How to become a better investor:
The process of becoming a better investor is never ending and a lot of fun too. I am of course assuming that you enjoy the process of investing and going beyond the call of duty.
Here are some of my learning over the past few years:
1. You should be interested in Investing: For most of the people I meet, investing just means signing where the adviser wants you to sign. If you are in that category, just go to a good investment adviser and let him handle the process.
2. Be ready for some hard work, enjoyable learning, and a dull boring activity which will leave you rich.
3. Know yourself: Do you play to the gallery? Investing could get complicated.
4. I belong to an old school of investing, and need lots of people to talk to. I talk to analysts, buy side, sell side, regulators, investment managers, portfolio managers, wealth managers, – it helps.
5. A good knowledge of accounting, law, and some sense of macro are all useful. However from anthropology, biology, right up till zoology everything could be useful.
6. When you are judging promoters it is nice to have been a student of history, psychology and philosophy. Seriously no particular background is very important, but I liked the fact that I qualified to be a CA and trained to be a Lawyer!
7. ‘This too shall pass’ – is very important to remember in life, as in investing. The thrill of a trade of buying a share at 120 and selling at 185 within 45 days is lost QUICKLY when the share goes to 325 in 90 days. Even though this is a trading example, remember Investing too will give you your share of agony and ecstasy.
8. Trading and Investing are both very methodical and you need to learn it. So if you do make research reports preserve all the reports that you ever make (made). Read it and see how much you are improving.
9. Logic and Sense are sometimes suspended in the market – albeit for a small period, but learn to find those signals, and take advantage.
10. Do not get trapped in images of being an intellectual, investor, speculator, positional trader, researcher – frankly it does not matter. I wear all these hats interchangeably, and comfortably.
11. Be objective and independent within limits.
12. You will have your biases – do not fight them, but surely know them. I am particular about knowing the promoter’s background especially if it is a small company and it is a first generation promoter. However when it is a Foreign company, there is nothing I can do about this and accept it as a given. Sounds stupid, but hey that is how it works.
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