Invest, do not trade!

Investing is a lot about luck – any investor will tell you that. I have said this in an earlier post also. For example I sold hdfc, l&t, and tata power (skill, I thought they were overpriced in a slowing down market) – they are still way below my sale price. Then I used some of that money to buy Basf (luck, I had no inkling that a buy back will be announced way, way above my cost price.

However, I do few, very few transactions in a year. That is why I realised the great pleasures of inaction. I normally use only equities or cash – am too lazy to move in and out of liquid funds and FMPs. Like preparing for a war can take a long time, and the war itself a short time – remember Field Marshall Sam Manekshaw  told the  then Prime Minister Indira Gandhi  it  would take him  6 months to prepare for the war?  Well Indira  Gandhi wanted the war in  September,  Sam  said  December, and  Dec,  1971 it was.

Similarly preparing a portfolio, construction, asset allocation, goal oriented investment planning, creating an investment strategy, drafting the investment policy statement / strategy statement etc. are the things which take time. Trading / doing the transaction takes very little time. So spend time on all these and little time in trading. It will help.

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