Dr. Sumit Roy holds a PhD in Economics and has more than seven years’ experience in the stock market. From our interview with Sumit, one thing that is evident is his hands-on experience in working and studying in many countries. Like any other serious investor, Sumit performs in-depth research before investing in a company, but he also brings the advantage of hands-on experience in understanding how companies work across three continents. Sumit is a Popular Investor on the eToro platform and a full-time investor. Although he is in front of the screens all day researching, analysing and trading, his message to potential copiers is to have patience.
We found some time during his busy schedule to speak with Sumit about his background, his investment strategy and goals as an investor.
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Tell us a little about yourself!
I am a researcher and Business Consultant by profession. Now using that experience and those skills for slowly transitioning into a full-time eToro investor. I hold a PhD in Economics, Management and Statistics from the University of Messina, Italy. In addition, I have studied and worked in India, Italy, the US, Belgium and China where I have had a lot of exposure and interactions with industries representing various sectors.
I am an avid chess player, curious traveller and an enthusiastic trekker. Of course, outdoor activities are on hold due to the pandemic.
Tell us about your financial background.
I was first formally introduced to the concept of stocks and investing while studying for a Business Degree at university. I learned more about investing and became actively involved while studying for my MBA. Initially, I was only interested in the stock market for a few years while managing a stock portfolio for my family. My knowledge relating to managing stocks increased significantly during those times. Later on, I studied for a PhD in Economics, Management and Statistics during which I became much more comfortable with the stock market.
What is your strategy, and have you changed it recently to adapt to the volatile markets?
My strategy involves the following criteria:
- 𝐕𝐚𝐥𝐮𝐞 𝐈𝐧𝐯𝐞𝐬𝐭𝐢𝐧𝐠: Identify undervalued stocks to invest in
- 𝗗𝗶𝘃𝗶𝗱𝗲𝗻𝗱s: Keep one portion of investments in dividend-paying stocks
- 𝗚𝗿𝗼𝘄𝘁𝗵: Growth stocks targetting higher returns
- 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗦𝗲𝗰𝘁𝗼𝗿𝘀: Investments in diverse sectors like travel, technology, green energy, food, fashion, healthcare and pharmaceuticals.
- 𝗢𝘁𝗵𝗲𝗿𝘀: Occasional indices, commodities and currency trading. I often take small risks by opening short-term positions in commodities and currency trading (X5, X10) but only with small amounts.
- Diversification: To reduce the impact of volatility, I diversify. I follow the rule of having no single stock with more than 5% weight in my portfolio. Most of the investments I keep are well under 4% of the total portfolio.
I try to buy more stocks of strong but undervalued companies. If I believe in the company’s prospects and see that the fundamentals are strong, I continue opening new positions there even if shares are falling. I do this until the investment reaches around 5% of the total portfolio. Similarly, if I identify a company whose fundamentals are weakening, I immediately close my positions there. I also sometimes open small positions in trending stocks, buying and selling within a few days.
Where do you do your research?
I use trading central, tradingview, yahoo finance and Microsoft money as sources of information and articles to study the companies I am interested in investing in. I usually find companies of interest from financial news, WSJ articles and other popular investors before researching them. I also look into the company’s official publications, reports and reviews from other investors. I learn from other successful investors, and along with my knowledge about financial management, I try to apply those lessons to my investments.
How has eToro changed the way you trade?
Since I joined eToro, I have done more research on my targeted companies than I did before. I also started to invest more internationally. Thanks to eToro’s offering, currently, I have diversified my investments into companies in many countries.
One more interesting change happened due to eToro’s commission-free trade system. I frequently open new smaller positions; I wasn’t doing it before, because on other platforms, I had to pay commission on a per-trade basis.
Which assets or industries do you have your eye on now?
Airline, travel, real estate & construction, fashion, food, technology, healthcare and pharma. I keep looking for emerging and undervalued companies in these sectors.
What was your favourite trade over the past 12 months?
If I have to name one trade, it would be Hugo Boss.
Hugo Boss plummeted to under $25 per share as soon as the pandemic lockdown started. After carefully studying the company, I decided to buy stocks. The low stock price was primarily due to lockdown. The numbers were good, and analysts were giving the company “buy” ratings. The company had plans to expand, and online sales were strong.
With the new CEO in June last year, Hugo Boss announced a new online-focused strategy in July. That included a sales target of 400 million Euro before 2022 and opening up Hugo Boss online stores in 24 new markets.
This was my cue to buy this stock. I opened my positions in July 2020 and held them until the price rose to the pre-pandemic level last month. It is my favourite recent trade because of the percentage of return I managed to get from it in less than a year.
Do you invest in any asset classes outside of stocks, commodities and crypto?
Stocks are my preferred investments. At any given point, I keep more than 90% of my portfolio allocation in stocks. After stocks, I look to commodities. Crypto investing is something I rarely do with a cap of never exceeding 2% of my portfolio, and I seldom operate in currency trading.
What is your long-term trading goal?
I consider stock investments as an instrument to achieve long-term financial security. The idea of compounded growth in stocks provides unmatched financial freedom. With rising inflation, money loses its value. To keep generating value from money, the best way is to invest in good stocks.
Any message to copiers or potential copiers?
- Patience — The stock market is naturally volatile. Don’t panic. Once you copy an investor, let him work for you. Some corrections are normal.
- Diversify — Even if your copy investor is well-diversified, you can still diversify more by copying even more people.
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