Copying is very difficult especially if you want to be the first! How can you copy from the second best and be first? So that makes copying difficult. However you could take parts of many and look original…then you need not defend your copying!
Warren Buffet made most of his money by staying and investing in the USA. Late John Templeton made most of his money by betting on markets world wide. He was in Asia, he was in commodity stocks..all over the place.
Which strategy works? And the fact that a strategy has worked well from 1977 to 2007 it does not mean it will work from 2007 to 2037.
If you read what John Templeton says, you will believe that you need to create a diversified portfolio – a little of Japanese stocks, lots of American, some emerging markets, etc. in equity alone. Apart from this some debt – short term, long term, etc.
Warren Buffet on the other hand says you should concentrate your portfolio if you wish to create wealth.
Whom should you listen to?
You should have a concentrated portfolio – which means in the Indian context, if you have a Rs. 25L portfolio you may not need more than 6 companies. However, once you have created some wealth, you need to protect a portion of it from the vagaries of the market.
Let us take an example. In case you had invested Rs. 10,000 in Wipro in the year 1980, today it would be worth Rs. 350 crores (assuming you consumed all the dividends). However, at various stages you would have sold some part of your wipro shares to invest in other companies too – now if WIPRO had not done well, but some other company in which you invested (say Silverline) had done well, you would have looked smart (but actually you were lucky, simply, lucky).
However if you are still holding on to ALL the shares of WIPRO, it makes sense for you to sell a portion of WIPRO and invest in a simple index fund, some real estate, some rbi bonds, etc.
Also it is important for we the common investors to realize is when you are Azim Premji – you are in control of the fortunes of Wipro. However as a small shareholder, we are not. So to think ‘I made money in X company..and so will my son’ – is a wrong concept and completely untenable….
So read what Phillip and Ken Fisher have to say about investing, read Buffett, read Templeton, read Motley Fool, read Subramoney…but do what YOU think is fit and proper FOR YOU……only that will work…
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