One very important thing to know while investing and hoping to create wealth is to know about smartness. Which means when you have a good fund manager who is willing to treat all his unit holders equally, you need not have a high IQ.

Also when you are investing directly it is better to know 2 smart people in the market instead of doing 2 months of research. Take my case. When Colgate was at 400, I thought it was worth selling at least 20% of my holding. Similarly when Tata Motors was 800, I was sure that it was a good price to sell at least 15-20% of my holding. Similarly in 2007 Dec to Jan 2008, I had spotted L&T and Tata Power to be overpriced, so I sold them at very attractive prices. Last week I was tempted to do the same, but no clue why, but I did not.

However one smart thing about me (oops!) is that I know that I do not understand markets (and have reconciled to the fact that there are people far, far, far more hands on and superior to me in the market). So i called one of them. He said Colgate is a good sell at 1100, Tata Motors you hold till you know that JLR is making money, L&T and Tata Power have lagged the index – so hey Johny do nothing.

That one phone call cost me Rs. 1 perhaps (not sure about phone costs anyway!)…and the benefit was worth at least 2 million times the cost of the phone call.

ROC (return on capital) any one?

So to make money it is important to know that ego is the problem, not intelligence. So kill your ego, your net worth statement does not jeer at you if somebody else has created it, know that there are smarter people than you in the market. Know whom to call – having 4-5 people is enough, call them. It is far more helpful than reading research reports by unknown people.

I have shares of Moschip, Taneja Aerospace, Kerala Ayurveda, Deccan Gold, Arvind Trading.

Luckily I have traded very aggressively so am in ‘profit’ in all of these except Arvind Trading, Moschip and H K Finechem. The worst thing is I do not know why I have H K Finechem at all :). Arvind and Moschip…one of the 5 guys has said …abhi ke liye rak le bech ke kya milega, so am holding. H K finechem God only Knows.

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  1. Hi Subra,

    I have been an active reader of your blogs, but have remained passive when it comes to asking queries. I have decided to break the shell this time.

    This is a generic question which I have and I am sure many of the other passive folks would have:

    What is the theory of relativity behind the following:

    Interest rates, Inflation, Government spending, Govt. yield

    Vs.

    Bond funds, Floating rate Funds, General Debt funds, Gilt Funds.

    I know that my question has to do with the concentric confusious cycles of economics, but from a lame man’s perspective how are they related? (Adversely or positively)

    Thanks in advance for your reply.
    Srini

  2. Landing up holding a stock like (HK Finechem (Who the hell are they) is one of the bitter sweet experiences of being in the stock market.

    Having being carried away with the flow of market forces, sometimes you end up with the proverbial pot of Gold and more often with an empty pot that makes excellent music.

    So here we have Subra, drumming up the empty pot and not knowing why he is doing so.

    I’m afraid, many of us hold similar pots, only we play the music in private.

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