Let us face it, when the market was at 15000 most media stories were how:

a) people had lost lots of money in the equity markets,

b) how fixed deposits and PPF had given better returns over 3 years

c) why people should be scared of the equity markets.

One good thing about the media is, they seem to have done a good job. The Indian equity investor will soon be extinct.

At 20,000 there is not much of a story about the market.

At 24,000 the stories will be ‘Are we in a bull market’ – after completely missing the ride from 15k to 24k. Awesome media. They do it all the time. Earlier it was in the print media, but now it is the ticker channels who can create the Fear and the Greed. When Buffett said ‘Be Greedy when others are fearful, and be Fearful when others are greedy’ – I am sure OTHERS meant the media.

I hear a few people now saying ‘You have reached your price, now is the time to redeem’. Awful advice. Terrible, awful advice.

Three things to remind you again:

1. Heights by great men reached were not by sudden flight, but they while their competitors slept were toiling upwards in the night: Read it in school, and it is an awesome saying. Spend long hours reading, understanding and do remember that you need to spend long years in the market. The market and the indices are not daily, weekly or quarterly stories. Companies like Hdfc, Bajaj Auto, Reliance, Siemens, Cummins, Colgate, EiD parry, Coromandel International, Tatas,…were not built overnight. Nor will you make money overnight.

2. Media, and therefore the common man have a terrible, terrible, awful ability to time the market. Sadly this is true for 90% of the fund managers too. So please do not use your ‘timing’ brain in the market. God forgot to put it in there. If you entered at a high, do not compound that mistake by selling at a low. Good companies bounce back. Cash flow is a fact, Growth stories are stories.

3. Dull boring companies with solid cash flow will be good in the long run. If you want sex appeal, you are in the wrong market. Go elsewhere. If you want speed and thrill, go to the races. This is a dull boring place where you will get rich over a LONG period of time. Time spent in the market is far, far more important.

4. Watch entertainment and animal channels. Media hurts. If a person appears more than twice in a fortnight on business channels, check his KRA – THAT is his job, analyzing is being done by somebody else. He is just a loud mouth paid to be on TV. Either by the channel itself or by his employer.

5. If I give my age as 445,424 hours, will you not say please say it in years and months? Similarly when I ask you for your portfolio by age…I do not want it in weeks, I want it in years….

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  1. Dr M Chandrashekhar

    You are right. Iam sick of watching the same guys switching channels each day & mouthing some figures which contradict each other. I do not think any one should take these self styled market experts seriously.

  2. Subra Sir … So you prefer (and only?) to buy “attractive bluechips (assuming they usually have good cash flows)” rather than

    a. High dividend yield stocks
    b. reasonable priced growth stocks
    c. Discount to book value stocks
    D. Companies with moats

  3. when i bought eid parry at 16 in 1986 it was a turnaround, when I bought Hero HOnda in 1985 it was a start up, when I bought Hdfc in 1980 it WAS BELOW PAR, when I bought Hdfc bank it was a start up with a good parentage, when I bought Coromandel International…circa 1986-89 it was a fertiliser co. at the govt’s mercy.

    i bought Bharti airtel at 80 and sold at 1200…it was a start up

    i hope that answers ur query.

    but yes today I will not mind buying a Colgate and Nestle, but will not buy an ITC or LnT – even though all are a part of my current portfolio. ITC has a govt created fantastic moat, LnT has no moat. I do think they are over priced – but as I said i do not have to do anything…and my quantity is not too much….

  4. Subra Sir,

    @ above post; How much do you think you were just damn lucky with the stocks or the timing of it? Keeping a track of all the stocks and invest time in tracking, IMO the cost (time) – benefit doesn’t favour it much.

  5. Hi Subra sir,

    How much would you attribute your success to slow “price discovery” process of 1990s? Now FII, Domestic mutual funds being part of market investors how likely is that a retail investor would be able to spot/access next big company? Also, has electronic trading made price discovery faster? Or whether it has just added volatility and volume in the market?

    Or do you think that things are still the same or even worse because/irrespective of electronic trading?

    A post on this will certainly help to mention whether there is any opportunity for retail investor.

    I agree that retail investor can invest in illiquid stocks for long term which mutual funds cannot do because of fear of redemption pressure. Other than that, is there possibility that retail investor can beat mutual funds or nifty etf?

  6. Nitin if i got lucky over 30 years, thats great. It is not the buying that is lucky, but knowing what to hold, and discarding. I remember buying Chokani international at 10 holding till 14 over 3-4 years and then selling it off..Similarly Shreyas shipping, Varun shipping, Nagarjuna Signode..many companies which were in my portfolio for 2-3-4 years and then disappeared. So remember u can get lucky in a trade, not over 30-40 years. The fact that I sold Satyam (no clue about the accounting fraud, but did not like the broker who brought the deal to me), …sure there is a piece of luck, but holding a share for 35 years is not luck….

  7. Subra Sir .. Out of

    – attractive bluechips
    – High dividend yield stocks
    – reasonable priced growth stocks
    – Discount to book value stocks
    – Companies with moats

    which do you think may have good cashflows? Companies with moats (except stocks like ITC, LnT etc.) ? reasonably priced growth stocks?

  8. Right Sir, I will just think aloud: Why only equity? Had someone invested in Real Estate, the outcome would have been spectacular. Certainly, the same rules apply in any asset class. So the point comes down to keep riding your winning bet and keep minimizing your loosing bet, doesn’t it? The trick is, No one knows the future and you can’t be 100% (even 60%? ) sure if the chosen asset(equity/RE/bonds) will be winner (out-performer). So based on heuristics (Can’t apply science since there are too many variables involved), choose your asset, keep tracking and dump it as soon as it hits the wrong way else ride on it.

  9. And Sir,

    More than your winning bet, please tell us your losing ones and how you minimized or cut it short. That will be very insightful and certainly will act as a learning steps for the youngsters.

  10. Nitin, before you post use an excel sheet. Take the sensex over 34 years and compare real estate over that period. Sensex comes out on top in 10/10 cases. If you want to pick one particular area, compare it to wipro. Rs. 10,000 became Ra. 300 crore.

    To buy the index u require no brain, just sensible asset allocation. To have stuck with Wipro you needed luck. I know some oil dealers who have done so…..after all they owe their loyalty to the Oil Processing company, right?

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