighted
above.
A few articles that’ll illustrate this point better:
https://www.investopedia.com/financial-edge/0311/what-drives-the-price-of-gold.aspx
https://www.cnbc.com/2025/04/11/is-this-a-good-time-to-buy-gold-experts-weigh-in.html
https://www.investopedia.com/articles/basics/08/invest-in-gold.asp
https://finshots.in/archive/why-warren-buffett-isnt-a-fan-of-gold/#:~:text=But%20gold%20for%20
him%2C%20is,you%20back%20in%20any%20way.
What’s happening in the US?
Basically, $30ish trillion worth of loans, 5x of India’s economy’s size, many are maturing this
year. The US economy is neck-deep in debt, the US doesn’t want to be the global currency
anymore, it’s shifting towards bilateralism, and US manufacturing is at an all-time low. Hence, in
the short term, inflation might increase a lot, leading to Fed rate cuts, which will help them get
loans again at low interest rates.
For better understanding, watch this - https://www.youtube.com/watch?v=b2hM3rPIbKM
2. How should I go about understanding the markets? Is CFA needed for it?
The answer to the second question is no.
All you need is an interest in the markets, and that interest will be developed through watching
market movements, news, understanding global events, and why some companies hit the upper
circuit even in the bleeding markets.
- Market news: Economic Times, Mint every day
- Understand that there are two ways a company can rise/fall - one is through global
events/macroeconomic factors beyond the business’s control/industry explosion, and the
other is through intrinsic factors.
- For the external factors, news will suffice.
- For intrinsic factors, you have to look out for certain fundamental ratios (here CFA Level
1’s Equity and Derivatives books will help)
- Watch YouTube videos of certain people - The Valuation School, Aswath Damodaran,
Ashwini Bajaj, Peeyush Chitlangia.
- CFA Level 1’s QA TVM Chapter - https://www.youtube.com/@edZeb
- Corporate Finance Institute
- Investopedia
3. I’m done with all this. Tell me about the intrinsic factors
Preliminary courses that might help -
Financial Statements-
https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastacctg.htm
Foundations of Finance -
https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastfoundationsonline.htm
https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcasteqspr24.htm
I’ll just add the broad link for your reference. You don’t need anything more than this -
https://pages.stern.nyu.edu/~adamodar/New_Home_Page/onlineclass.htm
4. What's next?
Learn about the industries - FMCG, Healthcare, Retail, and see what’s happening around. News
is the best source for it.
Check this out -
https://www.investopedia.com/sectors-and-industries-analysis-4689756
https://corporatefinanceinstitute.com/resources/management/industry-analysis-methods/
https://www.bloomberg.com/asia
5. Evaluate a stock using preliminary ratios
All ratios - https://corporatefinanceinstitute.com/resources/accounting/financial-ratios/
The ones investors are concerned with -
https://www.bankrate.com/investing/important-financial-ratios/
See the promoter holding -
https://www.bajajbroking.in/blog/understanding-promoter-holding-importance-and-impact-on-inv
estors#:~:text=Promoter%20holding%20plays%20a%20key,increase%2C%20and%20vice%2D
versa..
Has the promoter ratio gone down in the past few months?
Is the company doing financially well?
Is the FII/DII ratio decreasing?
Are there a lot of retailers in the company? (Red flag) - E.g., BluSmart has 65% retailer holdings
as of now
Has any investment bank/credit organisation made a negative note on the company recently?
(E.g., IREDA fell after Philip Capital gave a negative target price last year)
6. Okay, I checked all ratios. The company looks good, but slightly in the overbought
zone. What to do?
Indicators -
https://www.investopedia.com/ask/answers/121214/what-are-best-indicators-identify-overbought
-and-oversold-stocks.asp#:~:text=An%20oversold%20market%20is%20one,are%20more%20ef
fective%20than%20others.
Let’s say you invested in a company for the long term, but you see that it’s consistently been in
a downtrend. E.g. IDEAFORGE
To protect your money, what you should do is -
Check the company’s financial reports
Check QoQ and YoY earnings
Are the revenues down? This means that the company is not getting enough sales.
Are the revenues up but profitability down? At times, a company can boast of a massive order
book, but lower profitability can be a red flag. In this case, it is important to understand why the
profits are not increasing at the same rate.
It could be due to the fact that the company did a lot of CapEx, is planning to expand, or has
invested a lot in R&D. Such things are okay.
However, if we look at Gensol, these companies start spiralling, there are fishy transactions, etc.
Red flags can be -
that the Board of Directors have been exiting
The company has taken on a lot of debt
The order book is there, but orders aren’t being processed at the same rate.
Interest costs are taking a toll on the company’s financial health
Big mutual funds are exiting
Shady management
Management is not able to give a clear growth trajectory forward to its investors.
Now, how will you know all of this?
Through attending the company’s concalls.
Concalls are conference calls that the company does on a specified basis (mostly quarterly)
with its investors. In this meeting, the company reveals its profitability, financial statements, QoQ
earnings, plans forward, if any big changes that are happening.
You can take a look at these to have a basic idea of what happens in a conference call and
highlights -
https://alphastreet.com/india/earnings-call-highlights/
Now, how will you know which company is conducting its conference call and at what time?
SEBI has laid out provisions that every company has to inform SEBI and its shareholders well in
advance of the call. Upcoming concalls can be tracked through Screener.
SEBI mandates that listed entities promptly make available audio/video recordings and
presentations from conference calls on their website, before the next trading day or within 24
hours of the call's conclusion. Additionally, transcripts of these calls must be posted on the
website within five working days. These materials must be kept on the website for at least eight
years, in addition to being disseminated on stock exchanges.
https://www.screener.in/concalls/upcoming/
