This is a very old story…you can attribute the wise man to be Moses, Buddha, Tenali Raman, Birbal….choice is yours.
The story goes like this….
There was a man who was digging a well. He was hoping to strike water soon.
One man came up to him and said ‘Arre you are digging for water here! Alas there is no water here…..start digging here. He had already dug 7 feet. The ‘adviser’ said even though you have dug 7 feet..I think you should be digging here.
The man shifted his digging to the other place – by now it was noon and started all over again and had dug about 6 feet when another ‘adviser’ told him that it was not a great place to dig. He was then advised to dig in another place…and the whole thing started again.
In the evening he was tired, had dug at 3 places and did not have any water.
A wise man came along (you can call him a Zen master, a rishi, Buddha,….the choice is yours) and asked him what he was doing. Then he asked him at what depth did he hope to get water. The man said ‘maximum 10-12 feet even in the worst case scenario’ . The wise man laughed and said ‘you have already dug 7+6+7 feet which is enough for 2 wells!
He explained the need for focus, confidence and concentration.
Similar is the case in case of ‘performance seekers’ – they keep jumping from one fund scheme to another. In many cases staying on in the same scheme has helped even if there has been some under performance in a couple of quarters. My dad has been doing SIPs in Prima (which has huge periods of under performance) and still on a 6 year basis, the returns are in the mid twenties – way, way beyond what I was expecting, but far below how his equity portfolio has done.
Similarly shares like Hero Honda, Colgate, P&G, all have huge periods of under performance – but staying on in these shares has definitely helped his portfolio…..so here is a lesson.
It is not only individuals who lose focus – many companies also lose focus. Jain irrigation, Sanmar, Cholamandalam, are names that come to mind. However all these companies have got rid of their ‘poor cash flow business’ – good that they got back to focus – now these are companies which are doing well in the bourses! So focus pays….!
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