Why am I doing a post like this?

Simply because the amount of CONFIRMATION that people want BEFORE they invest is just awesome. So if in an investing span of say 50 years you spend 45 in getting confirmation of what will work, when will you invest?

The more qualified a person is, the more the questions –

1. ‘Subra you are saying on an average equities will work but will it really work for ME?’

Frankly there is no way how I can answer this question. I can only say that as a family my dad has been in equities since 1956 and I have been personally in equities since 1979 and it has worked. I do not know how much return I have got on a daily, weekly, or monthly rolling average without reinvestment of dividends.

No, I am not a research scholar doing 100 year IRRs on equity as a class of investing across 30 countries. No, I do not need to. Hey, but I invest.

2. I am sometimes a saver, an investor, a speculator, a trader, a long term investor, a short term investor, – I normally know when I do a trade why, how much and in what role I am doing it. For e.g. I have Cummins (when I originally bought it, it was called Kirloskar Cummins) and have been holding it for 20+ years. However in the past 10 months I must have traded in and out of Cummins about 4-6 times) and thus many a time there is a convergence. Ultimately the question is ‘does it make money’ and is it ‘tax efficient’ .

3. Sometimes I am a growth investor seeking all the value in the growth that is happening. Like buying Bharti Airtel at 80 when it was making huge losses. The value, really came from growth.

4. Will the same strategy work for me over the next 25 years of my life? frankly I do not know. However my portfolio is still not in the ‘permanent retirement’ no need to act stage. I will go there ONLY over the next 20 years – maybe 15.

If you wish to invest in equities – maybe a small part – and you wait for PERFECT INFORMATION (no clue what it means from a usage point of view) I hope you remember Operations Research.

Do you realize that EVPI (Economic Value of Perfect Information) is NIL?

So then, sorry, equities will not work for you.

 

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  1. Just the trigger i needed, i guess. Thinking about TCS, Bajaj Auto and HDFC bank for a while and waiting for an entry point.

    Today, invested 50k each in these three scripts.

  2. As the late parent used to say– you can take a horse to the water but you cannot make him drink…

    Dividends paid our school fees, art class fees, music fees etc. of course we had the advantage of free girl education in my state when in was in college and b school.

  3. Subra,

    Lets not go in argument over whether we need 100 years of data confirmation (If thats what i meant from my last comment, really sorry, didn’t mean that).

    The only point I was making that No, equity will not work for everyone. The blanket advice to do SIP in equity too will not work for everyone. People who just want the easy suggestion, do SIP and tada..you beat inflation, sounds great but be prepare to get astonished.

    And believe me it doesn’t take 45 years to do the analysis. It take just 1 day to do all the analysis if you want to.

    Otherwise, If I play out simple : Invest – Forget – and see it after 30 years…I am gambling..playing my luck. Thats all and nothing more than that.

    And if someone is putting his/her hard earned money, seriously do your own analysis and take the plunge. There are no free lunches and not at Subramoney too.

    @Mira: Please don’t take the horse to the river if he doesn’t know how to swim!

    And yes if you say it worked for you so it will work for anyone…it is similar to statement our elders said: Equity/Stock market ruined XYZ and hence it will ruin you too…funny right ?

  4. I don’t quite see where the dichotomy is. No one ever suggests making blind investments. Every book I’ve read, every sensible blog I’ve gone through, always emphasized on doing your homework before putting down the money. I guess it’s come to a point where it goes without saying – learn well, analyze, think hard before you invest.

    At the end of the day, these are only opinions. All of us have to analyze it in the context of our own individual background, experience, intelligence, risk-ability, loss-immunity,…

    Sure, there are those that have made profits and others that have lost everything. Thankfully, both of them are helpful for our continued education. I guess that’s the beauty of variety – one set will learn to stop going the equities way, another will polish their selection criteria and learn to be on guard, yet another will keep scouring the web for those “magical suggestions” for their right investments,….

  5. I understand everyone dons this hat of saver, investor, speculator, trader, long term and short term. The only difference probably between you and others is that the above may be applicable to one asset class (equity) and for others, it could be multiple asset classes. Take an example of IT guy, he saves part of his salary, invest in PPF, speculates in Gold, trade in forex/other commodities and puts money in property for long term/short term gains.

    The key question here is CAGR. As long as one generates above inflation returns,it is a success story. Why beat the drum of equity alone.

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