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Home / Markets / Stock Markets /  He lost 80 lakh in stock market. How he later built a business with 20 million subscribers

He lost 80 lakh in stock market. How he later built a business with 20 million subscribers

Ajay Lakhotia, Founder & CEO –StockGro.

  • Instead of shying away from the market, Ajay Lakhotia decided to learn how it works and recover his losses

A decade ago when the financial crisis hit the stock market, Ajay Lakhotia was amongst the many individuals for whom 2008 was not a good year, financially. Without having a proper understanding of the markets, he was just running in a race for "getting the highest return". This resulted in him losing 80 lakh. Ajay Lakhotia, Founder & CEO –StockGro, Asia's first social investment platform shared his ups and downs.

A decade ago when the financial crisis hit the stock market, Ajay Lakhotia was amongst the many individuals for whom 2008 was not a good year, financially. Without having a proper understanding of the markets, he was just running in a race for "getting the highest return". This resulted in him losing 80 lakh. Ajay Lakhotia, Founder & CEO –StockGro, Asia's first social investment platform shared his ups and downs.

“I lost over 80 lakh in the stock market crash in 2008, which was eye-opening. Before 2008, the markets were soaring! While FD rates were 7-8%, markets were giving a much higher return (2% return a month, around 24% annually). Which is why everyone started investing heavily," said Lakhotia.

“I lost over 80 lakh in the stock market crash in 2008, which was eye-opening. Before 2008, the markets were soaring! While FD rates were 7-8%, markets were giving a much higher return (2% return a month, around 24% annually). Which is why everyone started investing heavily," said Lakhotia.

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He said that friends would compete against each other to see who bagged the highest returns. At that time, investments were entirely based on tips. 

“But when the crash happened, I realised I had no idea how the market works - how analysts evaluate a company's performance and how they made stock recommendations," he added.

Instead of shying away from the market, he decided to learn how it works and recovered his losses.

He noticed how everyone in India loves talking about the stock market and is curious to find and invest in the right opportunities, but they lack the understanding to figure out the technicalities like entry & exit timings. No wonder, despite having the highest working population with decent literacy levels, only a fraction i.e. less than 4% of India’s population really invests in financial markets. 

This journey of losing money in the market crash, and recovering that from the markets became a strong foundation of why he built StockGro today.

StockGro's Lakhotia follows a few basic rules for investing

-Always diversify & hedge your portfolio.

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-Use a top-down approach to determine which sectors will perform well & why, which companies in the sector are most reliable, the company's past dividend record, and the promoter's background.

-Put a 2% stop loss and, more importantly, a 5% book profit target on all trades.

How people can manage their personal finances

Most people have their money management on autopilot. They save a certain percentage of their earnings (typically 10% to 20%) in a fixed deposit and spend the remainder.

According to Lakhotia,  the general rule is that after 20 years of work, your investment should provide you with enough annual returns to support your lifestyle.

Like other market experts and analysts, Lakhotia also believes that you should invest very early in life because at that time your risk appetite is higher and your personal lifestyle cost is lower - as you get older and your family responsibility increases, your risk appetite decreases.

StockGro CEO's money management mantra

50% - Expenditure

FD savings of 20%

30% investments in stocks/mutual funds.

In his opinion, one should invest in products that you like and believe will be sustainable in the long run, regardless of boom and bust cycles.

So what are the sectors that the long-term investors should bet on?

-Toothpaste and soaps, for example, are unlikely to die and will continue to pay dividends.

-The auto sector and logistics will thrive and expand in the future.

-The banking and financial services sectors are bound to grow with the growing economy.

-For long-term investments, pick good dividend-paying stocks that experience less volatility when the results are announced.

 

Advice for short-term investors

For short-term investments, pick momentum stocks in which investors see traction due to current developments in the company or sector, such as regulatory changes, new product wins, and so on, which change the perception of the company's future earnings.

Ajay, who is an entrepreneur at heart and investor at soul, said such stocks can be traded for as short as 7 days to 3 months time period with a strict stop loss.

“For example, the National Logistics Policy is expected to transform the sector and provide numerous incentives. Leading high-tech logistics companies would benefit the most, resulting in the rise of their stock prices," he said.

He also cautioned investors and said as the stock price rises, adjust your stop loss to 2% of the current price to ensure that you remain profitable even if the tides turn.

StockGro, the Bangalore-based startup, was founded in January 2020. With its focus on millennials and Gen-Z, the company boasts of growing almost 2x a month on month and has crossed 20 million app downloads within 2 years after its launch in June 2020. 

 

 

 

 

ABOUT THE AUTHOR

Sangeeta Ojha

Sangeeta is a Chief Content Producer at Livemint. Writes on personal finance, banking and real estate. She has over 12 years of experience as a journalist with television and digital media
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