Arjun Rudra, 25

Occupation: Studying to become a financial adviser

Portfolio: Currently 50 per cent in equities and 50 per cent in cash; equities include Alliance Grain Traders Inc. Home Capital Group Inc. Sprott Resource Corp. and Sterling Resources Ltd.

He is now studying toward the Certified Financial Planner and Chartered Financial Analyst designations, with the intention of finding a position in the financial industry.

Mr. Rudra also operates investingthesis.com, which features posts on investment topics and interviews with investment professionals. I’m trying to interview and glean the insights of as many professionals in the capital markets as I possibly can, he says.

Investment approach: He started investing about four years ago. At first, his portfolio followed the recommendations of so-called experts on television and the Internet. He now takes a more active role to selecting investments.

My approach is a blend of fundamental and technical analysis, Mr. Rudra explains. I first screen for companies that are generating higher returns on their equity than their peers. … Return on equity takes into account retained earnings from previous years and tells investors how effectively their capital is being reinvested.

Mr. Rudra then uses technical analysis to determine entry and exit points. Technical indicators used include those based on trading volumes and relative strength. Limit and stop-loss orders are deployed when buying and selling.

DuPont analysis: Part of his research on a company involves performing a DuPont analysis, which involves breaking down return on equity into three elements to identify its source of strength or weakness: profit margins (efficiency of operations), asset turnover (efficiency of using assets) and equity multiplier (financial leverage).

Best move: My best investment move would have to be the formulation of a strict buy-and-sell discipline.

Worst move: It would be blindly following the recommendations of gurus or experts on television or the Internet without doing any kind of research to figure out the investment thesis for owning a particular investment.

Advice: Empower yourself by reading as much as you possibly can, Mr. Rudra recommends. You will not only have a firmer grasp of your financial situation but also be able to ask better questions of your financial adviser.

Special to The Globe and Mail

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