Portfolio Rebalancing

- The Hedge way

 Introduction to Investment
Philosophy
 We felt the need of framing this concept
in the light of global recession which has
taken a toll on investor confidence and
created doubts in the power of equity as
an asset class.
 Lot of discussions and thought processess
took us to reach a conclusion which is
relevant in any market situations.
 Does the bull run helped in windfall
gains for majority retail investors?
 Have you gained in the bull run?why did
you enter the market ?
 (is it because your friend told)
 (or since equity market gives you great
returns?
 Or since stocks were cheap?
 Or because you are well informed abt the
market?
 Have they lost in the bear market
heavily?
Does the loss overtook the gains in the bull
run?

Why did this happen?why were they not

able to protect the gains?
 The philosophy unveils now
 Answer is the one end only one
Lack of Discipline
a.Financial Discipline
b.Trading discipline
 What is financial discipline?
 For being wealthy it is important for you
to be financially committed and stick to a
plan.
 Financial discipline is about deploying
your wealth in right place in right
proportion.(Have you done it?)
 Trading Discipline
 Have you had a rationale before entering in
a counter?
 Why do you want to buy scrips for
premium?
 Do you enter /buy scrips when it offers you
value?
 Do you book your profits regularly?
 Do you cut down your loss when it is
required?
 Continued…
 If your answer is yes , then you are
disciplined as a trader
 But unfortunately most of the answers
would give a bleak picture.
Is there a solution for this?
 Solution
 We have developed a discipline which has its
basics enrouted in to the concept called portfolio
rebalancing.
What are the benefits of Portfolio Rebalancing?
 It creates a discipline and ensures that the gains
are protected and sees that the investment is
split up in right proportion there by benefitting
the customers irrespective of the market
situations.
 Our way
 We believe that the customer should be
benefitted in all the time.
 How does it happen when the markets are
down?
We have arrived in a principle where in
we would combine the principle of
investing coupled with disciplined trading.
 Parameters of allocation
 We decide on the investment style based
on the client’s risk appetite.
 Having said that we wouldn’t want the
client to lose the quick opportunities
provided by the markets.(we do use
swings in the markets)
 Market levels (Valuation)
 Diversification
 Hedge’s Investment /Trading
Model 70:20:10
 We advocate a 70:20:10 allocation pattern
to the client.
 With in this framework we would go for
diversification and staggered deployment of
cash.
 70% of the investment would go to cash,
20% for shorterm/technical trades and 10%
would be purely used for trades using
option strategies.
 Rationale
 70% cash investment in aimed at value
buying and scrips would be picked strictly
based on the fundamentals of the
company.This would be done in tranches
and will be diversified across the sectors.
 20% would be used to trade using
technicals and stoplosses.This is where the
customer will have the opportunity to
generate maximum returns.
 Continued…..
 Next 10% would be either used to hedge
the cash position or to trade naked
options(call/put)based on the market.
 We would always have 10% of the
portfolio in cash which would act as a
cushion and would be used up on when
contingencies arise.(Ex: Unexpected
market fall due to Unexpected news flows)
 Continued
 If at all, there is any change in the
portfolio pattern,this would be done only
in line with the market condition and
would be reviewed time to time
 Quote of all time

 "When stocks are attractive, you buy

them. Sure, they can go lower. I've
bought stocks at $12 that went to $2, but
then they later went to $30. You just don't
know when you can find the bottom.“-
Peter Lynch
 Disclaimer
 This presentation is developed exclusively
by Hedge and for Hedge and all the ideas
generated are truly original. Any
coincidence shall be regretted.
 We promote this keeping in mind the
benefit of the client .
 All the ideas and advices are subjected to
market risk.
THANK YOU