The equity market is like a lion. When you see it take a couple of steps back, it is not to run away, but to spring with great vigor.

Ok this may not sound too great, but you may not have heard it anywhere else too!

You have been hearing Bill Gross saying ‘Equity markets are dead’ and The Street.com saying ‘market is climbing the walls of worry’. You have Robert Kiyosaki saying ‘In 2016 the EQUITY markets will bleed so much..that investors will be dead’….well, well, let us come to India…

You have Shankar Sharma tell Vivek Kaul ‘You can shut the equity markets for a few years…and nobody will miss it’ and you have others saying that in 3 years time the markets will see new heights. You have Naren Sankaran and Prashant Jain saying this is a good time to be buying, because fortunes are made by people who buy when the markets are low.

You see amazingly poor understanding by a few people in the press and an extremely mature Dhirenkumar of valuresearchonline.com saying ‘You still need equity in your portfolio’.

You see the likes of Warren Buffet say ‘Diversification is for people who do not understand what they are doing’ and John Templeton saying ‘You need to diversify across markets and assets’.

Life is really tough if you are a serious investor. What do you do?

Well you do the following:

a. Visit and keep revisiting your asset allocation: if you are happy with the asset allocation, more power to you! Your asset allocation should allow you to sleep well.  If your asset allocation does not allow you to sleep well, change your asset allocation.

b. Your asset allocation should help you meet your goals: The risk of ‘not meeting your goals’ is a huge risk, and you should realize that this risk you cannot take. So whatever your goals – marriage, children’s marriage, education,….retirement..the job of your money is to make sure that the goals are met, while letting you sleep well.

c. Read, read, read a lot of the old classics in Investing and equity management: The more you read the more you will realise that there is no ‘one theory’ which works. John Templeton encouraged diversification, and Warren Buffet said ‘only when you do not understand, do you diversify’.

On the one side the paid media says ‘do not try building your own portfolio, come to mutual funds’ and on the other side Motleyfool.com says ‘it is not very difficult to beat the fund manager who has a lot of investing restrictions’.

So what to do?

Well invest in 2-3 well managed funds (do not worry too much about styles and caps – most fund managers are not really true to label) and also create your own portfolio. Keep seeing how is your performance vis a vis the funds / index. If you are doing better than the funds / index, more power to you.

If the funds / index is doing better than you, accept the fact that fund management is a full time job (as you found out, not because i said so), give your money to Naren Sankaran, Prashant Jain, …..etc. and relax.

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  1. Absolutely spot on with your advise Subra. Loved every word of your a,b,c and the rest that followed. That’s exactly what i have been trying to do for li’l over 2 years now.
    Am satisfied with my performance so far (based on number’s). Am also hoping it wasn’t all beginner’s luck, and i’ll get better with time and effort 🙂

    Regards

  2. Subra,

    It could not have been more simpler. Well,being simple is difficult.( My take)( People love action , but when to act and when to react , merits a post,which you should do , sometime soon)

  3. Only one point of difference of opinion.

    Have you ever heard from the fund managers/ those who earn their bread from the market say that NOW the time in not good for investing. they will be dead that day. They didnt say that in 2000, 2002, 2007 nor 2011. They will not say that in 2015 either. So dont fall too much fall for their words and analysis but their performance should be speaking more for them… 🙂

  4. Fund managers are after all human beings and they too fail.

    If u visit valueresearchonline.com and see how the funds are performing and then compare with how u are performing that will be enough. No need to invest in mutual funds seperately just to compare with ur personal portfolio investment.

    My experience is I am beating the best performing fund by at least 18% YOY. So why will I invest in Mutual funds or ULIPS or any such harebrained schemes.

  5. Shinu all fund managers are busy with insider trading with the result that they lose focus of the market. Have u seen any single fund manager indicted for insider trading by SEBI? Insider trading is rampant in the Indian markets. So, never park ur money with funds or any other person to invest. Do the investment urself.

