Ego and pride are not really useful elements any where. So even while investing ego, pride, etc. have to be packed away in a box and tightly secured in a box. Many investors I know have made money because of luck or research done by some other person. However when they apply their minds a little on the shares that they buy, they think they are doing research!

My research for example, is completely outsourced to a friend who has been in this business for a very long time. And I am also convinced that talking to 2 smart people in the market is better than 2 months of research by a kid still wet behind the ears.

And many others have made money because about say 30 years back (or say 50 years back) it was not very fashionable to “trade” equity. So when an electrode supplier liked the way L&T, Tata steel, Tata Motors or Hindalco were run, he was impressed, he bought the share and today is sitting on a few million rupees.

However some so called smart people have not chosen the shares to keep! They have got rid of Colgate, Hero Honda, Hindustan Unilever, State Bank of India, and invested in ‘B’ or even ‘E’ grade companies! The lure of the multi bagger is really huge. For me, the probability of an event happening is far more important – expected PV of the action is more important.

It is not uncommon for intelligent, competent people who have been successful in business or an academic environment to try their hands at trading on the markets. If I have been better than my peers in academics, I should be better than them in investing is it not? In fact there are many engineers in the BARC who think that if they can do such hi tech work, investing should be …..

In essence, because they have managed to outpace the competition in the business or university sector, they think they can do the same with investments. However, while this logic may be appealing, it does not always pay off and many of these individuals lose money for a variety of reasons.

If in a small incident like being “first” in a lunch queue happens by luck, or rather you are willing that it happened by luck, why will people not admit that they got a good share by luck? I do not know maybe a doctor can answer this question!

Speaking of doctors, they make excellent investors – ask the bank RMs who deal with them .

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  1. obviously the amount invested was about X in 1989…he already had equity worth about X invested prior to that. His dividend income today is X. So on a portfolio that was 2X in 1989 the dividend in 2013 is X. You can choose whatever value of X, it would be true.

  2. Movements in stock happens because of fresh news hitting the market. No models, no analysis, fundamental or technical have been invented so far, which can predict the future information & there by future performance. Noting to do with intelligence or IQ of a person. Its because of science. In physical science which has physical properties one can exactly predict the outcome, e.g. an oil field engineer, by applying certain formulas, can exactly predict how much oil can be dig out from that field. The outcome of oil filed will not change by the behaviour of a human being. However this is not the case with stock price. Stock price moves due to human behaviour. Everyone has their own way of interpreting the new news coming to market. So basically to predict the right price of any stock, one has to out guess entire market which is humanly impossible. Thats why even a intellectual person go wrong at predicting the multi bagger. & if still one manages to find it out its sheer luck.

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