Risk is a matter of tremendous interest to me. Recently when I posted about Bharti Airtel – as a good buy at 290 somebody said ‘there are many multibaggers available’ . Sure – my multi-baggers search happens in the top 100 shares, and that is difficult.

If I wanted to take MORE RISK why would I not buy GMR Infra at Rs. 19? I am sure that could be a multi bagger. Right?

No. It is against my philosophy of buying a Hyd based company. Sorry if I am offending my Andhra readers, but I do not take a long term view on Hyd based companies. My view of those companies HAS NEVER BEEN GOOD….so even in Dr. Reddy Lab I have only held trading positions. Jupiter Bioscience, Satyam (of course) GTB, …are not really the greatest examples to show off…so no GMR in my portfolio – I may still punt on it at 21 hoping to sell it at 30…but that would be a trading call.

Having said all this RISK is still difficult to understand.

Let us say we are in a crunch match and Yuvraj is at the crease. He hits an inside out shot which goes for a brilliant 4 – and the next ball hits it even better. The ball goes for a six!

The ball after that he tries another extravagant shot, and perishes.

The commentators say “There was no need to take the RISK ..” especially if the commentator is India’s greatest politician Mr. S M Gavaskar.

ACTUALLY, the RISK had to be taken.

NO way how Yuvraj would have known how much to score. If he DID NOT TAKE THE RISKS, the pressure on the later players like Dhoni goes up.

Now greats of the game like Gavaskar (remember he scored 37 runs in 60 overs) who have NEVER played a crunch game do not appreciate the NEED for taking risks in the middle over.

Simple is it not?

Why invest in equities? Simply because if you do not invest in equities for very long periods of time..chances are :

1. You will not have enough amount of money to retire.

2. There will be tremendous pressure in the later years to dramatically reduce one’s standard of living.

3. Equity investing is not difficult, but YOU should know how to keep it simple. Avoiding MISTAKES far more important than hitting sixes. Look at yourself as Ishant Sharma while batting and as Dhoni while bowling. YOUR MAIN JOB IS TO MAKE SURE THAT YOU DO NOT GET OUT.

4. It is a big and famous investor / Cricketer who has to ‘spot winners’ – if you can index your investments (buy index stocks/ index industries) albeit in a different ratio – and you might be home.

well on risk…there is always more..

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  1. Equity timing is INDEFINITE. At the peak of a bull run you may have to hold on for 12 years, at the beginning of a bull run you may double your money in 4 months.

    The skill is in buying good quality companies that reward you in terms of dividends…

  2. Sir, my problem is a different kind..i’m 30 & I’m so inspired by you that 90% of my savings are in equities..Now its not a no holds barred day trading but an uninterrupted SIP in decent MFs since 2010..till now happy with the going. I feel sad when the market keeps rising like this.

  3. Subra sir,

    Excellent comparison, but difficult to implement for lay investors like me, though i am making a effort.

  4. “if you can index your investments (buy index stocks/ index industries) albeit in a different ratio – and you might be home”

    Great piece of advice for any amateur investor in direct equities.

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