  6. @ Jai ho..
    Would you mind sharing some of the stock pics and your approach along with the duration of your success here?

    Regards
    Aditya

  7. Jai Ho,

    With great respect to you…if you are beating fund managers on yoy basis by 18%, you would be in the same league as RJ.

  8. I really do not know how RJ made his pile, and of course I am too small to be compared to him.

    But I can tell u safely that I did not rcv any legacy from my parents. I completed my graduation as everybody does and I started of my career with a simple supervisory job on the shop floor and reached a middle mgmt level by the time I was 40. I had planned to stop working for somebody else at the age of 50 and I did as planned.

    I was aggressively sold two LIC policies by one of my own relatives who was an agent when I rcvd my first salary. I had to keep them just because my parents looked at me in a funny sort of way whenever I told them as planning to surrender them. Of course it also helped me with my ITax. Never after that did i buy insurance or a health policy or a mutual fund.

    I started investing in equity in 1984(NO MULTIBAGGER MIDCAPS PLS). I skipped MASTERSHARE FROM UTI :):):) which was a big launch in those days.

    I did not even touch those share certificates until I had to demat them.

    In all those years I did not touch FDs though my father was an avid devotee of FDs. I only went to the postoffice for my PPF account which I collected religiously after 15 years and reinvested the money in stocks. Believe me no NSCs no NSS no IVPs nothing.

    No boozing, no smoking, no paan, no gutka, no parties, a life of a GOOD SATTVIK PERSON DEVOTED TO WIFE CHILDREN AND PARENTS AND SOCIETY IN THAT ORDER. 5% of my salary went to charity.

    Meanwhile I got married had two kids, educated them. Luckily for me they studied well and went in to professional colleges and one of them is already in the US and another is about to leave for the US. According to them Merit has no place in India, though Mediocrity is REVERRED!!!

    I had always wanted to be a successful businessmen/trader. But where was the capital those days? So I decided to own companies 🙂 By 2002, when I was 40 I was part owner of a good number of blue chip companies (public shareholder :):)) By 2012 it was sone pe suhaaga.

    2012 was my planned D day and at the age of 50 I left service.

    Today my investments take care of everything and as subra was saying in another piece, I take that flight, the vacation, the hotel accommodations, the rent a car etc comfortably. I have travelled nearly one fourth of the world and plan to see it all before I or my loving sweet wife pops off.

    NO mediclaim no ULIP no insurance for me.

    I had joined a TA course in 2007. I paper traded in futures for three years. Today I have a good technical system which helps me successfully trade in index futures. My trading business makes me four times more money than the last salary that my company paid me 🙂 And I have not yet touched my stocks :):)

    Of course, I have been reading Subra since he started blogging :):)

  9. Congratulations, Jai ho.
    Thanks for sharing.
    Would you let us know what else you invest your time in? Other than tech trading, that is?

  10. varghese tell me if u have assets worth a minimum of 1 crore (excluding ur residence of course) why would u pay a premium to an insurance company year after year so that they can pay ur medical bills.

    Simple. U can afford to pay ur medical bills out of ur pocket. It makes more sense.

    And in fact there is no gaurantee that ur insurance provider will not hike ur premium. And if u have a claim they will make all sorts of roadblocks for u to rcv ur claim. It is daylight robbery!!! It is fine for somebody who has no savings or does not have substantial savings.

    During my younger working days mine and my dependents medical was taken care of by my company. I never made a claim.

    A few years back my wife had some ailment and was hospitalized. I bought her the best medical treatment out of my own pocket.

  11. Mira trading is a full time activity and it takes all my energy for now:) Besides that my wife and I visit at least one spiritual landmark in the city at least four times a week. We love the positive vibrations. We practice Yoga early morning at home. We take reasonably brisk walks on the beach whenever we can. Since I drive we do take off at least once a month to nature spots.

    The single most important thing we human species should understand is good thought. Everything starts from the thought. It is the thought that starts the chain reaction of ones karma. So always think good positive for one and all.

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