1. You should not fall in love with your stocks: too many of the newbies having ‘read up’ some literature feel that one should not fall in love with your portfolio. Completely wrong. I agree the company does not know that you exist and frankly the company could not care, but it is stupid to say you cannot fall in love with your portfolio.

Why? Because the text book says so.

If you have held shares of Tata Steel and Tata Motors – and the certificates had Jamshetji Tata’s signature (I have not seen) or J R D Tata’s signature (have seen many in my dad’s portfolio), or Hindalco with G D Birla’s signature, there is a good chance that you remember the certificate.

You remember the company for regular dividends, for bonuses, for making your Rs. 1250 to Rs. 42,00,000 apart from the regular dividends….well there is nothing wrong.

Investing is about passion. Unless of course you are outsourcing it to a fund manager.

2. You cannot do irrational things in the market: If it makes money, it is all right to do irrational things. I have sold a company and bought the parent (holding company) simply because the parent and the holding company were in completely different industries. It made money. However I cannot now try to ‘intellectualise’ and try to rationalise it. There is no great rationale, but it worked. So when you break a rule and make money, DO NOT THINK THE RULE HAS CHANGED…it is just that at that point in time some other theory was at play 🙂

3. The biggest learning one should have from Aswath Damodaran’s book Investment Fables is that there are many theories. When one theory works for a long period of time people get confused between the ’cause’ and the ‘effect’. So be careful do not be blind in following ‘rules’ made by ANYBODY.

Remember the dates when Graham, Buffett, Lynch, Fisher, etc. wrote about US markets. Also remember there is no great Indian book….to do a cut n paste. And by some chance if you can see the details of the life of Benjamin Graham, I am not so sure how many of us would want a LIFE like that! What about Albert Einstein ….please go and Google their lifestyles and life histories…and you will know what I mean.

So if you wish to do a c n p is fine, but if you cannot paste, DO NOT CUT.

  1. Subra Sir,

    Love that thought, Now a days everybody is trying to master techniques for valuations.While I agree to the efficacy of the methods , is it not right that the future is uncertain, hence none of the methods are really true,these are at most Risk mitigation strategies, they reduce only known risks but can not predict the future…

  2. Subra Sir,
    It is good to fall in love with your stocks provided the underlying company is so good where its stock can be locked into a locker and keys can be thrown into water. That’s what my uncle said about this stocks (in days of paper based stocks).

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>