Thread by @gurjota

Failure is life’s best teacher & loss is stock market’s best teacher!

I lost 80% of my capital in a #Nifty50 stock in just 1 year!

It is my life's worst investment till date & Covid had no role in it!

Here are my Top 5 lessons from my biggest mistake!

Thread 🧵👇
(1/9)

Lesson 1 – Never average down with deteriorating fundamentals

I bought #YesBank in Sep'18. It was in Nifty since 2015 & reported 4k cr PAT in FY18.

1 week later, RBI declined CEO Rana Kapoor’s extension & stock crashed 50%🔻

I kept averaging looking at past performance
(2/9)

In Jan'19, new CEO announcement led to good recovery in stock price.

I thought market is happy and bank is back on track.

But in April, bank declared shocking Q4FY19 numbers.

A loss of 1500 cr which was the 1st ever in the bank’s history!

Stock crashed 50% again 📉

(3/9)

Somehow I still justified my holding & didn't book a loss.

I went with the TV/market narrative that a new management often cleans up books of accounts with a “kitchen sinking” qtr.

My senses had taken leave off me so I averaged further into deteriorating fundamentals.

(4/9)

Lesson 2 – Never listen to TV experts

I made another big mistake by listening to TV experts talking how banks in 🇮🇳 never fail. And I kept adding.

A big learning, “I” need to be the final authority on my investments, not anyone else no matter their experience or wisdom.

(5/9)

Lesson 3 – Never act on market speculation

Daily news harped about potential foreign investors taking over the bank.

I thought a big PE firm or FII will soon save #YesBank like a knight in shining armor.

I only compounded my earlier mistakes by averaging aggressively 😢

(6/9)

Lesson 4 – Swallow your ego and book a loss (if writing is on the wall)

I finally did one thing right!

I exited Yes Bank at Rs.30 immediately after the RBI moratorium announcement on 5 Mar 2020.

I saved min. 10% of capital as the stock halved 50% even from that time.

(7/9)

Lesson 5 – Avoid big bets in leveraged financials

I invested 10% of PF in #YesBank & lost 80% in just 1 year.

Leveraged financials are very risky because of high debt to equity.

They are the first ones to get thrashed in any economic crisis (ex: Demon, ILFS, Covid)

(8/9)

Top 5 Lessons Summary

1.Never avg down with deteriorating fundamentals
2.Never listen to TV experts
3.Never act on market speculation
4.Swallow your ego & book a loss
5.Avoid big bets in leveraged financials

Share this 🧵to educate & prevent retail from these mistakes!
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